THIS DEBENTURE AND THE SHARES OF COMMON STOCK
("SHARES") ISSUABLE UPON CONVERSION OF THE
DEBENTURE BY A HOLDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THE DEBENTURE AND THE
SHARES MAY NOT BE SOLD UNLESS REGISTERED THEREUNDER
OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION SHALL
BE AVAILABLE. THE TRANSFER RESTRICTIONS AND OTHER
OBLIGATIONS AND CONDITIONS ARE SPECIFIED HEREIN.
COASTWIDE ENERGY SERVICES INC.
8% CONVERTIBLE SUBORDINATED DEBENTURE
__________ , 1994 $ _____________
For value received, the undersigned, COASTWIDE ENERGY SERVICES, INC.,
a Delaware corporation (the "Company"), hereby promises to pay __________ having
his or its address at __________ , or registered assigns, the principal amount
of __________ DOLLARS ($ ______ ), together with interest thereon calculated
from the date of issuance hereof in accordance with the provisions of this 8%
Convertible Subordinated Debenture ("Debenture"). The capitalized terms set
forth in the Debenture shall have the meanings set forth in Section 1, unless
otherwise defined herein.
1. Definitions. The following terms shall be defined as follows:
"Business Day" shall mean any day that is not a Saturday, Sunday, or a
day on which banks in Houston, Texas are not required to be open.
"Common Stock" shall mean the shares of common stock, $.01 par value
per share, of the Company.
"Conversion Date" shall have the meaning set forth in Section 6(b).
"Conversion Price" shall have the meaning set forth in Section 6(a).
"Conversion Rights" shall mean the rights of the Holders to convert
the Debenture into shares of Common Stock pursuant to the terms of the
Debenture.
"Events of Default" shall have the meaning set forth in Section 8.
"Holder" shall mean the original payee of this Debenture and each
registered subsequent Holder of the Debenture.
"Indebtedness" shall mean all obligations (including principal,
interest and premiums, if any) of the Company held by banks or other
financial institutions, including without limitation finance companies
and insurance companies (a) for borrowed money, (b) evidenced by
non-convertible bonds, debentures, notes or other similar instruments
(including letters of credit and bankers' acceptances) (c) all
indebtedness that is guaranteed directly or indirectly by the Company
and (d) purchase money indebtedness or indebtedness secured by
property at the time of acquisition, for the payment of which the
Company is directly or indirectly liable.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean the principal of, interest on, and
premiums, if any, for (a) all Indebtedness of the Company, whether
outstanding on the date of the Debenture or thereafter created or
assumed, (b) all deferrals, renewals, extensions and refundings of,
and amendments, modifications and supplements to, any Indebtedness.
unless the terms of the instrument creating or evidencing any
Indebtedness expressly provide that it is not superior in right of
payment to the Debenture.
2. Payment of Interest.
(a) Interest will accrue on the unpaid principal amount of the
Debenture outstanding from time to time at a rate equal to eight
percent (8%) per annum (calculated on the basis of a 360 day
year). Subject to Section 4 and the terms of any Senior
Indebtedness, the Company will pay interest accrued quarterly
commencing October 1, 1994 and on the first day of each January,
April July and October thereafter until repaid or converted (each
an "Interest Payment Date"). Any accrued interest which for any
reason has not theretofore been paid will be paid in full on the
date on which the final principal payment on the Debenture is
paid.
(b) Payments of inte
▇▇▇▇▇▇'s address stated in the Debenture, in lawful money of the
United States of America. If payment is due on any day that is
not a Business Day, the date shall be extended to the next
succeeding Business Day.
3. Payment of Principal.
(a) Subject to Section 4 and the terms of any Senior Indebtedness,
unless earlier redeemed or converted, the Company shall repay the
principal amount of the Debenture on July 1, 2004.
(b) Payments of principal are to be made on the Debenture, at the
Holder's address stated in the Debenture, in lawful money of the
United States of America. If payment is due on any day that is
not a Business Day, the due date shall be extended to the next
succeeding Business Day.
4. Subordination.
(a) Debenture Subordinated to Senior Indebtedness. The Company, for
itself, its successors and assigns, covenants and agrees, and the
Holder of the Debenture likewise covenants and agrees, that the
Indebtedness evidenced by the Debenture, including the principal
of, premium, if any, and interest thereon and any other amounts
payable with respect to the Debenture, shall be subordinate and
subject in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment of all Senior
Indebtedness of the Company and that each holder of Senior
Indebtedness of the Company whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness of the Company in reliance upon the
covenants and provisions contained in this Debenture.
