EXHIBIT 10.1
FORM OF PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is dated as of this ___ day
of _______, 2000 among Commodore Holdings Limited, a Bermuda corporation (the
"Company") and _____________________________________________ (the "Purchasers").
R E C I T A L S:
WHEREAS, the Company has authorized the issuance of 800,000 shares of
Series B Convertible Preferred Stock (the "Series B Stock") with the rights,
preferences and limitations as set forth in EXHIBIT "A" attached hereto (the
"Preferred Stock Terms");
WHEREAS, the Company has authorized the issuance of convertible
subordinated debentures (the "Convertible Debentures") with an aggregate face
value in the amount of $5,000,000, which Convertible Debentures may be converted
into shares of the Company's common stock, par value $.01 per share (the "Common
Stock"); and
WHEREAS, the Company desires to sell and the Purchasers desire to
purchase some of the shares of the Company's Series B Stock and/or Convertible
Debentures.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
warranties and representations contained herein and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. PURCHASE OF SERIES B PREFERRED STOCK AND/OR CONVERTIBLE DEBENTURES.
The Company hereby sells, conveys and transfers to the Purchasers and the
Purchasers hereby purchase from the Company such number of shares of Series B
Stock and/or Convertible Debentures as set forth on the signature page of this
Agreement. The purchase price for the shares of Series B Stock shall be $10.00
per share. The purchase price of the Convertible Debentures shall be the face
value of such Convertible Debentures. The aggregate purchase price hereunder
shall be ________________ (the "Purchase Price").
2. DELIVERIES BY THE PARTIES. Upon delivery by the Purchasers of the
Purchase Price to the Company, the Company shall deliver to the Purchasers stock
certificates representing shares of Series B Stock and/or notes evidencing the
Convertible Debentures. The Series B Stock shall begin to accrue dividends and
the Convertible Debentures shall begin to accrue interest on the date the
Company receives the Purchase Price in cleared funds.
3. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser acknowledges,
represents and warrants to the Company as follows:
(a) RECEIPT OF CORPORATE INFORMATION. Each Purchaser is familiar with
the business and financial condition of the Company, has been provided access
and an opportunity to review all material agreements, books and records of the
Company, has had the opportunity to ask questions and receive answers concerning
the terms and conditions of his purchase of the
shares of Series B Stock and the Convertible Debentures and to obtain any
additional information which the Company possesses or can acquire without
unreasonable effort or expense.
(b) RISKS. Each Purchaser acknowledges and understands that the
purchase of the shares of Series B Stock and/or the Convertible Debentures and
the Common Stock issuable upon conversion of the Series B Stock and/or the
Convertible Debentures (collectively, the "Conversion Shares") involves a high
degree of risk and is suitable only for persons of adequate financial means who
have no need for liquidity in this investment in that (i) a Purchaser may not be
able to liquidate the investment in the event of an emergency; (ii)
transferability is extremely limited; and (iii) in the event of a disposition, a
Purchaser could sustain a complete loss of its entire investment. Each Purchaser
is sufficiently experienced in financial and business matters to be capable of
evaluating the merits and risks of an investment in the Company; has evaluated
such merits and risks, including risks particular to the Purchaser's situation;
and each Purchaser has determined that this investment is suitable for the
Purchaser. Each Purchaser has adequate financial resources and can bear a
complete loss of the Purchaser's investment.
(c) ACCREDITED INVESTOR STATUS. Each Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act").
(d) INVESTMENT INTENT. Each Purchaser hereby represents that the shares
of Series B Stock and/or the Convertible Debentures are being acquired for the
Purchaser's own account with no intention of distributing such shares of Series
B Stock and/or the Convertible Debentures to others. No Purchaser has any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or otherwise distribute to any person or to have any person sell,
transfer or otherwise distribute for the Purchaser the shares of Series B Stock
and/or the Convertible Debentures or any interest therein.
(e) COMPLIANCE WITH FEDERAL, STATE AND FOREIGN SECURITIES LAWS. Each
Purchaser understands that the shares of Series B Stock, the Convertible
Debentures and the Conversion Shares have not been registered under the
Securities Act or applicable state or foreign securities laws. Each Purchaser
understands that the shares of Series B Stock, the Convertible Debentures and
the Conversion Shares must be held indefinitely unless the sale or other
transfer thereof is subsequently registered under the Securities Act and
applicable state and foreign securities laws or an exemption from such
registration is available. Each Purchaser also realizes that its right to
transfer the underlying Conversion Shares is subject to certain volume
restrictions set forth in Section 7 of this Agreement and that it may not be
able to sell or dispose of the shares of Series B Stock, the Convertible
Debentures or the Conversion Shares as there may be no public or other market
for them. Each Purchaser understands that certificates evidencing the shares of
Series B Stock and/or the Convertible Debentures being purchased hereunder shall
bear a legend substantially as follows:
The Securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended
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(the "Securities Act") or any applicable state or
foreign law. They may not be offered for sale, sold,
transferred or pledged without (1) registration under
the Securities Act and any applicable state and
foreign securities law, or (2) an opinion (reasonably
satisfactory to the Company) of counsel that
registration is not required.
(f) AUTHORITY. In the event that a Purchaser is a corporation, the
Purchaser is duly incorporated, validly existing and in good standing under the
laws of its state of incorporation and has full corporate power, authority and
legal right to own its properties and to conduct the businesses in which it is
now engaged. Each Purchaser has the requisite power and authority to execute and
deliver this Agreement and perform its covenants and agreements hereunder. The
execution and delivery by each Purchaser of this Agreement, the performance by
each Purchaser of its covenants and agreements hereunder and the consummation by
each Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action.
(g) ENFORCEABILITY. This Agreement has been duly executed and delivered
and constitutes the valid and legally binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting the enforcement of creditors' rights generally or by the
principles governing the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in equity or at law).
(h) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
constitute a violation of or default under, or conflict with, any judgment,
decree, statute or regulation of any governmental authority applicable to any
Purchaser or any contract, commitment, agreement or restriction of any kind to
which a Purchaser is a party or by which its assets are bound. The execution and
delivery of this Agreement does not, and the consummation of the transactions
described herein will not, violate applicable law, or any mortgage, lien,
agreement, indenture, lease or understanding (whether oral or written) of any
kind outstanding relative to the Purchaser.
