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EXHIBIT 4.2
[FORM OF SENIOR CONVERTIBLE NOTE]
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. ANY
TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTIONS 3(c)(III) AND 16
HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY
THIS NOTE AND, ACCORDINGLY, THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF
MAY BE LESS THAN THE AMOUNTS SET
FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 3(c)(III) OF THIS NOTE. UNLESS
PERMITTED UNDER CANADIAN SECURITIES
LEGISLATION, THE HOLDER OF THESE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE
AUGUST 16, 2005.
GOLDEN STAR RESOURCES LTD.
SENIOR CONVERTIBLE NOTE
Issuance Date: April 15, 2005
Principal: U.S. $50,000,000
FOR VALUE
RECEIVED, GOLDEN STAR RESOURCES LTD., a Canadian corporation
(the "COMPANY"), hereby promises to pay to
the order of AMARANTH LLC or its
registered assigns ("HOLDER") the amount
set out above as the Principal (as
reduced pursuant to the terms hereof
pursuant to redemption, conversion or
otherwise, the "PRINCIPAL") when due,
whether upon the Maturity Date (as defined
below), acceleration, redemption or
otherwise (in each case in accordance with
the terms hereof) and to pay interest
("INTEREST") on any outstanding Principal
at the rate of 6.85% per annum, subject to
adjustment pursuant to Section 2 (the
"INTEREST RATE"), from the date set out
above as the Issuance Date (the
"ISSUANCE DATE") until the same becomes due
and payable, whether upon an
Interest Date (as defined below), the
Maturity Date, acceleration, conversion,
redemption or otherwise (in each case in
accordance with the terms hereof). This
Senior Convertible Note (including all
Senior Convertible Notes issued in
exchange, transfer or replacement hereof,
this "NOTE") is one of an issue of
Senior Convertible Notes (collectively, the
"NOTES" and such other Senior
Convertible Notes, the
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"OTHER NOTES") issued on the Issuance Date
pursuant to
the Securities Purchase Agreement (as
defined below). Certain capitalized terms
are defined in Section 27.
(1) MATURITY. On
the Maturity Date, the Holder shall surrender
this Note to the Company and the Company
shall pay to the Holder an amount
representing all outstanding Principal,
accrued and unpaid Interest and accrued
and unpaid Late Charges, if any, in
accordance with Section 10 hereof. The
"MATURITY DATE" shall be April 15, 2009, as
may be extended at the option of the
Holder (i) in the event that, and for so
long as, an Event of Default (as
defined in Section 4(a)) shall have
occurred and be continuing or any event
shall have occurred and be continuing which
with the passage of time and the
failure to cure would result in an Event of
Default or (ii) through the date
that is ten days after the consummation of
a Change of Control in the event that
a Change of Control is publicly announced
or a Change of Control Notice (as
defined in Section 5(b)) is delivered prior
to the Maturity Date.
(2) INTEREST;
INTEREST RATE. Interest on this Note shall commence
accruing on the Issuance Date and shall be
computed on the basis of a 365-day
year and actual days elapsed and shall be
payable in arrears semi-annually on
each June 30 and December 31 and on the
Maturity Date during the period
beginning on the Issuance Date and ending
on, and including, the Maturity Date
(each, an "INTEREST DATE") with the first
Interest Date being June 30, 2005.
Interest shall be payable on each Interest
Date in cash. ]. From and after the
occurrence of an Event of Default, the
Interest Rate shall be increased to
twelve percent (12%). In the event that
such Event of Default is subsequently
cured, the adjustment referred to in the
preceding sentence shall cease to be
effective as of the date of such cure;
provided that the Interest as calculated
at such increased rate during the
continuance of such Event of Default shall
continue to apply to the extent relating to
the days after the occurrence of
such Event of Default through and including
the date of cure of such Event of
Default. For the avoidance of doubt, no
compensation or gross-up payment by the
Company will be made in respect of Canadian
withholding taxes on payments of
Interest to the Holder.
(3) CONVERSION
OF NOTES. This Note shall be convertible into
common shares of the Company, no par value
per share (the "COMMON STOCK"), on
the terms and conditions set forth in this
Section 3.
(a) Conversion
Right. Subject to the provisions of Section
3(d), at any time or times on or after the
Issuance Date, the Holder shall be
entitled to convert any portion of the
outstanding and unpaid Conversion Amount
(as defined below) into fully paid and
nonassessable shares of Common Stock in
accordance with Section 3(c), at the
Conversion Rate (as defined below). Upon
any conversion, the Company shall pay in
cash to the Holder any accrued and
unpaid Interest and Late Charges on such
Conversion Amount. The Company shall
not issue any fraction of a share of Common
Stock upon any conversion. If the
issuance would result in the issuance of a
fraction of a share of Common Stock,
the Company shall round such fraction of a
share of Common Stock to the nearest
whole share. The Company shall pay any and
all taxes that may be payable with
respect to the issuance and delivery of
Common Stock upon conversion of any
Conversion Amount.