(b) Terms of Subordination. No payment of the principal of, premium,
if any, or interest on the Debenture shall be made by the Company
or received by the Holder, and no prepayment, retirement,
purchase or other acquisition of the Debenture shall be made by
the Company, if at the time thereof or immediately thereafter
giving effect thereto, there exists (and has not been waived) any
default with respect to any provision of any Senior Indebtedness
then outstanding or under any agreement under which such Senior
Indebtedness was issued.
Upon any distribution of the assets of the Company upon any
dissolution, winding up, liquidation, reorganization or
recapitalization or readjustment of the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other arrangement
or marshalling of the assets and liabilities of the Company, or
otherwise); provided that the consolidation of the Company with
or the merger of the Company into another company or the sale of
its property as an entirety, or substantially as an entirety, to
another company shall not be deemed a winding up for purposes
hereof if such company as a part of such consolidation, merger or
sale, assume the obligation to pay the indebtedness evidenced by
the Debenture:
(i) Except as hereinafter provided, the holder or holders of
Senior Indebtedness shall first be entitled to receive
payment in full, or have provisions satisfactory to such
holders made for payment in full, of the principal
thereof, premium, if any, and interest thereon, before the
Holder is entitled to receive any payment on account of
the principal of, premium, if any, or interest on the
Debenture; and
(ii) Except as hereinafter provided, any payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities to
which the Holder would be entitled except for the
provisions hereof shall be paid by the liquidating trustee
or agent, whether a trustee in a receiver or liquidating
trustee or other trustee or agent, directly to the holder
or holders of the Senior Indebtedness of the Company or
their representative or representatives, ratably according
to the aggregate amounts remaining unpaid on account of
the principal of, premium, if any, and interest on, the
Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution, or provision therefor,
to the holder of such Senior Indebtedness; provided that
no such delivery shall be made to the holders of Senior
Indebtedness of stock or obligations which are issued
pursuant to reorganization or readjustment proceedings or
dissolution or liquidation proceedings, or upon any
merger, consolidation, sale, lease, transfer or other
disposal of property or assets not prohibited by the
provisions of the Debenture, by the Company, as
reorganized, or by the company succeeding to the Company
or acquiring its property and assets, if such stock or
obligations are subordinate and junior at least to the
extent provided in (and governed by terms substantially
identical to the provisions of) this Section 4(b) to the
payment of all Senior Indebtedness then outstanding and to
the payment of any stock or obligations which are issued
in exchange or substitution for any Senior Indebtedness
then outstanding.
In the event that any payment or distribution of assets of
the Company of any kind or character, whether in cash,
property or securities, shall be received by the Holder
which such Holder is not entitled to receive under this
Section 4(b), such payment or distribution shall be held
in trust by such Holder for, and immediately paid over to,
the holder or holders of Senior Indebtedness remaining
unpaid or unprovided for or their representative or
representatives, ratably according to the aggregate
amounts remaining unpaid on account of the principal of,
premium, if any, and interest on such Senior Indebtedness,
until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of
such Senior Indebtedness.
(c) Subrogation of the Debenture. Subject to the payment in full of
all Senior Indebtedness, the rights of the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of cash, property or securities
of the Company applicable to Senior Indebtedness until the
principal of and interest on the Debenture shall be paid in full;
and, for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Holder would be entitled
except for the provisions of this Section 4, and no payment over,
pursuant to the provisions of this Section 4, to the holders of
Senior Indebtedness, and the Holder, be deemed to be payment by
the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Section 4 are, and are
intended solely for the purpose of, defining the relative rights
of the Holder on the one hand, and the holder of Senior
Indebtedness on the other hand.
Nothing contained in this Section 4 or elsewhere herein is
intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the
Holder, the obligation of the Company, which is absolute and
unconditional, to pay to the Holder the principal of and interest
on the Debenture as and when the same shall become due and
payable in accordance with the terms hereof, or is intended to or
shall affect the relative rights of the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from
exercising all remedies otherwise permitted by applicable law
upon default hereunder, subject to the rights, if any, under this
Section 4 of the holders of Senior Indebtedness in respect of
cash, property or securities of the Company received upon the
exercise of any such remedy.