(i) APPROVALS. No approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery of this Agreement by each Purchaser or the
consummation of the transactions described herein.
4. REPRESENTATIONS OF THE COMPANY. The Company acknowledges, represents
and warrants to each Purchaser as follows:
(a) CORPORATE ORGANIZATION. The Company is duly incorporated, validly
existing and in good standing under the laws of Bermuda and has full corporate
power, authority
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and legal right to own, lease and operate its properties and to conduct the
businesses in which it is now engaged. Each of the Company's subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state or country of its organization. The Company and each of its
subsidiaries is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
lease of its respective assets or the operation of its respective business
requires such qualification, except where the failure to be so qualified would
not have a "Material Adverse Effect". "Material Adverse Effect" shall mean any
effect on the business, operations, properties or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement in any
material respect.
(b) AUTHORITY. The Company has full corporate power and authority to
execute and deliver this Agreement, the shares of Series B Stock and the
Convertible Debentures and to perform all of its covenants and agreements
hereunder. The execution and delivery by the Company of this Agreement, the
shares of Series B Stock and the Convertible Debentures, the performance by the
Company of its covenants and agreements hereunder and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no further consent or authorization is required
of the Company's directors or stockholders.
(c) ENFORCEABILITY. This Agreement, the shares of Series B Stock and/or
the Convertible Debentures have been duly executed and delivered by the Company
and this Agreement and the Convertible Debentures constitute the valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by the principles governing the availability of
specific performance, injunctive relief and other equitable remedies (regardless
of whether such enforceability is considered in equity or at law).
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement, the shares of Series B Stock and/or the Convertible Debentures by the
Company, nor the consummation of the transactions contemplated hereby, nor the
performance by the Company of the transactions contemplated hereunder (i)
violate any provision of the Memorandum of Association or Bye-Laws of the
Company; (ii) violate any existing law, statute, ordinance, regulation, or any
order, judgment or decree of any court or governmental agency to which the
Company is a party or by which the Company or any of its assets is bound
(including applicable Federal or state securities laws and regulations); or
(iii) conflict with or will result in any breach of any of the terms of or
constitute a default under or result in the termination of or the creation of
any lien pursuant to the terms of any indenture, mortgage, real property lease,
securities purchase agreement, credit or loan agreement or other material
agreement to which the Company is a party or by which the Company or any of its
assets is bound, to the extent such violation thereof, conflict therewith,
breach thereof, default thereunder or termination thereof would have a Material
Adverse Effect.
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(e) THE SHARES OF SERIES B PREFERRED STOCK. The shares of Series B
Stock have been duly and validly authorized and, the Conversion Shares when
issued in accordance with the Preferred Stock Terms or Convertible Debentures,
as the case may be, will be duly and validly authorized; and the Series B Stock,
when issued for the consideration herein provided, and the Conversion Shares,
when issued in accordance with the Preferred Stock Terms or Convertible
Debentures, as the case may be, will be duly and validly issued and outstanding,
fully paid and nonassessable and the Purchaser of the Conversion Shares shall be
entitled to all rights accorded to the holders of the Common Stock, subject to
the restrictions contained in this Agreement. The Company has reserved and made
available out of its authorized but unissued shares of Common Stock such number
of shares of Common Stock as shall be sufficient to effect the conversion of the
Series B Stock and Convertible Debentures.
(f) APPROVALS. Except as may be required under federal, state and
Bermuda securities laws (which have been or, in the case of compliance required
on a post-sale basis, will be complied with), the execution, delivery and
performance of this Agreement by the Company does not require (i) the consent,
waiver, approval, license or authorization of or any filing with any person or
any governmental authority; or (ii) the approval or authorization of the
shareholders of the Company.
(g) CAPITALIZATION.
(i) The Company has authorized capital stock consisting of
100,000,000 shares of common stock, par value $.01 per share, of which _________
shares are issued and outstanding, as of the date hereof, and 10,000,000 shares
of preferred stock, par value $.01 per share (the "Preferred Stock"), 400,000 of
which were issued and outstanding prior to the consummation of the transactions
contemplated hereby. All of the outstanding shares of Common Stock and Preferred
Stock are duly and validly authorized and issued, fully paid and non-assessable,
and were offered, issued and sold in accordance with applicable Federal and
state securities laws.
(ii) Except for the options, warrants and obligations to issue
shares described in the Company's Annual Report on Form 10-K for the year ended
September 30, 1999 (the "Form 10-K"), and options proposed to be issued since
the date of the Form 10-K pursuant to the Company's stock option plans
(including the Company's 1999 Stock Plan that will be submitted to the Company's
stockholders for approval at its 2000 annual stockholders' meeting (the "Annual
Meeting")), the Company does not have outstanding any securities convertible
into capital stock, nor any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock or securities convertible into its
capital stock. Excluding rights granted to holders of outstanding Preferred
Stock, which Preferred Stock will be redeemed in connection with this
transaction, the Company has granted registration rights to holders of
securities presently exercisable for or convertible into _______ shares of
Common Stock, which rights have not yet been exercised.
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(iii) The Company is not a party to, and has no knowledge of,
any agreement restricting the voting of its Common Stock. No shares of Common
Stock are entitled to preemptive rights.
(h) COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, during the past three (3) years,
the Company has timely filed (or with respect to the proxy statement for the
Annual Meeting, will timely file) all reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and Exchange
Commission (the "Commission") pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act (all of the foregoing including filings incorporated by reference
therein being referred to herein as the "Commission Documents"). The Company
presently meets the eligibility requirements to file a registration statement on
Form S-3 with the Commission with respect to secondary offerings of its Common
Stock. The Company has delivered or made available to the Purchaser true and
complete copies of the Commission Documents filed with the Commission since
September 30, 1996. As of its filing date, and assuming that the Company files
the proxy statement in connection with its Annual Meeting with the Commission on
a timely basis, the Form 10-K complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and, as of its filing date, the Form 10-K did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Commission
Documents comply as to form in all material respects with the published rules
and regulations of the Commission. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be otherwise
indicated in such financial statements or the notes thereto) and fairly present
in all material respects the financial position of the Company and its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended.
(i) ACTIONS PENDING. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as disclosed in the Commission Documents, there is no
action, suit, claim, investigation or proceeding pending or, to the knowledge of
the Company, threatened, against or involving the Company, any subsidiary of the
Company or any of their respective properties or assets that would have a
Material Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any subsidiary that would have a Material
Adverse Effect.