(b) Conversion
Rate. The number of shares of Common Stock
issuable upon conversion of any Conversion
Amount pursuant to Section 3(a) shall
be
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determined by dividing (x) such Conversion
Amount by (y) the Conversion Price
(the "CONVERSION RATE").
(i)
"CONVERSION
AMOUNT" means the portion of the Principal to be
converted,
redeemed or otherwise with respect to which this determination
is being
made.
(ii)
"CONVERSION PRICE"
means, as of any Conversion Date (as defined
below) or
other date of determination, $4.50, subject to adjustment as
provided
herein.
(c) Mechanics of
Conversion.
(i)
Optional
Conversion. To convert any Conversion Amount into shares of
Common
Stock on any date (a "CONVERSION DATE"), the Holder shall (A)
transmit
by facsimile (or otherwise deliver), for receipt on or prior to
11:59
p.m., New York Time, on such date, a copy of an executed notice
of
conversion
in the form attached hereto as Exhibit I (the "CONVERSION
NOTICE")
to the Company and (B) if required by Section 3(c)(iii),
surrender
this Note to a common carrier for delivery to the Company as
soon as
practicable on or following such date (or an indemnification
undertaking with respect to this Note in the case of its loss,
theft or
destruction). On or before the second Business Day following the
date of
receipt of
a Conversion Notice, the Company shall transmit by facsimile a
confirmation of receipt of such Conversion Notice to the Holder and
the
Company's
transfer agent (the "TRANSFER AGENT"). On or before the third
Business
Day following the date of receipt of a Conversion Notice (the
"SHARE
DELIVERY DATE"), the Company shall (i) (X) credit such
aggregate
number of
shares of Common Stock to which the Holder shall be entitled to
the
Holder's or its designee's balance account with Depository
Trust
Company
("DTC") through its Deposit Withdrawal Agent Commission system
or
(Y) if the
Transfer Agent is not participating in the DTC Fast Automated
Securities
Transfer Program, (ii) issue and deliver to the address as
specified
in the Conversion Notice, a certificate, registered in the name
of the
Holder or its designee, for the number of shares of Common Stock
to
which the
Holder shall be entitled and (iii) deliver to the Holder an
amount of
cash equal to any accrued and unpaid Interest and Late Charges
on such
Conversion Amount. If this Note is physically surrendered for
conversion
as required by Section 3(c)(iii) and the outstanding Principal
of this
Note is greater than the Principal portion of the Conversion
Amount
being converted, then the Company shall as soon as practicable
and
in no
event later than three (3) Business Days after receipt of this
Note
and at its
own expense, issue and deliver to the Holder a new Note (in
accordance
with Section 17(d)) representing the outstanding Principal not
converted.
This Note or any portion thereof surrendered for conversion
shall
thereupon be deemed cancelled. The Person or Persons entitled
to
receive
the shares of Common Stock issuable upon a conversion of this
Note
shall be
treated for all purposes as the record holder or holders of
such
shares of
Common Stock on the Conversion Date.
(ii)
Company's Failure to
Timely Convert. If the Company shall fail to
issue a
certificate to the Holder or credit the Holder's balance
account
with DTC
for the number of shares of Common Stock to which the Holder is
entitled
upon conversion of any Conversion Amount on or prior to the
date
which is
five Business Days after the Conversion Date (a "CONVERSION
FAILURE"),
then (A) the Company shall pay damages to
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the Holder
for each day of such Conversion Failure in an amount equal to
1.0% of
the product of (I) the sum of the number of shares of Common
Stock
not issued
to the Holder on or prior to the Share Delivery Date and to
which the
Holder is entitled, and (II) the Closing Sale Price of the
Common
Stock on the Share Delivery Date and (B) the Holder, upon
written
notice to
the Company, may void its Conversion Notice with respect to,
and
retain or
have returned, as the case may be, any portion of this Note
that
has not
been converted pursuant to such Conversion Notice; provided
that
the
voiding of a Conversion Notice shall not affect the Company's
obligations to make any payments which have accrued prior to the
date of
such
notice pursuant to this Section 3(c)(ii) or otherwise. In addition
to
the
foregoing, if within three (3) Trading Days after the Company's
receipt of
the facsimile copy of a Conversion Notice the Company shall
fail to
issue and deliver a certificate to the Holder or credit the
Holder's
balance account with DTC for the number of shares of Common
Stock
to which
the Holder is entitled upon the Holder's conversion of any
Conversion
Amount, and if on or after such Trading Day the Holder
purchases
(in an open market transaction or otherwise) Common Stock to
deliver in
satisfaction of a sale by the Holder of Common Stock issuable
upon such
conversion that the Holder anticipated receiving from the
Company (a
"BUY-IN"), then the Company shall, within three (3) Business
Days after
the Holder's request and in the Holder's discretion, either (i)
pay cash
to the Holder in an amount equal to the Holder's total purchase
price
(including brokerage commissions and other out-of-pocket
expenses,
if any)
for the shares of Common Stock so purchased (the "BUY-IN
PRICE"),
at which
point the Company's obligation to deliver such certificate (and
to issue
such Common Stock) shall terminate, or (ii) promptly honor its
obligation
to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an
amount
equal to
the excess (if any) of the Buy-In Price over the product of (A)
such
number of shares of Common Stock times (B) the Closing Bid Price
on
the
Conversion Date.