Upon any payments or distribution of assets of the Company
refereed to in this Section 4, the Holder shall be entitled to
rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation
or reorganization proceedings are pending, or a certificate of
the receiver, trustee in bankruptcy, liquidating trustee,
custodian, agent or other party making such payment or
distribution, delivered to the Holder, for the purpose of
ascertaining the parties entitled to participate in such
distribution, the holders of the Senior Indebtedness and other
Innndebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Section 4.
The terms "paid in full" and "payment in full" as used in this
Section 4 with respect to Senior Indebtedness mean the receipt,
in money or money's worth, of the principal amount of the Senior
Indebtedness (and any premium due thereon) and full interest
thereon to the date of such payment of principal and all other
amounts due to holders of Senior Indebtedness pursuant to the
provisions of the instruments providing therefor.
Nothing contained in this Section 4 shall impair the right of the
Holder to convert this Debenture into shares of Common Stock as
provided in Section 7 hereof.
5. Optional Prepayment,
(a) To the extent that the Company shall have funds legally available
for such payment, the Company may prepay the Debenture at its
option, in whole or from time to time in part, after July 1, 1997
at a prepayment price equal to 105% of the principal amount plus
accrued interest to the prepayment date.
(b) If the Company proposes to prepay less than all of the Debentures
outstanding on any of the above dates, the Debentures to be
prepaid will be selected by lot or pro rata or any other method
as may be determined by the Board of Directors of the Corporation
to be fair. Notice of prepayment shall be mailed at least 15
business days before the prepayment date to each Holder to be
prepaid at its registered address. On and after the prepayment
date interest shall cease to accrue on the Debentures or portion
thereof called for prepayment.
6. Conversion. Each Debenture may be converted at any time, at the
option of the Holder, in whole or in part, into shares of Common Stock
on the terms and conditions set forth in this Section 6.
(a) Each Debenture shall be convertible at the option of the Holder
thereof, in whole or in part, at any time and from time to time,
as hereinafter provided, into that number of fully paid and
nonassessable shares of Common Stock (as such shares may be
constituted on the Conversion Date, as hereinafter defined) as
shall be obtained by dividing the principal amount of the
Debenture outstanding on the Conversion Date which the Holder
desires to convert by the Conversion Price, subject to adjustment
as provided herein. The Conversion Price shall be 4.25 per
share.
(b) Before any Holder of this Debenture shall be entitled to convert
the same into Common Stock, he shall deliver the Debenture, for
transfer and conversion, at the office of the Company, at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or such other
office or agency of the Company as the Company may designate by
notice in writing to the Holder) and shall give written notice to
the Company that he elects to convert all or part of the
Debenture and shall state in writing therein the name or names in
which he wishes the certificate or certificates of Common Stock
to be issued. Conversion shall be deemed to have been effected
on the date when such delivery is made, and such date is referred
to herein as the "Conversion Date." The Company will, as soon as
practicable thereafter, issue and deliver to such Holder
certificates for the number of shares of Common Stock to which he
shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share as hereinafter provide If surrendered
Debentures are converted only in part, the Company will issue and
deliver to the Holder, a new Debenture representing the remaining
balance of the Debenture.
(c) Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment as follows:
(i) Adjustments for Changes in Capital Stock. If the Company:
(1) pays a dividend in shares of Common Stock to holders
of Common Stock;
(2) subdivides outstanding shares of Common Stock into a
greater number of shares;
(3) combines outstanding shares of Common Stock into a
smaller number of shares;
(4) pays a dividend on shares of Common Stock in shares of
its capital stock other than Common Stock or makes a
distribution on Common Stock in shares of its capital
stock other than Common Stock; or
(5) issues by reclassification of shares of Common Stock
any other shares of its capital stock;
then the Conversion Price in effect immediately prior to
such action shall be adjusted so that the Holder of this
Debenture thereafter converted may receive the number of
shares of capital stock of the Company which such Holder
would have owned immediately following such action if such
Holder had converted the Debenture immediately prior to
such action.
For a dividend or distribution, the adjustment shall become
effective immediately after the record date for the
dividend or distribution. For a subdivision, combination
or reclassification, the adjustment shall become effective
immediately after the effective date of the subdivision,
combination or reclassification.
If after an adjustment the Holder upon conversion may
receive shares of two or more classes of capital stock of
the Company, the Board of Directors of the Company shall
determine the allocation of the adjusted Conversion Price
between or among the classes of capital stock. After such
allocation, the Conversion Price of the classes of capital
stock shall thereafter be subject to adjustment on terms
comparable to those applicable to the Common Stock
contained in this Section 6(c).