(j) TAXES. The Company and each of the subsidiaries has accurately
prepared and filed all Federal, state and other tax returns required by law,
domestic and foreign, to be filed by it, has paid or made provisions for the
payment of all taxes shown to be due and all additional
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assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the subsidiaries of the Company for all
current taxes and other charges to which the Company or any subsidiary of the
Company is subject and which are not currently due and payable except where the
failure to prepare and file such tax returns or the failure to pay or make
provision for the payment of all such taxes could not reasonably result in a
Material Adverse Effect. None of the Federal income tax returns of the Company
or any subsidiary of the Company, since their respective organization, have been
audited by the Internal Revenue Service or other foreign governmental tax
agency. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) pending or threatened
against the Company or any subsidiary of the Company for any period that would
have a Material Adverse Effect, nor of any basis for any such assessment,
adjustment or contingency.
(k) DISCLOSURE. To the best of the Company's knowledge, neither this
Agreement nor any of the Commission Documents furnished to the Purchaser by or
on behalf of the Company in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under and at the time at which they
were made herein or therein, not misleading.
(l) SECURITIES ACT OF 1933. The Company has complied and will comply
with all applicable Federal and state securities laws in connection with the
offer, issuance and sale of the Series B Stock and Convertible Debentures
hereunder in order that the issuance and sale of the Series B Stock and
Convertible Debentures will not be subject to the registration provisions of the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws. Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Series B Stock and Convertible
Debentures.
(m) GOVERNMENTAL APPROVALS. Except for the filing of any notice prior
or subsequent to the consummation of the transactions contemplated hereby that
may be required under applicable state and/or Federal securities laws and/or
other applicable laws of territories in which the Company conducts business
(which if required, shall be filed on a timely basis), including the filing of a
registration statement or statements pursuant to this Agreement, no
authorization, consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the delivery of the Series B Stock and Convertible Debentures,
or for the performance by the Company of its obligations under this Agreement.
(n) USE OF PROCEEDS. The net proceeds from the sale of the Series B
Stock and Debentures will be used by the Company and its subsidiaries toward the
purchase of a cruise ship.
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(o) ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in the
Commission Documents, since September 30, 1999, neither the Company nor any
subsidiary has:
(i) sold, assigned or transferred any tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(ii) suffered any losses or waived any rights of value,
whether or not in the ordinary course of business, which would result in a
Material Adverse Effect;
(iii) experienced any problems with labor or management in
connection with the terms and conditions of their employment, which would result
in a Material Adverse Effect;
(iv) entered into any agreements with its officers, directors
or significant shareholders that would be required to be disclosed in the Form
10-K if such agreement had been entered into prior to September 30, 1999;
(v) to the knowledge of the Company, incurred any liabilities,
indebtedness (except as described herein), obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would have a Material Adverse Effect;
(vi) to the knowledge of the Company, suffered an event or
circumstance with respect to the Company or its subsidiaries or their respective
businesses, properties, prospects, operations or financial condition, which is
reasonably likely to have a Material Adverse Effect;
(vii) committed to expend in excess of $1,000,000 for future
capital expenditures; or
(viii) conducted its business in violation of any applicable
Federal, state or local governmental law, rule, regulation or ordinance,
domestic or foreign, except where the conduct of such business in violation
thereof has not resulted in and is not reasonably likely to result in a Material
Adverse Effect.
5. PAYMENT OF DIVIDENDS. The Board of Directors shall declare cash
dividends on the Series B Stock at the end of each calendar quarter unless
prohibited by applicable law in which event such dividends shall accrue. Such
dividends shall be paid in accordance with the Preferred Stock Terms.
6. RESTRICTION ON SALES OF COMMON STOCK. Any holder of Series B Stock
and/or Convertible Debentures may not sell more than 25% of the maximum number
of Conversion Shares that it could receive upon conversion of all of its Series
B Stock and/or Convertible Debentures during any 90-day period, without the
Company's prior written consent. The number of Conversion Shares that may be
sold during any 90-day period shall be increased to
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50% of the maximum number of Conversion Shares that it could receive upon
conversion of all of its Series B Stock and/or Convertible Debentures if the
Company delivers a Notice of Conversion (as defined in the Preferred Stock Terms
and in the form of Debenture attached hereto as EXHIBIT "B") to the holders of
Series B Stock and/or Convertible Debentures.
7. NOTICES. All notices, reports and other communications to the
Purchaser or the Company hereunder shall be in writing, shall refer specifically
to this Agreement and shall be hand delivered or sent by overnight courier,
facsimile transmission or by registered mail or certified mail, return receipt
requested, postage prepaid, in each case to the respective persons and addresses
specified below (or to such other persons or addresses as may be specified in
writing to the other party):
If to the Purchaser, to: ____________________________
____________________________
____________________________
Fax No.: ___________________
With Copy to: ____________________________
____________________________
____________________________
____________________________
____________________________
Fax: _______________________
If to the Company, to: Commodore Holdings Limited
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With Copy to: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. Deutsch, P.A.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or communication given in conformity with this Section shall
be deemed to be effective when received by the addressee if delivered by hand or
overnight courier or by facsimile (with confirmation of transmission), and three
days after mailing, if mailed.
8. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of the
Purchaser or the Company to exercise and no delay in exercising any right,
power, remedy or privilege under this Agreement or provided by statute or at law
or in equity or otherwise, including, without limitation, the right or power to
terminate this Agreement, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a waiver of any breach
of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
9. AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision(s) intended to be
amended, modified, waived, terminated or discharged and signed by the Purchaser
and the Company, and each amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Purchaser and the Company.
10. INTEGRATION. This Agreement, including any Exhibits hereto,
represents the entire understanding and agreement of the parties with respect to
the subject matter hereof. No other representations, statements or warranties
have been made, other than what is written herein.
11. COSTS OF PARTIES; ATTORNEYS' FEES. The Company shall bear its own
costs and up to $10,000 of costs of the Purchaser in connection with this
Agreement and the transactions contemplated hereby. Except as otherwise set
forth herein, all costs and expenses, including reasonable attorneys' fees,
incurred in the enforcement of this Agreement (including enforcement based on a
breach of a representation or warranty contained herein or any claim of a third
party resulting from a breach of this Agreement or as a result of the Company
entering into the transactions contemplated by this Agreement), shall be paid to
the prevailing party by the non-prevailing party, upon demand.