(iii)
Book-Entry. Notwithstanding anything to the contrary set forth
herein,
upon conversion of any portion of this Note in accordance with
the
terms
hereof, the Holder shall not be required to physically
surrender
this Note
to the Company unless (A) the full Conversion Amount
represented
by this
Note is being converted or (B) the Holder has provided the
Company
with prior
written notice (which notice may be included in a Conversion
Notice)
requesting physical surrender and reissue of this Note. The
Holder
and the
Company shall maintain records showing the Principal, Interest
and
Late
Charges converted and the dates of such conversions or shall use
such
other
method, reasonably satisfactory to the Holder and the Company, so
as
not to
require physical surrender of this Note upon conversion.
(iv)
Pro Rata Conversion;
Disputes. In the event that the Company
receives a
Conversion Notice from more than one holder of Notes for the
same
Conversion Date and the Company can convert some, but not all,
of
such
portions of the Notes submitted for conversion, the Company,
subject
to Section
3(d), shall convert from each holder of Notes electing to have
Notes
converted on such date a pro rata amount of such holder's portion
of
its Notes
submitted for conversion based on the principal amount of Notes
submitted
for conversion on such date by such holder relative to the
aggregate
principal amount of all Notes submitted for conversion on such
date. In
the event of a dispute as to the number of shares of Common
Stock
issuable
to the Holder in connection with a
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conversion
of this Note, the Company shall issue to the Holder the number
of shares
of Common Stock not in dispute and resolve such dispute in
accordance
with Section 22.
(d) Limitations
on Conversions.
The Company shall not be obligated to issue any shares of
Common
Stock upon conversion of this Note if the
issuance of such shares of Common
Stock would exceed that number of shares of
Common Stock which the Company may
issue upon conversion of the Notes without
breaching the Company's obligations
under the rules or regulations of the
Principal Market (the "EXCHANGE CAP"),
except that such limitation shall not apply
in the event that the Company (A)
obtains the approval of its stockholders as
required by the applicable rules of
the Principal Market for issuances of
Common Stock in excess of such amount or
(B) obtains a written opinion from outside
counsel to the Company that such
approval is not required, which opinion
shall be reasonably satisfactory to the
Required Holders. Until such approval or
written opinion is obtained, no
purchaser of the Notes pursuant to the
Securities Purchase Agreement (the
"PURCHASERS") shall be issued, upon
conversion of Notes, shares of Common Stock
in an amount greater than the product of
the Exchange Cap multiplied by a
fraction, the numerator of which is the
principal amount of Notes issued to such
Purchaser pursuant to the Securities
Purchase Agreement on the Issuance Date and
the denominator of which is the aggregate
principal amount of all Notes issued
to the Purchasers pursuant to the
Securities Purchase Agreement on the Issuance
Date (with respect to each Purchaser, the
"EXCHANGE CAP ALLOCATION"). In the
event that any Purchaser shall sell or
otherwise transfer any of such
Purchaser's Notes, the transferee shall be
allocated a pro rata portion of such
Purchaser's Exchange Cap Allocation, and
the restrictions of the prior sentence
shall apply to such transferee with respect
to the portion of the Exchange Cap
Allocation allocated to such transferee. In
the event that any holder of Notes
shall convert all of such holder's Notes
into a number of shares of Common Stock
which, in the aggregate, is less than such
holder's Exchange Cap Allocation,
then the difference between such holder's
Exchange Cap Allocation and the number
of shares of Common Stock actually issued
to such holder shall be allocated to
the respective Exchange Cap Allocations of
the remaining holders of Notes on a
pro rata basis in proportion to the
aggregate principal amount of the Notes then
held by each such holder.