(ii) Adjustment for Rights Issue. If the Company issues any
rights or warrants to all or substantially all holders of
shares of Common Stock entitling them after the record date
mentioned below to purchase shares of Common Stock (or
securities convertible into shares of Common Stock) at a
price per share (or having a Conversion Price per share)
less than the Market Price per share on that record date,
the Conversion Price shall be adjusted in accordance with
rights or warrants.
N x P
-----
C' = C x O + M
-------
O + N
where:
C' = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock outstanding
on the record date.
N = the number of additional shares of Common Stock
offered
P = the offering price per share of the additional
shares.
M = the closing price per share of Common Stock on
the record date.
The adjustment shall be made successively whenever any such
rights or warrants are issued, and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive the rights or warrants.
If all of the shares of Common Stock or securities
convertible into shares of Common Stock subject to such
rights or warrants have not been issued when such rights or
warrants expire, then the Conversion Price shall promptly
be readjusted to the Conversion Price which would then be
in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual
number of shares of Common Stock (or securities convertible
into shares of Common Stock) issued upon the exercise of
such rights or warrants.
(iii) Adjustment for Certain Other Distributions. If the Company
distributes to all or substantially all holders of shares
of Common Stock any assets or general evidences of
indebtedness or any rights or warrants to purchase assets
or general evidences of indebtedness of the Company, then
the Conversion Price shall be adjusted in accordance with
the formula:
C' = C x (O x M) - F
-----------
(O x M)
where:
C' = the adjusted Conversion Price.
C = the current Conversion Price.
O = the number of shares of Common Stock outstanding
on the record date.
M = the Market Price per share of Common Stock on the
F = the fair market value on the record date as
determined by the Board of Directors of the
assets or general evidences of indebtedness
distributed.
The 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 the distribution. This
Section does not apply to cash dividends or cash
distribution Also, this Section does not apply to rights or
warrants referred to in Section 7(c)(ii).
(iv) Voluntary Adjustment. The Company at any time may
decrease the Conversion Price, temporarily or otherwise,
by any amount but in no event shall such Conversion Price
result in the issuance of Common Stock at a price less
than the par value of the Common Stock at the time such
decrease is made. Any decreased Conversion Price shall be
available for at least 20 days from the date on which
notice of such decrease is filed by the Company with the
transfer agent for the Common Stock, and such decrease
shall be irrevocable during such period. The Company
shall notify Holders of the Debentures at least 15 days
prior to the date on which the reduced Conversion Price
takes effect.
(v) Reorganization, Consolidation, Merger or Sale. In case
the Company shall consolidate or merge into or with
another corporation, or in case the Company shall sell or
convey to any other person or persons all or substantially
all the property of the Company, the Holder of the
Debenture shall have the right thereafter to convert the
Debenture into the kind and amount of shares of stock,
other securities, cash and property receivable upon such
consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock into which such
shares might have been converted immediately prior to such
consolidation, merger, sale or conveyance, and shall have
no other conversion rights. In any such event, effective
provision shall be made, in the certificate or articles of
incorporation of the resulting or surviving corporation or
otherwise or in any contracts of sale and conveyance so
that, so far as appropriate and as nearly as reasonably
may be, the provisions set forth herein for the protection
of the conversion rights of the Debentures shall
thereafter be made applicable.
(vi) Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case, the Company
shall give written notice thereof, by first class mail,
postage prepaid, addressed to the Holder at the address of
the Holder as shown on the books of the Company, which
notice shall state the Conversion Price resulting from
such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the
exercise of the conversion rights, setting forth in
reasonable detail the method of calculation and the facts
upon which such calculation is based.
(vii) Notice of Certain Events. In the event:
(a) that the Company shall authorize the granting to all
holders of its Common Stock of rights or warrants to
subscribe for of puchase shares of stock of any class
or of any other rights or warrants; or
(b) of any capital reorganization or classification of
the Common Stock, or any consolidation or merger to
which the Company is a parry and for which approval
of any stockholders of the Company is required, or of
the sale, lease or other disposition of all or
substantially all of the assets of the Company, and
in the event any such consolidation, merger or sale
will result in a change in the shares held by the
holders of Common Stock; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then the
Company shall cause to be mailed to the Holder a
notice stating (i) the date on "which a record is to
be taken for the purpose of such granting of rights
(the "record date"), or, if a record is not to be
taken, the date or anticipated date as of which the
holders of Common Stock of record to be entitled to
such granting of rights are to be determined or (ii)
the date or anticipated date on which such capital
reorganization, reclassification, consolidation,
merger, sale, lease, or other disposition,
dissolution, liquidation or winding-up is expected to
become effective, and which notice, in the case of
the notice specified in clause (ii), shall also state
the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other
property deliverable upon such capital
reorganization, reclassification, consolidation,
merger, sale, lease, or other disposition,
dissolution, liquidation or winding-up.