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12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
13. GOVERNING LAW. This Agreement shall be enforced, governed and
construed in all respects in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of New York.
14. BROKERS. Each Purchaser represents to the Company that he has not
employed or dealt with any broker, agent or finder in respect of the
transactions provided for herein. The Company acknowledges that it has dealt
with such a broker, agent or finder in respect of the transactions provided for
herein and that it shall be solely responsible for compensating such person.
Each party hereto agrees to indemnify and hold harmless the other party hereto
from and against all fees, in any way resulting from any contract or
understanding existing between the indemnifying party and such broker, agent or
finder.
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IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Agreement as of the date first written above.
COMPANY:
COMMODORE HOLDINGS LIMITED
By:
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: CHAIRMAN OF THE BOARD
----------------------------
PURCHASERS:
Number of Shares of
Series B Stock Purchased: By:
________________________ -------------------------------
Name:
-----------------------------
Face Value of Convertible Debentures
Purchased:
________________________
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EXHIBIT A
SERIES B PREFERRED STOCK TERMS
COMMODORE HOLDINGS LIMITED
SERIES B CONVERTIBLE PREFERRED STOCK
RIGHTS, PREFERENCES & LIMITATIONS
The Series B Convertible Preferred Stock (the "Series B Preferred Stock") shall
have the following rights, preferences and limitations:
1. DIVIDENDS. The holders of the Series B Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
funds of Commodore Holdings Limited (the "Company") legally available therefor,
cash dividends at the rate of 11% per annum and no more, payable quarterly at
the end of each calendar quarter. Such cash dividends on Series B Preferred
Stock shall be cumulative so that, if for any quarter cash dividends at the
specified rate shall not have been declared and paid or set apart for payment on
the Series B Preferred Stock outstanding, the deficiency shall be declared and
paid or set apart for payment prior to the making of any dividend or other
distribution on the Company's common stock, par value $0.01 per share (the
"Common Stock"). Cash dividends on Series B Preferred Stock shall accrue from
the date of issue of such Series B Preferred Stock. Upon the payment of all
dividends, current and accumulated, at the specified rate upon the outstanding
Series B Preferred Stock, the Directors of the Company may declare and pay
dividends upon the Common Stock.
2. CONVERSION.
(a) VOLUNTARY CONVERSION. Each share of Series B Preferred Stock shall
be convertible into a number of shares of Common Stock (the "Conversion Shares")
based upon a conversion price per share of Common Stock of $4.0625 (the
"Conversion Price"). Unless a holder of Series B Preferred Stock and the Company
agree otherwise or unless there is a "Change of Control" (as hereinafter
defined), the Series B Preferred Stock shall become convertible at any time
commencing twelve (12) months after the date of issuance. If a Change of Control
occurs or is contemplated, the Series B Preferred Stock shall become convertible
just prior to the consummation of the Change of Control. A "Change of Control"
shall have occurred if: (i) any "person" within the meaning of Section 14(d) of
the Securities Exchange Act of 1934 becomes the owner, directly or indirectly,
of more than 30% of the Company's outstanding Common Stock (excluding warrants,
options or other securities convertible into or exercisable for Common Stock);
or (ii) the Company's stockholders have approved the sale of all or
substantially all of the assets of the Company.
Conversion shall be effective on the third business day following the
receipt by the Company of the Notice of Conversion (as hereafter defined) from
the holder of the Series B Preferred Stock, together with the original stock
certificate evidencing the Series B Preferred Stock, executed stock powers and
signatures guaranteed.
(b) MANDATORY CONVERSION. Unless a holder of Series B Preferred Stock
and the Company agree otherwise, at any time after the Company files a
registration statement with the Securities and Exchange Commission ("SEC") with
respect to the sale of the Conversion Shares and such registration statement has
been declared effective by the SEC, the Company shall have the right to force
conversion of up to twenty-five percent (25%) of the shares of the Series B
Preferred Stock during any ninety (90) day period at the Conversion Price if at
any time the
closing bid price of the Company's Common Stock on The Nasdaq Stock Market
equals or exceeds 150% of the Conversion Price per share for any ten (10)
consecutive trading days (a "Conversion Trigger Date"). For a period of ten (10)
business days after the Conversion Trigger Date, the Company shall have the
right to deliver to any or all of the holders of Series B Preferred Stock a
Notice of Conversion, which states that the Company has elected to exercise its
right to demand conversion of the number of shares of Series B Preferred Stock
into Common Stock as set forth in such Notice of Conversion. The Notice of
Conversion shall state the date that the conversion shall be effective (the
"Conversion Date"), which shall not be earlier than the date the Notice of
Conversion is delivered to the holders of the Series B Preferred Stock.
(c) ANTI-DILUTION ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price
provided for herein shall be subject to the following adjustments:
(i) If the Company shall declare and pay to the holders of the
shares of Common Stock a dividend in shares of Common Stock, the Conversion
Price in effect immediately prior to the date fixed for the determination of
shareholders entitled to such dividends shall be proportionately decreased
(adjusted to the nearest 1/1,000 of a share of Common Stock), such adjustment to
become effective immediately after the date fixed for such determination.
(ii) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares of Common Stock or combine the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such subdivision or
combination, as the case may be, shall be proportionately decreased or increased
(adjusted to the nearest 1/1,000 of a share of Common Stock), as the case may
require, such decrease or increase, as the case may be, to become effective when
such subdivision or combination becomes effective.
(iii) In the case of any reclassification or change of
outstanding shares of Common Stock issuable upon the conversion of the Series B
Preferred Stock, or in the case of any consolidation or merger of the Company
with or into another corporation, or in the case of any sale or conveyance to
another corporation of all or substantially all of the property of the Company,
the holder of each share of Series B Preferred Stock then outstanding shall have
the right thereafter, so long as such holder's conversion right hereunder shall
exist, to convert such Series B Preferred Stock into the same kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock of the Company into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions; PROVIDED, HOWEVER, that
effective provision(s) shall be made, in the Articles or Certificate of
Incorporation of the resulting, surviving or successor corporation or otherwise,
so that the provisions set forth herein for the protection of the conversion
rights of the shares of Series B Preferred Stock shall thereafter become
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding or other convertible preferred
shares receivable by the holders in place thereof; and provided, further, that
any such resulting, surviving, or successor corporations shall expressly assume
the
2
obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities, or property as the holders of the shares of Series B
Preferred Stock remaining outstanding, or other convertible preferred shares
receivable by the holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provisions for the protection of
the conversion right as above provided.