(4) RIGHTS UPON
EVENT OF DEFAULT.
(a) Event of
Default. Each of the following events shall
constitute an "EVENT OF DEFAULT":
(i)
the failure of
the applicable Registration Statement required to be
filed
pursuant to the Registration Rights Agreement to be declared
effective
by the SEC on or prior to the date that is 60 days after the
applicable
Effectiveness Deadline (as defined in the Registration Rights
Agreement), or, while the applicable Registration Statement is
required to
be
maintained effective pursuant to the terms of the Registration
Rights
Agreement,
the effectiveness of the applicable Registration Statement
lapses for
any reason (including, without limitation, the issuance of a
stop order) or
is unavailable to any holder of the Notes for sale of all
of such
holder's Registrable Securities (as defined in the Registration
Rights
Agreement) in accordance with the terms of the Registration
Rights
Agreement,
and such lapse or unavailability continues for a period of ten
(10)
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consecutive days or for more than an aggregate of thirty (30) days
in any
365-day
period (other than days during an Allowable Grace Period (as
defined in
the Registration Rights Agreement));
(ii)
the suspension from
trading or failure of the Common Stock to be
listed on
the Principal Market or an Eligible Market for a period of five
consecutive days or for more than an aggregate of seven Trading
Days in
any
365-day period;
(iii) the
Company's (A) failure to cure a Conversion Failure by delivery
of the
required number of shares of Common Stock within ten (10)
Business
Days after
the applicable Conversion Date or (B) notice, written or oral,
to any
holder of the Notes, including by way of public announcement or
through
any of its agents, at any time, of its intention not to comply
with a
request for conversion of any Notes into shares of Common Stock
that is
tendered in accordance with the provisions of the Notes, except
where such
noncompliance is in accordance with Section 3(d) hereof;
(iv)
intentionally
deleted;
(v)
the Company's
failure to pay to the Holder any amount of Principal,
Interest,
Late Charges or other amounts when and as due under this Note
or
any other
Transaction Document (as defined in the Securities Purchase
Agreement), except, in the case of a failure to pay amounts other
than
Principal
when and as due, in which case only if such failure continues
for a
period of at least three Business Days;
(vi)
any default under,
redemption of or acceleration prior to maturity
of any
Indebtedness (as defined below) of the Company or any of its
Subsidiaries (as defined in Section 3(a) of the Securities
Purchase
Agreement)
with an unpaid principal amount in excess of $1,000,000 at the
time of
such acceleration other than with respect to any Other Notes;
(vii) the
Company or any of its Subsidiaries, pursuant to or within the
meaning of
Title 11, U.S. Code, or any similar Federal, foreign or state
law for
the relief of debtors (collectively, "BANKRUPTCY LAW"), (A)
commences
a voluntary case, (B) consents to the entry of an order for
relief
against it in an involuntary case, (C) consents to the
appointment
of a
receiver, trustee, assignee, liquidator or similar official (a
"CUSTODIAN"), (D) makes a general assignment for the benefit of
its
creditors
or (E) admits in writing that it is generally unable to pay its
debts as
they become due;
(viii) a
court of competent jurisdiction enters an order or decree under
any
Bankruptcy Law that (A) is for relief against the Company or any
of
its
Subsidiaries in an involuntary case not dismissed within 60 days,
(B)
appoints a
Custodian of the Company or any of its Subsidiaries or (C)
orders the
liquidation of the Company or any of its Subsidiaries;
(ix)
a final judgment or
judgments for the payment of money aggregating
in excess
of $1,000,000 are rendered against the Company or any of its
Subsidiaries and which judgments are not, within 60 days after the
entry
thereof,
bonded, discharged or stayed pending appeal, or are not
discharged
within 60 days after the expiration of such stay; provided,
however,
that any judgment which is covered by insurance or an indemnity
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from a
credit worthy party shall not be included in calculating the
$1,000,000
amount set forth above so long as the Company provides the
Holder a
written statement from such insurer or indemnity provider
(which
written
statement shall be reasonably satisfactory to the Holder) to
the
effect
that such judgment is covered by insurance or an indemnity and
the
Company
will receive the proceeds of such insurance or indemnity within
30
days of
the issuance of such judgment;
(x)
the Company
materially breaches any material representation,
warranty,
covenant or other term or condition of any Transaction
Document,
except, in
the case of a breach of a covenant or other term or condition
which is
curable, only if such breach continues for a period of at least
thirty
(30) consecutive days after notice thereof by a Holder to the
Company;
or
(xi)
any Event of Default
(as defined in the Other Notes) occurs with
respect to
any Other Notes.