(viii) Company to Reserve Common Stock. The Company covenants
that it will at all times reserve and keep available out
of the aggregate of its authorized but unissued Common
Stock or its issued Common Stock held in its treasury, or
both, for the purpose of effecting conversions of the
Debenture, the full number of shares of Common Stock then
deliverable upon the conversion of the outstanding
principal amount of this Debenture; and if at any time the
number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the
outstanding principal amount of the Debenture, the Company
will take such corporate action as may in the opinion of
its counsel be necessary to increase its authorized but
unissued Common Stock to such number of shares as shall be
sufficient for that purpose.
(ix) Taxes on Conversion The Company will pay any and all
documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of
Common Stock on conversion of the Debenture.
(x) Representations of the Holder. In connection with any
conversion hereunder, the Holder will supply an investor's
representation letter to the Company to the effect that:
(1) the shares of Common Stock are being acquired for
investment only and not with a view to resale or other
distribution; (2) the Company has made available to the
Holder and its representatives all documents that the
Holder has requested relating to the Company and that the
Holder has carefully read all such documents; (3) the
Company has provided answers to all of the Holder's
questions concerning the Company and the Common Stock; and
(4) such other provisions as the Company deems net to
insure that it may issue the shares of Common Stock
without registration pursuant to an applicable exemption
therefrom under the Securities Act and state securities
laws.
(d) Exercise of the Conversion Rights or Transfer of the Debenture or
Common Stock. Each certificate for shares of Common Stock
initially issued upon the exercise of the Conversion Rights shall
be stamped or otherwise imprinted with a legend in substantially
the following form:
"The transfer of the shares represented by this certificate is
subject to the conditions specified in the 8% Convertible
Subordinated Debenture of Coastwide Energy Services, Inc. and no
transfer of such shares shall be valid or effective until such
conditions have been fulfilled with respect to such transfer."
The Holder of this Debeture or the shares of Common stock issued
upon exercise of the Conversion Rights, by acceptance thereof,
agrees to give written notice to the Company before transferring
the Debenture, or any shares of Common Stock received on the
exercise of the Conversion Rights, of the Holder's intention to
do so, describing briefly the manner of any proposed transfer of
this Debenture or shares of Common stock or the Holder's
intention as to the disposition (and the intended method thereof)
accompanied by an opinion of counsel (which opinion and choice of
counsel shall be acceptable to the Company in the exercise of its
reasonable discretion) opining that the proposed transfer and
disposition of the Debenture or of shares of Common Stock may be
effected without registration or qualification under the
Securities Act or state securities laws applicable to such
transfer of the Debenture or the shares of Common stock issued
with respect thereto. No later than 15 days after receipt by the
Company of such written notice and opinion of counsel, the
Company shall notify the Holder of the Company's acceptance or
rejection of the opinion of counsel and choice of counsel, and if
the Company has accepted the same, the Holder shall be entitled
to transfer this Debenture or such shares of Common stock all in
accordance with the terms of the notice as delivered by the
Holder to the Company.
If the Company rejects the opinion of counsel or the choice of
counsel as set forth above, the proposed transfer or disposition
may not be effected without registration or qualification of this
Debenture or the shares of Common stock issued upon the exercise
of the Conversion Rights, and the Company shall so notify the
Holder of such shares of Common Stock and the Holder will not
transfer such securities unless they have been so registered or
qualified. The Company shall not register or recognize, or be
required to register or recognize, any attempted transfer or
disposition of this Debenture or any shares of Common stock
issued upon conversion thereof in contravention of the Debenture.
(e) Fractional Shares: Accrued Interest: Partial Conversion. No
fractional shares or scrip representing fractional shares shall
be issued upon conversion of the Debenture. Instead of any
fractional share of Common Stock that would otherwise be issuable
upon conversion of the Debenture, the Company will pay a cash
adjustment an amount equal to the price per share of Common Stock
at the close of business on the business day prior to the day of
conversion. In case the Debenture is converted in part only, the
Company shall, upon such conversion, execute and deliver to the
Holder at the expense of the Company, a Debenture in aggregate
principal amount equal to the remaining principal balance of the
Debenture surrendered and interest from the date to which
interest has been paid on the Debenture so surrendered.