In case securities or property other than shares of Common
Stock shall be issuable or deliverable upon the conversion as aforesaid, then
all references in this section shall be deemed to apply, so far as appropriate
and as nearly as may be, to such other securities or property. The subdivision
or combination of shares of Common Stock at any time outstanding into a greater
or lesser number of shares of Common Stock (whether with or without par value)
shall not be deemed to be a reclassification of the Common Stock of the Company
for the purposes of this subsection (iii).
(iv) If at any time after the date hereof the Company shall
issue shares of Common Stock or rights, options or warrants or convertible or
exchangeable securities containing the right to subscribe for shares of Common
Stock (collectively the "Securities") for a consideration per share (the
"Issuance Price") less than the Conversion Price in effect immediately prior to
the issuance of such Securities, the Conversion Price shall be reduced to the
price determined by multiplying the Conversion Price then in effect by a
fraction (a) the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to the issuance of the Securities,
and (ii) the number of shares of Common Stock underlying the Securities
multiplied by the consideration per share received (or in the case of warrants
or options, the exercise price to be received) by the Company for the Securities
divided by the Conversion Price then in effect, and (b) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
issuance; provided, however, that if the Company issues an aggregate number of
Securities equal to or exceeding 100,000 shares of Common Stock (or rights to
receive upon exercise or conversion at least 100,000 shares of Common Stock)
after the date hereof, which Securities are issued, exercisable, or convertible
for less than the Conversion Price, the Conversion Price with respect to all
shares of Series B Preferred Stock shall be reduced to the Issuance Price.
Except as provided in the foregoing subsections (i-iv), there
shall be no adjustments to the Conversion Price received upon conversion set
forth above.
(d) NOTICE OF CONVERSION. In order to convert Series B Preferred Stock
into Common Stock, the holder or the Company, as the case may be, must deliver a
notice of conversion (the "Notice of Conversion"), in the form attached hereto.
Notices of Conversion shall be deemed delivered on the date sent, if personally
delivered or sent by facsimile (with confirmation of transmission) to the
address of record for each holder, or, if sent to the Company, to the Company's
Chief Executive Officer at the Company's principal place of business, or when
actually received if sent by another method. The Notice of Conversion, if sent
by a holder of Series B Preferred Stock, shall be accompanied by a facsimile
(which shall be followed by an original within one (1) business day) or original
certificate evidencing the Series B Preferred Stock to be converted.
3
(e) CONVERSION PROCEDURE. The Company shall use its reasonable best
efforts to cause its transfer agent to issue the Common Stock within three (3)
business days after the Company receives a fully executed Notice of Conversion
and original certificates for the Series B Preferred Stock with executed stock
powers and signatures guaranteed. The Company shall bear the cost associated
with the issuance of the Common Stock. The Common Stock shall be issued with a
restrictive legend indicating that it was issued in a transaction which is
exempt from registration under the Securities Act of 1933, as amended, and that
it cannot be transferred unless it is so registered, or an exemption from
registration is available, in the opinion of counsel to the Company. The Common
Stock shall be issued in the same name as the person who is the holder of the
Series B Preferred Stock unless, in the opinion of counsel to the Company, such
transfer can be made in compliance with applicable securities laws. The person
in whose name the certificates of Common Stock are so registered shall be
treated as a common stockholder of the Company on the date the Common Stock
certificates are so issued. With respect to Mandatory Conversion, each holder of
Series B Preferred Stock shall deliver to the Company the appropriate number of
shares of Series B Preferred Stock promptly after the Company's delivery of the
Notice of Conversion, together with executed stock powers with signatures
guaranteed. In the event a holder of Series B Preferred Stock fails to deliver
shares of Series B Preferred Stock after the Company's delivery of the Notice of
Conversion, such shares of Series B Preferred Stock shall be deemed to have been
converted into Common Stock at the Conversion Price on the Conversion Date and
shall be issued and held by the Company until the appropriate certificates for
Series B Preferred Stock are presented for cancellation with executed stock
powers and signatures guaranteed. The certificates representing the Series B
Preferred Stock shall be cancelled, as reflected in the records of the Company
on the date of issuance of the Common Stock.
3. RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all then outstanding
shares of Series B Preferred Stock, the sufficiency of which shall be determined
by using the Conversion Price.
4. NO PREEMPTIVE RIGHTS. No holder of the Series B Preferred Stock
shall be entitled, as a right, to purchase or subscribe for any part of the
unissued capital stock of the Company, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities convertible
into or carrying options or warrants to purchase stock or other securities of
the Company or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of Bermuda.
5. NO VOTING RIGHTS. Holders of Series B Preferred Stock shall not have
voting rights.
6. LIQUIDATION PREFERENCE. Series B Preferred Stock shall have a
liquidation preference equal to $10.00 per share of Series B Preferred Stock
plus accrued and unpaid dividends.
7. NO FRACTIONAL SHARES. The Series B Preferred Stock shall not be
converted into fractions of a share and, where applicable, will be rounded to
the nearest whole number of shares upon conversion into Common Stock.
4
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the registered Holder in order to convert Series B Preferred
Stock)
The undersigned hereby irrevocably elects to convert _______ shares of Series B
Preferred Stock into shares of Common Stock of COMMODORE HOLDINGS LIMITED (the
"Company") according to the rights, preferences and limitations of the Series B
Preferred Stock, as of the date written below.
Date of Conversion: *
---------------------------
Signature:
------------------------------------
Name:
-----------------------------------------
Signature Guarantee:
--------------------------
Address:
--------------------------------------
----------------------------------------------
Social Security No.
---------------------------
*The Conversion Date shall be the third business day following the Company's
receipt of the original stock certificate evidencing the Series B Preferred
Stock with executed stock powers and signatures guaranteed and the Notice of
Conversion or, in the case of a Mandatory Conversion, the date set forth in the
Notice of Conversion.