(b) Redemption
Right Upon Event of Default. Promptly after
becoming aware of the occurrence of an
Event of Default or any breach requiring
notice from the Holder pursuant to Section
4(a)(x) with respect to this Note or
any Other Note, the Company shall deliver
written notice thereof via facsimile
and overnight courier (an "EVENT OF DEFAULT
NOTICE") to the Holder. At any time
after the earlier of the Holder's receipt
of an Event of Default Notice and the
Holder becoming aware of an Event of
Default, or, in the case of a breach of
Section 4(a)(x), after the date that is
thirty (30) consecutive days after
notice thereof from the Holder to the
Company, the Holder may require the
Company to redeem all or any portion of
this Note by delivering written notice
thereof (the "EVENT OF DEFAULT REDEMPTION
NOTICE") to the Company, which Event
of Default Redemption Notice shall indicate
the portion of this Note the Holder
is electing to redeem. Each portion of this
Note subject to redemption by the
Company pursuant to this Section 4(b) shall
be redeemed by the Company at a
price equal to the greater of (i) the
product of (x) the sum of the Conversion
Amount to be redeemed and accrued and
unpaid Interest and Late Charges thereon
and (y) the Event of Default Redemption
Premium and (ii) the product of (A) the
Conversion Rate with respect to such
Conversion Amount in effect at such time as
the Holder delivers an Event of Default
Redemption Notice and (B) the Closing
Sale Price of the Common Stock on the date
immediately preceding such Event of
Default (the "EVENT OF DEFAULT REDEMPTION
PRICE"). Redemptions required by this
Section 4(b) shall be made in accordance
with the provisions of Section 12.
(5) RIGHTS UPON FUNDAMENTAL
TRANSACTION AND CHANGE OF CONTROL.
(a) Assumption.
The Company shall not enter into or be party
to a Fundamental Transaction unless (i) the
Successor Entity assumes in writing
all of the obligations of the Company under
this Note and the other Transaction
Documents in accordance with the provisions
of this Section 5(a) pursuant to
written agreements in form and substance
satisfactory to the Required Holders
and approved by the Required Holders prior
to such Fundamental Transaction,
including agreements to deliver to each
holder of Notes in exchange for such
Notes a security of the Successor Entity
evidenced by a written instrument
substantially similar in form and substance
to the Notes, including, without
limitation, having a principal
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amount and interest rate equal to the
principal amounts and the interest rates
of the Notes held by such holder and having
similar ranking to the Notes, and
satisfactory to the Required Holders and
(ii) the Successor Entity (including
its Parent Entity) is a publicly traded
corporation whose common stock is quoted
on or listed for trading on an Eligible
Market. Upon the occurrence of any
Fundamental Transaction, the Successor
Entity shall succeed to, and be
substituted for (so that from and after the
date of such Fundamental
Transaction, the provisions of this Note
referring to the "Company" shall refer
instead to the Successor Entity), and may
exercise every right and power of the
Company and shall assume all of the
obligations of the Company under this Note
with the same effect as if such Successor
Entity had been named as the Company
herein. Upon consummation of the
Fundamental Transaction, the Successor Entity
shall deliver to the Holder confirmation
that there shall be issued upon
conversion or redemption of this Note at
any time after the consummation of the
Fundamental Transaction, in lieu of the
shares of the Company's Common Stock (or
other securities, cash, assets or other
property) purchasable upon the
conversion or redemption of the Notes prior
to such Fundamental Transaction,
such shares of stock of the Successor
Entity, securities, cash, assets or any
other property whatsoever (including
warrants or other purchase or subscription
rights) which the Holder would have been
entitled to receive upon the happening
of such Fundamental Transaction had this
Note been converted immediately prior
to such Fundamental Transaction, as
adjusted in accordance with the provisions
of this Note. The provisions of this
Section shall apply similarly and equally
to successive Fundamental Transactions and
shall be applied without regard to
any limitations on the conversion or
redemption of this Note.