7. Registration Rights of Holder.
(a) If the Company at any time after the date hereof proposes to
register any shares of its Common stock under the Securities Act
(except with respect to any registration filed on Form S-8 or
Form S-4 or such other similar form then in effect under the
Securities Act), it will each such time promptly give written
notice to (i) each holder (a "Registration Holder") of shares of
Common Stock who has received such shares of Common Stock upon
conversion of the Debenture (such shares of Common Stock being
referred to herein as "Registrable Shares") and (ii) each Holder
of this Debenture, of its intention to do so and, upon the
written request of any Registration Holder given within 10
calendar days after receipt of any such notice (which request
shall state the intended method of disposition of such shares by
such Registration Holder), subject to the limitations set forth
in subsection (g) below, the Company will use its best efforts to
cause Registrable Shares hell by such Registration Holder as to
which registration is so requested, to be registered under the
Securities Act, all to the extent requisite to permit the sale or
other disposition (in accordance with the intended methods
thereof, as aforesaid) by such Registration Holder (each such
registration under the Securities Act being referred to herein as
a "Registration"); provided, however, that (A) the Company may at
any time withdraw or cease proceeding with any such Registration
if it shall at the same time withdraw or cease proceeding with
the ration of such other shares of its Common Stock originally
proposed to be registered, and (B) if the managing underwriter of
any offering shall state in writing that in its opinion the
inclusion of such Registrable Shares in the proposed registration
statement would have a material adverse effect on the proposed
offering, then at the Company's request, (x) the Registration
Statement shall include only that number of Registrable Shares,
if any, which the managing underwriter believes may be offered
without causing such adverse effect, and the number of
Registrable Shares shall be allocated among all Registration
Holders requesting to participate in such Registration Statement
in proportion (as nearly as practicable) to the number of
Registrable Shares requested to be included by each Registration
Holder or (y) the Registration Statement shall provide that the
effective date of the Registration Statement with respect to the
Registrable Shares shall be delayed for ninety (90) days.
Notwithstanding anything to the contrary contained herein, the
Company will not be obligated alter the date hereof to take any
action to effect more than four registrations pursuant to the
piggy-back registration rights contained in this Section 7.
(b) If Registration Holders representing the aggregate more than 40%
of the Negotiable Shares may make written request to the Company
to file, at Holder's election, a registration statement covering
the Registrable Securities owned by such Holders. The Company
agrees upon receiving such written request to comply therewith as
promptly as practicable subject to the following terms and
conditions:
(i) The Company shall have the privilege of postponing action
for a reasonable period of time (not exceeding 120 days) in
the event the filing would, in the reasonable opinion of the
Board of Directors, adversely affect a material financing
project, or a proposed or pending acquisition, merger, or
other corporate reorganization for which the Company is or
is expected to be a party.
(ii) Upon receipt of such written request, the Company shall
promptly give written notice thereof to all holders of the
Debenture at their addresses as they appear on the books of
the Borrower, offering to include such Holder's Registrable
Securities in a registration statement to be filed by the
Company as provided herein, if such Holder makes a written
request therefor within 15 days after the giving of such
notice by the Company; provided that if the Company shall
have elected under (i) above to postpone action under this
paragraph, it shall, in such notice, state the termination
date of the period of such postponement and the time for
Holders to make said written requests shall be extended to
15 days after said termination date. The Company shall not
be required to affect more than two registrations pursuant
to the demand registration rights provided herein.