EXHIBIT B
FORM OF DEBENTURE
8
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER
THE SECURITIES LAWS OF ANY STATE OR FOREIGN COUNTRY. THE
SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT
BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT IF SUCH
TRANSACTION IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR IF SUCH
TRANSACTION IS EXEMPT FROM SUCH REGISTRATION, AS CONFIRMED
BY AN OPINION OF COUNSEL TO THE COMPANY.
No. D-_ US $_________
COMMODORE HOLDINGS LIMITED
11% CONVERTIBLE SUBORDINATED DEBENTURE DUE __________, 2006
FOR VALUE RECEIVED, COMMODORE HOLDINGS LIMITED, a Bermuda corporation
(the "Company"), promises to pay to ____________________________, the registered
Holder hereof (the "Holder"), the principal sum of ____________________ on
__________, 2006 (the "Maturity Date") and to pay interest on the principal sum
outstanding, in arrears, at the end of each calendar quarter, beginning on March
31, 2000, at the rate of 11% per annum, accruing from the date on which the
Company receives the principal amount of this Debenture in cleared funds.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Accrual of interest shall commence on the first such business day
to occur after the date on which the Company receives the principal amount of
this Debenture in cleared funds and continue until payment in full of the
principal sum has been made in cash or this Debenture is converted as provided
herein. Subject to the provisions of Section 4 below, interest on this Debenture
is payable in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. The
Company shall pay the principal of and interest upon this Debenture, less any
amounts required by law to be deducted, to the Holder of this Debenture at the
address of such Holder which is the last address appearing on the Debenture
Register of the Company for such Holder. The forwarding of such payment shall
constitute a payment of principal and/or interest, as the case may be, hereunder
and shall satisfy and discharge the liability for principal and/or interest, as
the case may be, on this Debenture to the extent of the sum represented by such
payment plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. EXCHANGE. This Debenture is exchangeable only at the office of the
Company by the surrender thereof for cancellation, and upon payment of any stamp
tax or other governmental charge connected with the exchange for Debenture
certificates representing an equal aggregate principal amount but issued in
different authorized denominations, as requested by the Holder surrendering the
same in denominations of $100,000 or multiples thereof.
2. WITHHOLDING. The Company shall be entitled to withhold from all
payments of principal of and interest on this Debenture any amounts required to
be withheld under the applicable provisions of the United States income tax laws
or other applicable laws at the time of such payments, and the Holder shall
execute and deliver all required documentation in connection therewith.
3. RESTRICTIONS ON TRANSFER. This Debenture has been issued subject to
investment representations of the original purchaser hereof and may be
transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and other applicable state and foreign
securities laws. In the event of any proposed transfer of this Debenture, the
Company may require, prior to issuance of a new Debenture in the name of such
other person, that it receive reasonable transfer documentation including
opinions of counsel that the issuance of the Debenture in such other name does
not and will not cause a violation of the Securities Act or any applicable state
or foreign securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
4. INTEREST RATE. The Company shall pay the Holder interest at the rate
of 11% per annum, payable quarterly in arrears, and at maturity together with
principal.
5. CONVERSION.
A. VOLUNTARY CONVERSION. The Holder of this Debenture is entitled to
convert the face value of this Debenture or any portion thereof into a number of
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), based upon a conversion price per share of Common Stock of $4.0625 (the
"Conversion Price"). Unless the Holder of this Debenture and the Company agree
otherwise or unless there is a "Change of Control" (as hereinafter defined),
this Debenture shall become convertible at any time commencing twelve (12)
months after the date of issuance. If a Change of Control occurs or is
contemplated, this Debenture shall become convertible just prior to the
consummation of the Change of Control. A "Change of Control" shall have occurred
if: (i) any "person" within the meaning of Section 14(d) of the Securities
Exchange Act of 1934 becomes the owner, directly or indirectly, of more than 30%
of the Company's outstanding Common Stock (excluding warrants, options or other
securities convertible into or exercisable for Common Stock); or (ii) the
Company's stockholders have approved the sale of all or substantially all of the
assets of the Company.
B. MANDATORY CONVERSION. Unless a Holder of this Debenture and the
Company agree otherwise, at any time after the Company files a registration
statement with the Securities and Exchange Commission ("SEC") with respect to
the sale of the shares of Common Stock issuable upon conversion of this
Debenture (the "Conversion Shares") and such registration statement has been
declared effective by the SEC, the Company shall have the right to force
conversion of up to twenty-five percent (25%) of the face value of this
Debenture during any ninety (90) day period at the Conversion Price if at any
time the closing bid price of the Company's Common Stock as quoted on The Nasdaq
Stock Market equals or exceeds 150% of
2
the Conversion Price per share for any ten (10) consecutive trading days (a
"Conversion Trigger Date"). For a period of ten (10) business days after the
Conversion Trigger Date, the Company shall have the right to deliver to any or
all of the Holders of the Debentures a notice of conversion (the "Company's
Notice of Conversion"), which states that the Company has elected to exercise
its right to demand conversion of the face value of the Debentures into Common
Stock as set forth in such Company's Notice of Conversion. The Company's Notice
of Conversion shall state the date that the conversion shall be effective, which
shall not be earlier than the date the Company's Notice of Conversion is
delivered to the Holders of the Debentures.
C. ANTI-DILUTION ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price
provided for herein shall be subject to the following adjustments:
(i) If the Company shall declare and pay to the holders of the
shares of Common Stock a dividend in shares of Common Stock, the Conversion
Price in effect immediately prior to the date fixed for the determination of
shareholders entitled to such dividends shall be proportionately decreased
(adjusted to the nearest 1/1,000 of a share of Common Stock), such adjustment to
become effective immediately after the date fixed for such determination.
(ii) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares of Common Stock or combine the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such subdivision or
combination, as the case may be, shall be proportionately decreased or increased
(adjusted to the nearest 1/1,000 of a share of Common Stock), as the case may
require, such decrease or increase, as the case may be, to become effective when
such subdivision or combination becomes effective.