(b) Redemption
Right Upon a Change of Control. No sooner
than 15 days nor later than 10 days prior
to the consummation of a Change of
Control, but not prior to the public
announcement of such Change of Control, the
Company shall deliver written notice
thereof via facsimile and overnight courier
to the Holder (a "CHANGE OF CONTROL
NOTICE"). Such Change of Control Notice
shall also indicate (i) that, subject to
the conditions set forth in Section 9,
a Additional Shares are required to be
issued by the Company upon any conversion
by the Holder in connection with a Change
of Control, (ii) if applicable,
whether such Additional Shares are to be
issued pursuant to Section 9 or shall
be paid in cash and (iii) if Additional
Shares are to be issued in shares of
Common Stock that the Equity Conditions are
satisfied as of the date of such
notice. In the event that the Company fails
to deliver a Change of Control
Notice, the date of such notice shall be
deemed to be the later of (i) the date
that is 10 days prior to the consummation
of a Change of Control and (ii) the
date of the public announcement
thereof.
(c) At any time
during the period beginning after the
Holder's receipt of a Change of Control
Notice and ending on the date that is
thirty Trading Days after the date of the
consummation of such Change of Control
("CHANGE OF CONTROL REDEMPTION/CONVERSION
PERIOD"), the Holder may require the
Company to redeem all or any portion of
this Note by delivering written notice
thereof ("CHANGE OF CONTROL REDEMPTION
NOTICE") to the Company, which Change of
Control Redemption Notice shall indicate
the Conversion Amount the Holder is
electing to redeem. The portion of this
Note that the Holder specifies to be
redeemed pursuant to this Section 5 shall
be redeemed by the Company at a price
equal to 101% of the sum of the Conversion
Amount being redeemed and accrued and
unpaid Interest and Late Charges thereon
(the "CHANGE OF CONTROL REDEMPTION
PRICE"). Redemptions required by this
Section 5 shall be made in accordance with
the provisions of Section 12 and shall have
priority to payments to
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shareholders in connection with a Change of
Control. Notwithstanding anything to
the contrary in this Section 5, until the
Change of Control Redemption Price
(together with any interest thereon) is
paid in full, the Conversion Amount
submitted for redemption under this Section
5(b) (together with any interest
thereon) may be converted, in whole or in
part, by the Holder into Common Stock,
or in the event the Conversion Date is
after the consummation of the Change of
Control, shares of stock or equity
interests of the Successor Entity
substantially equivalent to the Company's
Common Stock pursuant to Section 3.
(d) Other
Corporate Events. In addition to and not in
substitution for any other rights
hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which
holders of shares of Common Stock are
entitled to receive securities or other
assets with respect to or in exchange
for shares of Common Stock (a "CORPORATE
EVENT"), the Company shall make
appropriate provision to ensure that the
Holder will thereafter have the right
to receive upon a conversion of this Note,
(i) in addition to the shares of
Common Stock receivable upon such
conversion, such securities or other assets to
which the Holder would have been entitled
with respect to such shares of Common
Stock had such shares of Common Stock been
held by the Holder upon the
consummation of such Corporate Event
(without taking into account any
limitations or restrictions on the
convertibility of this Note) or (ii) in lieu
of the shares of Common Stock otherwise
receivable upon such conversion, such
securities or other assets received by the
holders of shares of Common Stock in
connection with the consummation of such
Corporate Event in such amounts as the
Holder would have been entitled to receive
had this Note initially been issued
with conversion rights for the form of such
consideration (as opposed to shares
of Common Stock) and at a conversion rate
for such consideration commensurate
with the Conversion Rate. Provision made
pursuant to the preceding sentence
shall be in a form and substance
satisfactory to the Required Holders. The
provisions of this Section shall apply
similarly and equally to successive
Corporate Events and shall be applied
without regard to any limitations on the
conversion or redemption of this Note.
(6) ADJUSTMENT
OF CONVERSION PRICE .
(a) Subject at
all times to the restrictions set forth in
Section 14, the Conversion Price shall be
adjusted from time to time by the
Company as follows:
(i) In case the
Company shall (A) pay a dividend on
its Common
Stock in shares of Common Stock, (B) make a distribution on its
Common
Stock in shares of Common Stock, (C) subdivide its outstanding
Common
Stock into a greater number of shares, or (D) combine its
outstanding Common Stock into a smaller number of shares, the
Conversion
Price in
effect immediately prior thereto shall be adjusted so that the
Holder of
any Note thereafter surrendered for conversion shall be
entitled
to receive
that number of shares of Common Stock which it would have owned
had such
Note been converted immediately prior to the happening of such
event. An
adjustment made pursuant to this subsection (i) shall become
effective
immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the
effective
date in
the case of a subdivision or combination.