(c) If and whenever the Company is required pursuant to the terms of
this Debenture to use its best efforts to effect the registration
under the Securities Act of any Registrable Shares held by the
Registration Holder, the Company will, as promptly as possible:
(i) prepare and file with the Securities and Exchange
Commission (the "SEC) a Registration Statement with
respect to such Registrable Shares and use its best
efforts to cause such Registration Statement to become and
remain effective for a period of at least ninety (90)
days;
(ii) prepare and file with the SEC such amendments and
supplement:, to such Registration Statement and the
prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective
for ninety (90) days and to comply with the provisions of
the Securities Ad with respect to the sale or other
disposition of all such Registration Holder's Registrable
Shares covered by such Registration Statement;
(iii) furnish to such Registration Holder such number of copies
of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act,
and such other documents as such Registration Holder may
reasonably request in order to facilitate the public sale
or other disposition of such Registrable Shares owned by
such Registration Holder;
(iv) register or qualify the Registrable Shares covered by such
Registration Statement under the securities or blue sky
laws of such states as the Company shall determine, and do
any and all other acts and which may be necessary or
advisable to enable such Registration Holder to consummate
the public sale or other disposition in such jurisdictions
of such Registrable Shares owned by such Registration
Holder; provided, however, that the Company shall not be
required to quality to do business as a foreign
corporation in any state where it is not then so called,
nor take any action which will subject it to general
service or process in any state where it is not then so
subject;
(v) notify such Registration Holder, at any time when a
prospectus relating to such Registration Holder's
Registrable Shares covered by such Registration Statement
is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (ii)
above, of the happening of any event as a result of which
the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then
existing, and at such Registration Holder's request,
prepare and finish to such Registration Holder a
reasonable number of copies of a supplement to or an
amendment of such prose as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall Dot include an untrue
statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances then existing; and
(vi) furnish, at such Registration Holder's request, on the
date that such Registration Holder's Registrable Shares
are delivered to the underwriters for sale pursuant to a
registration thereof pursuant to this Debenture or, if
such Registrable Shares are not being sold through
underwriters, on the date the Registration Statement with
respect to such securities becomes effective, an opinion,
dated such date, of the counsel representing the Company
for the purposes of such Registration Statement, stating
that such Registration Statement has become effective
under the Securities Act and that (1) to the knowledge of
such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that
purpose have been instituted or are pending or
contemplated under the Securities Act; (2) the
Registration Statement, the related prospectus, and each
amendment or supplement thereto, comply as to form in all
material respects with the requirements of the Securities
Act and the applicable rules and regulations of the SEC
thereunder (except that such counsel need not express an
opinion as to financial statements contained therein); (3)
the descriptions in the Registration Statement or the
prospectus, or any amendment or supplement thereto, of all
legal documents or instruments present the information
required to be shown in compliance with the Securities
Act; and (4) such counsel does not know of any legal or
governmental proceedings, pending or contemplated,
required to be described in the Registration Statement or
prose or any amendment or supplement thereto, or to be
filed as exhibits to the Registration Statement which are
not described and filed as required; such opinion of
counsel shall additionally cover such other legal matters
with respect to the registration in respect of which such
opinion is being given as such Registration Holder may
reasonably request.
(d) Expenses. All expenses incurred by the Company in complying with
this Section 7, except for registration and filing fees which
shall be borne by the Registration Holders, shall be paid by the
Company. registration Holders shall be solely responsible for any
sales commissions on the sale of their Registrable Shares
(e) Indemnification by the Company. In the event of any registration
of any of a Registration Holder's Registrable Shares under the
Securities Act pursuant to this Section, the Company will
indemnify and hold harmless such Registration Holder, its
attorneys and accountants, each underwriter of such Registrable
Shares and each other person, if any, who controls such
Registration Holder or such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Registration Holder,
such underwriter or such controlling person may become subject
under the Securities Ad or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained (on the effective
date thereof) in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any
preliminary prose or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing; and will reimburse such Registration Holder, such
underwriter and each such controlling person for reasonable legal
or any other expenses reasonably incurred by such Registration
Holder, such underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or omission or alleged omission made in said
Registration Statement, said preliminary prospectus or said
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an
instrument duly executed by such Registration Holder or such
underwriter, as the case may be, speccically for use in the
preparation thereof.
(f) Indemnification by Registration Holders. In the event of any
registration of any of a Registration Holder's Registrable Shares
pursuant to this Section, such Registration Holder will indemnify
and hold harmless the Company, its attorneys, accountants and
each other person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or
such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained (on the effective date thereof) in
any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fad required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing; in each case to the extent and only to the extent
that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in said Registration Statement,
said prep prospectus or said prospectus or said amendment or
supplement in reliance upon and in conformity with written
information finished to the Company through an instrument duly
executed by such Registration Holder specifically for use in the
preparation thereof, and such Registration Holder will reimburse
the Company and each such controlling person for reasonable legal
or any other expenses reasonably incurred by the Company or such
controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that each Registration Holder shall only be liable for
any losses, claims, damages or liabilities pursuant to this
subsection (e) for an amount up to the amount of proceeds such
Registration Holder receives from the sale of his Registrable
Shares in a Registration.