(iii) In the case of any reclassification or change of
outstanding shares of Common Stock issuable upon the conversion of the Series B
Preferred Stock, or in the case of any consolidation or merger of the Company
with or into another corporation, or in the case of any sale or conveyance to
another corporation of all or substantially all of the property of the Company,
the holder of each share of Series B Preferred Stock then outstanding shall have
the right thereafter, so long as such holder's conversion right hereunder shall
exist, to convert such Series B Preferred Stock into the same kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock of the Company into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions; PROVIDED, HOWEVER, that
effective provision(s) shall be made, in the Articles or Certificate of
Incorporation of the resulting, surviving or successor corporation or otherwise,
so that the provisions set forth herein for the protection of the conversion
rights of the shares of Series B Preferred Stock shall thereafter become
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding or other convertible preferred
shares receivable by the holders in place thereof; and provided, further, that
any such resulting, surviving, or successor corporations shall expressly assume
the obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities, or property as the holders of the shares of Series B
Preferred Stock remaining outstanding, or other
3
convertible preferred shares receivable by the holders in place thereof, shall
be entitled to receive pursuant to the provisions hereof, and to make provisions
for the protection of the conversion right as above provided.
In case securities or property other than shares of Common Stock shall
be issuable or deliverable upon the conversion as aforesaid, then all references
in this section shall be deemed to apply, so far as appropriate and as nearly as
may be, to such other securities or property. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the Company for the
purposes of this subsection (iii).
(iv) If at any time after the date hereof the Company shall
issue shares of Common Stock or rights, options or warrants or convertible or
exchangeable securities containing the right to subscribe for shares of Common
Stock (collectively the "Securities") for a consideration per share (the
"Issuance Price") less than the Conversion Price in effect immediately prior to
the issuance of such Securities, the Conversion Price shall be reduced to the
price determined by multiplying the Conversion Price then in effect by a
fraction (a) the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to the issuance of the Securities,
and (ii) the number of shares of Common Stock underlying the Securities
multiplied by the consideration per share received (or in the case of warrants
or options, the exercise price to be received) by the Company for the Securities
divided by the Conversion Price then in effect, and (b) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
issuance; provided, however, that if the Company issues an aggregate number of
Securities equal to or exceeding 100,000 shares of Common Stock (or rights to
receive upon exercise or conversion at least 100,000 shares of Common Stock),
after the date hereof, which Securities are issued, exercisable or convertible
for less than the Conversion Price, the Conversion Price with respect to all
shares of Series B Preferred Stock shall be reduced to the Issuance Price.
Except as provided in the foregoing subsections (i-iv), there shall be
no adjustments to the Conversion Price received upon conversion set forth above.
D. NOTICE OF CONVERSION. In order to convert the Debenture into Common
Stock, the Holder or the Company, as the case may be, must deliver a notice of
conversion (the "Notice of Conversion"), in the form attached hereto. Notices of
Conversion shall be deemed delivered on the date sent, if personally delivered
or sent by facsimile (with confirmation of transmission) to the address of
record for each Holder, or, if sent to the Company, to the Company's Chief
Executive Officer at the Company's principal place of business, or when actually
received if sent by another method. The Notice of Conversion, if sent by a
Holder of this Debenture, shall be accompanied by a facsimile (which shall be
followed by an original within one (1) business day) or original certificate
evidencing the Debenture to be converted.
E. CONVERSION PROCEDURE. The Company shall use its reasonable best
efforts to cause its transfer agent to issue the Common Stock within three (3)
business days after the Company receives a fully executed Notice of Conversion
and original certificates for the Debenture. The Company shall bear the cost
associated with the issuance of the Common Stock. The Common Stock shall be
issued with a restrictive legend indicating that it was issued in a
4
transaction which is exempt from registration under the Securities Act of 1933,
as amended, and that it cannot be transferred unless it is so registered, or an
exemption from registration is available, in the opinion of counsel to the
Company. The Common Stock shall be issued in the same name as the person who is
the Holder of this Debenture unless, in the opinion of counsel to the Company,
such transfer can be made in compliance with applicable securities laws. The
person in whose name the certificates of Common Stock are so registered shall be
treated as a common stockholder of the Company on the date the Common Stock
certificates are so issued. With respect to Mandatory Conversion, each Holder of
a Debenture shall deliver to the Company the appropriate Debenture promptly
after the Company's delivery of the Notice of Conversion. In the event a Holder
of a Debenture fails to deliver the Debenture after the Company's delivery of
the Notice of Conversion, such Debenture shall be deemed to have been converted
into Common Stock at the Conversion Price on the Conversion Date and shall be
issued and held by the Company until the appropriate certificates for the
Debentures are presented for cancellation. The certificates representing the
Debenture shall be cancelled, as reflected in the records of the Company on the
date of issuance of the Common Stock.
6. RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all then outstanding
Debentures, the sufficiency of which shall be determined by using the Conversion
Price.
7. SUBORDINATION. The Debenture shall be subordinated in right of
payment to all existing and future debt of the Company, whether secured or
unsecured, and any deferrals, renewals or extensions of such indebtedness, or
any debentures, bonds, or notes evidencing such indebtedness. This Debenture
will also be subordinate to any debt securities that the Company may issue in
the future.
8. UNSECURED OBLIGATION. This Debenture shall be unsecured. The Holder
shall have no recourse against any specific assets of the Company in the event
of nonpayment of the Debenture.
9. DIRECT OBLIGATION. Subject to prior conversion, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and interest on, this Debenture at
the time, place, and rate, and in the manner herein prescribed. This Debenture
is a direct obligation of the Company.
10. INVESTMENT REPRESENTATIONS. The Holder of the Debenture, by
acceptance hereof, represents that the Holder is an "accredited investor" as
defined in the Securities Act and the rules promulgated thereunder, and agrees
that this Debenture is being acquired for investment and not with a view to the
distribution thereof, and that such Holder will not offer, sell or otherwise
dispose of this Debenture or the shares of Common Stock issuable upon conversion
thereof except under circumstances which will not result in a violation of the
Securities Act or any applicable state "blue sky" laws or similar state or
foreign laws relating to the sale of securities. Unless the issuance of the
shares of Common Stock issuable upon conversion of this Debenture shall have
been registered under the Securities Act, the Holder of this Debenture, by
tendering notice to the Company of the Holder's intent to convert all or part of
this Debenture pursuant to Section 4A hereof, shall be deemed to represent to
the Company that the Holder is
5
acquiring such shares of Common Stock for investment and not with a view to the
distribution thereof.
11. GOVERNING LAW; JURISDICTION. This Debenture shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of New York County, New York or the state courts of the State
of New York sitting in New York County in connection with any dispute arising
under this Debenture and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions.