(ii) In case the
Company shall issue rights, options or
warrants
to all or substantially all holders of its Common Stock
entitling
them (for
a period of not
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<PAGE>
more than
60 days after such issuance) to subscribe for or purchase
shares
of Common
Stock (or securities convertible into or exercisable or
exchangeable for Common Stock) at a price per share (or having
a
conversion, exercise or exchange price per share) less than the
Current
Market
Price (as defined in Section 6(a)(vi)) per share of Common Stock
on
the record
date for the determination of stockholders entitled to receive
such
rights, options or warrants (or if no record date is fixed, the
Business
Day immediately prior to the date of announcement of such
issuance)
(treating the conversion, exercise or exchange price per share
of the
securities convertible into or exercisable or exchangeable for
Common
Stock as equal to (x) the sum of (i) the price for a unit of
the
security
convertible into or exercisable or exchangeable for Common
Stock
and (ii)
any additional consideration initially payable upon the
conversion
of such security into or exercise or exchange of such security
for Common
Stock divided by (y) the number of shares of Common Stock
initially
underlying such security), the Conversion Price in effect
immediately prior thereto shall be adjusted so that the same shall
equal
the rate
determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction of which:
(A) the numerator shall be the number of shares of
Common
Stock outstanding on the close of business on such record date
with
respect to
such issuance (or if no record date is fixed, the date
immediately prior to the date of announcement of such issuance),
plus the
number of
shares which the aggregate subscription or purchase price for
the total
number of shares of Common Stock underlying the rights options,
or
warrants so issued (or the aggregate conversion, exercise or
exchange
price of
the securities so offered) would purchase at the Current Market
Price of
the Common Stock on such record date; and
(B) the denominator shall be the number of shares
of Common Stock
outstanding at the close of business on the record date
with
respect to such issuance (or if no such record date is fixed,
the
date
immediately prior to the date of announcement of such issuance),
plus
the total
number of additional shares of Common Stock underlying the
rights,
options or warrants so issued.
Such adjustment shall be made successively whenever any such
rights,
options or warrants are issued, and shall become effective
immediately after such
record date. If at the end of the period during
which such
rights or warrants are exercisable not all rights or warrants
shall have
been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the
number of
additional
shares of Common Stock actually issued (or the number of shares
of Common
Stock issuable upon conversion of convertible securities
actually
issued).
(iii) (1) In case the Company shall distribute to all or
substantially all holders of its Common Stock any shares of capital
stock
of the
Company (other than Common Stock), evidences of indebtedness or
other
non-cash assets (including securities of any person other than
the
Company
but excluding (A) dividends or distributions paid exclusively
in
cash or
(B) dividends or distributions referred to in subsection (iii)
of
this
Section 6(a)), or shall distribute to all or substantially all
holders of
its Common Stock rights or warrants to subscribe for or
purchase
any of its securities
10
<PAGE>
(excluding
those rights and warrants referred to in subsection (ii) of
this
Section 6(a)) and also excluding the distribution of rights to
all
holders of
Common Stock pursuant to a Rights Plan (as defined below)),
then in
each such case the Conversion Price shall be adjusted so that
the
same shall
equal the rate determined by multiplying the current Conversion
Price by a
fraction of which:
(A) the numerator shall be the Current Market
Price per
share of the Common Stock on such record date; less the fair
market
value on such record date (as determined in good faith by the
board
of
directors of the Company) of the portion of the distributed
assets
(other
than cash) so distributed applicable to one share of Common
Stock
(determined on the basis of the number of shares of Common
Stock
outstanding on the record date); and
(B) the denominator shall be such Current Market
Price on
such record date.
Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after
the
record
date for the determination of stockholders entitled to receive
such
distribution.
(2) In the event
the then fair market value (as so
determined) of the portion of the capital stock, evidences of
indebtedness
or other
non-cash assets so distributed or of such rights or warrants
applicable
to one share of Common Stock is equal to or greater than the
Current
Market Price per share of the Common Stock on such record date,
in
lieu of
the foregoing adjustment, adequate provision shall be made
prior
to the
time the foregoing adjustment could otherwise be made in a
writing
delivered
to the Holders so that each Holder of a Note shall have the
right to
receive upon conversion the amount of capital stock, evidences
of
indebtedness or other non-cash assets so distributed or of such
rights or
warrants
such Holder would have received had such holder converted each
Note on
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 of
the
Company
determines the fair market value of any distribution for
purposes
of this
Section 6(a)(iii) by reference to the actual or when issued
trading
market for any securities, it must in doing so consider the
prices
in such
market over the same period used in computing the Current
Market
Price of
the Common Stock.