(g) Notice of Claim. In the event of any claim for which indemnity
is sought under subsection (d) or (e) above, the party seeking
indemnification shall give prompt notice of its claim to the
other party and shall permit the other party to engage counsel
and to defend against the same.
(h) Limitation on Registration Rights.
(i) The Registration Holder's right to request registration of
Registrable Shares under this Section shall cease and
terminate as to any particular Registrable Shares when
such Registrable Shares shall have been effectively
registered and sold under the Securities Act have been
transferred in a disposition exempt from such registration
requirement or a public sale can be effected without
registration. For purposes of the Debenture, shares of
Common Stock shall cease to be Registrable Shares when
such shares have been sold pursuant to an effective
Registration Statement under the Act or pursuant to an
exemption from registration thereunder.
(ii) Notwithstanding anything in this subsection to the
contrary, the Company shall only be required, in
connection with a piggy-back registration, to register in
a Registration a number of Registrable Shares that equal
up to a maximum of twenty-five percent (25%) of the shares
of Common Stock being registered by the Company in a
Registration. Such limitation will be imposed among all
Registration Holders who have requested inclusion of their
Registrable Shares and all other holders of Common Stock
who request inclusion of their shares in the Registration
Statement.
8. Events of Default. In case one or more of the following Events of
Default shall have occurred and be continuing:
(a) Default in the payment, in the manner provided herein of any
installment of interest upon this Debenture as and when the same
shall become due and payable, and the continuance of such default
for a period of 30 days; or
(b) Default in the payment of the principal of this Debenture as and
when the same shall become due and payable either at maturity, by
declaration or otherwise, and continuance of such default for a
period of 30 days; or
(c) A decree or order by a court having jurisdiction shall have been
entered adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of
the Company under the federal bankruptcy statutes or any other
similar applicable federal or state laws, and such decree or
order shall have continued undischarged and unswayed for a period
of days; or a decree or order of a court having jurisdiction for
the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Company or of its
properties or for the winding up or liquidation of its affairs
shall have been entered and such decree or order shall have
remained in force undischarged and unswayed for a period of days;
or
(d) The Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the fling of a bankruptcy
pro against it, or shall file a petition or answer or consent
seeking reorganization under the federal bankruptcy statutes or
any other similar applicable federal or state laws, or shall
consent to the filing of any such petition, or shall consent to
the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of its properties,-
shall admit in writing its inability to pay its debts generally
as they become due; then the Holder, by notice in writing to the
Company may declare the principal of the Debenture and all
accrued and unpaid interest on this Debenture to be due and
payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this
Debenture contained to the contrary notwithstanding; provided,
however, that it, at any time before the principal of this
Debenture shall have been so declared due and payable, all Events
of Default shall have been cured, then such Events of Default
shall be deemed to have been waived by the Holder.
9. Miscellaneous.
(a) Successors and Assigns. This Debenture shall be binding upon and
inure to the successors and assigns of the parties hereto.
(b) Governing law. This Debenture shall be construed in accordance
with the laws of Delaware.
(c) Notices. Any notice, communication, offer, acceptance, request,
consent, approval, reply, payment or advice (hereinafter
severally and collectively called "Notice") in this Debenture
provided or permitted to be given, made or accepted by any party
to any other party or parties hereto unless otherwise expressly
provided in this Debenture ,must be in writing and be given or
served by depositing the same in the United States mail, postage
prepaid and registered or certified, and addressed to the party
or parties to be notified or entitled to receive same, with
return receipt requested, or by delivering the same in person or
parties as may be a corporation or corporations. Notice
deposited in the mail in the manner hereinabove described shall
be effective from and after the date it is so deposited. Notice
given in any other manner shall be effective only if and when
received by the party or parties to be, or provided to be,
notified. For purposes of notice, the addresses of the Company
and the Holder shall be as follows:
The Company:
Coastwide Energy Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Holder:
_____________________________
_____________________________
_____________________________
The parties may change their respective addresses and specify a
new address by giving not less than seven days written notice in
the manner provided.
(d) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any of its rights
hereunder shall operate as a waiver of any of its rights as a
holder hereof, except to the extent expressly waived in writing
by the Holder.
(e) This Debenture may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(f) The invalidity, enforceability, or illegality of any one or more
of the provisions of this Debenture for any reason shall not
affect any other provisions hereof, which other provisions shall
remain in fall force and effect.
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
by its President, and attested to by its Secretary, as of , 1994.
COASTWIDE ENERGY SERVICES, INC.
By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ATTEST
____________________