12. DEFAULT. Each of the following shall constitute an "Event of
Default":
a. the Company fails to pay any interest on this Debenture when
it is due and payable, and the failure continues for a period
of ten (10) days;
b. the Company fails to pay the principal of this Debenture at
its maturity;
c. the Company commences any voluntary proceeding under any
bankruptcy, reorganization, insolvency, readjustment of debt,
receivership, dissolution, or liquidation law or statute, of
any jurisdiction, whether now or subsequently in effect; or
the Company is adjudicated insolvent or bankrupt by a court of
competent jurisdiction; or the Company petitions or applies
for, acquiesces in, or consents to, the appointment of any
receiver or trustee of the Company or for all or substantially
all of its property or assets; or the Company makes an
assignment for the benefit of its creditors; or the Company
admits in writing its inability to pay its debts as they
mature;
d. there is commenced against the Company any proceeding relating
to the Company under any bankruptcy, reorganization,
insolvency, readjustment of debt, receivership, dissolution,
or liquidation law or statute, of any jurisdiction, whether
now or subsequently in effect, and the proceeding remains
undismissed for a period of ninety (90) days or the Company by
any act indicates its consent to, approval of, or acquiescence
in, the proceedings; or a receiver or trustee is appointed for
the Company or for all or substantially all of its property or
assets, and the receivership or trusteeship remains
undischarged for a period of ninety (90) days; or a warrant of
attachment, execution or similar process is issued against any
substantial part of the property or assets of the Company, and
the warrant or similar process is not dismissed or bonded
within ninety (90) days after the levy;
e. any of the representations or warranties made by the Company
herein, or in the purchase agreement between the Company and
the Holder of even date herewith (the "Purchase Agreement"),
shall be false or misleading in any material respect;
f. the Company shall fail to perform or observe, in any material
respect, any covenant, term, provision, condition, agreement
or obligation of the Company
6
under this Debenture, or the Purchase Agreement and such
failure shall continue uncured for a period of thirty (30)
days after notice from the Purchaser of such failure and
failure of the Company to cure such deficiency;
g. any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or substantially all of the
properties or assets of the Company;
h. the Company shall have its Common Stock delisted from the
Nasdaq Stock Market or other market or exchange on which the
Common Stock is or becomes listed or trading in the Common
Stock shall be suspended for more than ten (10) consecutive
days, and the Company fails to cause the Common Stock to
commence trading on another market or exchange within ten (10)
days after such delisting or suspension;
i. (i) the Company has filed a Registration Statement (the
"Registration Statement") in accordance with the Registration
Rights Agreement between the Company and the Holder of even
date herewith (the "Registration Rights Agreement"); (ii) the
Company has filed the Registration Statement on Form S-3 based
upon the Purchaser's demand for registration pursuant to the
Registration Rights Agreement; (iii) the Registration
Statement has been declared effective by the Securities and
Exchange Commission; and (iv) the Company has failed to
deliver to the Purchaser certificates for Common Stock (the
"Certificates") pursuant to Section 5(E) herein or pursuant to
Section 2(e) of the Series B Convertible Preferred Stock
Rights, Preferences and Limitations of the Company, as amended
on January 5, 2000, within five (5) business days after the
Company receives a fully executed Notice of Conversion and the
original certificates for either the Debenture or the Holder's
Series B Convertible Preferred Stock of the Company with
Holder's signature thereon medallion guaranteed, as the case
may be, which Certificates are free from any legend relating
to limitations on transferability under the Securities Act of
1933, as amended; or
j. the Company does not file the Registration Statement in
accordance with the Registration Rights Agreement between the
Company and the Holder.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default), at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
13. NO RIGHTS OF A SHAREHOLDER. Nothing contained in this Debenture
shall be construed as conferring upon the Holder the right to vote or to receive
dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights
7
whatsoever as a shareholder of the Company, unless and to the extent this
Debenture is converted in accordance with the terms hereof.
14. COLLECTION COSTS. In the event an Event of Default has occurred and
has not been waived by Holder, the Holder shall be entitled to collect from the
Company all costs and expenses incurred by Holder in enforcing its rights
hereunder, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Effective as of the ___ COMMODORE HOLDINGS LIMITED
day of _______, 2000
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: CHAIRMAN OF THE BOARD
----------------------------
8
AFFIDAVIT FOR EXECUTION OF DEBENTURE
OUTSIDE OF THE STATE OF FLORIDA
STATE OF __________)
) ss:
COUNTY OF _________)
BEFORE ME, the undersigned Notary Public, duly authorized in the County
and State aforesaid to administer oaths and take acknowledgments, personally
appeared the undersigned witnesses, to me known to be the persons described as
witnesses to the foregoing Debenture and who witnessed the execution of the
foregoing Debenture, and who, first being duly sworn by me did each depose, say
and acknowledge before me that they were present at the time that the said
Debenture was executed, that they saw the same executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, of
COMMODORE HOLDINGS LIMITED, and that they saw the delivery of the Debenture on
this date to the Holder in the state and county above-referenced.
_________________________________________________
Subscribing Witness
Print Name:______________________________________
Address:_________________________________________
_________________________________________________
_________________________________________________
Subscribing Witness
Print Name:______________________________________
Address:_________________________________________
_________________________________________________
SWORN TO AND SUBSCRIBED before me and acknowledged to me this ___ day
of _____________,.
_________________________________________________
(Signature of Notary Public)
_________________________________________________
(Typed, printed or stamped name of Notary Public)
Notary Public, State of _________________________
Commission No.:
My commission expires:
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the registered Holder in order to convert the Debenture)
The undersigned hereby irrevocably elects to convert $__________ of the
principal amount of the above Debenture No. ______ into shares of Common Stock
of COMMODORE HOLDINGS LIMITED (the "Company") according to the conditions
hereof, as of the date written below.
Date of Conversion* ____________________________________________________________
Signature ______________________________________________________________________
Name ___________________________________________________________________________
Social Security No. ____________________________________________________________
Signature Guarantee ____________________________________________________________
Address ________________________________________________________________________
* The Conversion Date shall be the third business day following the
Company's receipt of the original certificate evidencing the Debenture
and the Notice of Conversion or, in the case of a Mandatory Conversion,
the date set forth in the Notice of Conversion.