Notwithstanding the foregoing, if the securities distributed
by the Company
to all or substantially all holders of its Common Stock
consist of
capital stock of, or similar equity interests in, a Subsidiary
or other
business unit, the Conversion Price shall be adjusted so that
the
same shall
be equal to the rate determined by multiplying the Conversion
Price in
effect on the record date with respect to such distribution by
a
fraction
of which:
(A) the
numerator shall be the arithmetic average of
the
Closing Sale Prices of one share of Common Stock over the ten
consecutive Trading Day period (the "SPINOFF VALUATION PERIOD")
commencing
on and
including the fifth Trading Day
11
<PAGE>
after the
date on which "ex-dividend trading" commences on the Common
Stock on
the Principal Market or such other national or regional
exchange
or market
on which the Common Stock is then listed or quoted; and
(B) the
denominator shall be the sum of (x) the
arithmetic
average of the Closing Sale Prices of one share of Common Stock
over the
Spinoff Valuation Period and (y) the arithmetic average of the
Closing
Sale Prices over the Spinoff Valuation Period of the portion of
the
securities so distributed applicable to one share of Common
Stock,
such
adjustment to become effective immediately prior to the opening
of
business
on the fifteenth Trading Day after the date on which
"ex-dividend
trading"
commences.
In lieu of the foregoing, the Company may at the time of the
public
announcement of such distribution elect in a writing provided
to
the
Holders to reserve the pro rata portion of such Notes so that
each
Holder of
securities shall have the right to receive upon conversion the
amount of
such shares of capital stock or similar equity interests of
such
Subsidiary
or business unit that such Holder would have received if such
Holder had
converted such Notes on the record date with respect to such
distribution.
(3) With respect
to any rights (the "RIGHTS") that may be
issued or
distributed pursuant to any rights plan of the Company (any
Rights
that may be issued pursuant to any rights plan being referred
to
as, a
"RIGHTS PLAN"), upon conversion of the Notes into Common Stock,
to
the extent
that such Rights Plan is in effect upon such conversion, the
holders of
Notes will receive, in addition to the Common Stock, the Rights
described
therein (whether or not the Rights have separated from the
Common
Stock at the time of conversion), subject to the limitations
set
forth in
any such Rights Plan. If the Rights Plan provides that upon
separation
of rights under such plan from the Common Stock that the
Holders
would not be entitled to receive any such rights in respect of
the
Common
Stock issuable upon conversion of the Notes, the Conversion
Price
will be
adjusted as provided in this Section 6(a) (with such separation
deemed to
be the distribution of such rights), subject to readjustment in
the event
of the expiration, termination or redemption of the rights. Any
distribution of rights or warrants pursuant to a Rights Plan
complying
with the
requirements set forth in the immediately preceding sentence of
this
paragraph shall not constitute a distribution of rights or
warrants
pursuant
to this Section 6(a)(iii).
(4)
Rights, options
or warrants (other than rights issued
pursuant
to a Rights Plan) distributed by the Company to all or
substantially 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, options or
warrants,
until the occurrence of a specified event or events ("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 (including issuances of Common Stock
upon
conversion
of the Notes), shall be deemed not to have been distributed for
purposes of this Section 6 (and no
adjustment to the Conversion Rate under
this
Section 6 will be required) until the occurrence of the
earliest
Trigger
Event, whereupon such rights and warrants shall be deemed to
have
been
distributed and an
12
<PAGE>
appropriate adjustment (if any is required) to the Conversion Rate
shall
be made
under this Section 6(a)(iii). If any such right, option or
warrant,
including any such existing rights, options or warrants
distributed prior to the Issuance Date, are subject to events, upon
the
occurrence
of which such rights, options or warrants become exercisable to
purchase
different securities, evidences of indebtedness or other
assets,
then the
date of the occurrence of any and each such event shall be
deemed
to be the
date of distribution and record date with respect to new rights
or
warrants with such rights (and a termination or expiration of
the
existing
rights, options or warrants without exercise by any of the
holders
thereof). In addition, in the event of any distribution (or
deemed
distribution) of rights, options or warrants, or any Trigger Event
or
other
event (of the type described in the preceding sentence) with
respect
thereto
that was counted for purposes of calculating a distribution
amount
for which
an adjustment to the Conversion Rate under this Section 6 was
made, (1)
in the case of any such rights, options or warrants which shall
all have
been redeemed, purchased by the Company or repurchased without
exercise
by any holders thereof, the Conversion Rate shall be readjusted
upon such
final redemption, purchase by the Company 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 or substantially all holders of Common
Stock as
of the date of such redemption or repurchase, and (2) in the
case
of such
rights, options or warrants which shall have expired or been
terminated
without exercise by any holders thereof, the Conversion Rate
shall be
readjusted as if such rights and warrants had not been issued.
(iv) In case the
Company shall, by dividend or
otherwise,
at any time distribute cash (a "TRIGGERING DISTRIBUTION") to
all or
substant
