EXHIBIT 10.26
THIS DEBENTURE, AND THE PARTNERSHIP INTEREST INTO WHICH IT IS
CONVERTIBLE, HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE LAWS OF
ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED UNLESS
IT IS REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT.
AHN PARTNERS, L.P.
(a Delaware limited partnership)
8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2001
No. 1 $5,000,000.00
January 17, 1997
AHN PARTNERS, L.P., a limited partnership duly formed and existing under
the laws of the State of Delaware (the "Company"), for value received, hereby
promises to pay to ACCESS HEALTH, INC., a Delaware corporation, or assigns, the
principal sum of Five Million Dollars ($5,000,000.00) on December 31, 2001 and,
subject to the provisions of Section 2, to pay interest thereon, from the date
hereof, annually in arrears on April 15 in each year (each an "Interest Payment
Date"), commencing April 15, 1997, at the rate of 8% per annum, until the
principal hereof is paid. Interest hereon shall be calculated on the basis of a
360-day year comprised of twelve 30-day months. Such payments (including
premium, if any) shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts to the bank account of the Holder designated in writing
by the Holder. Certain capitalized terms used in this Debenture without
definition shall have the respective meanings accorded them in Section 1(d).
All references herein to Sections shall, unless otherwise stated, be to Sections
of this Debenture.
1. General.
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2.
1 This Debenture is one of a duly authorized issue of Debentures of
the Company designated as its 8% Convertible Subordinated Debentures due 2001
(herein called the "Debentures"), limited in aggregate principal amount to
$5,000,000.
2 The Debentures are direct and unsecured obligations of the
Company, subordinated as set forth in Section 7. There are no restrictions
herein on other indebtedness or securities which may be incurred or issued by
the Company.
(c) The Company has reserved for issuance to the Holder upon the
conversion of this Debenture a Post Recoupment Percentage Interest equal to 4%,
as of the date of this Debenture (the "Reserved Post Recoupment Percentage
Interest"). If and to the extent that at any time after the date of this
Debenture the Company makes available additional Post Recoupment Percentage
Interests in the Partnership such that the Post Recoupment Percentage Interests
of the Partners are reduced as a consequence thereof, the Reserved Post
Recoupment Percentage Interest of the Holder available upon conversion of this
Debenture shall be proportionally reduced.
(d) As used in the Debentures, the following terms shall have the
following meanings:
"Change in Control" shall mean an event upon the occurrence of
which (i) any "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act), other than the Company, any "person"
who on December 1, 1996 was a partner of the Company or a manager or
officer of the Company's general partner, or Entity which is owned,
directly or indirectly, by the partners of the Company in substantially
the same proportions as their ownership of Common Securities, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 30% of the then outstanding Common Securities
of the Company, (ii) the Company approves a merger or consolidation of the
Company with any other Entity, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving Entity outstanding immediately
after such merger or consolidation, or (iii) the Company approves a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company or all or substantially all of the Company's
assets.
"Common Securities" shall mean the outstanding Partnership
Interests (as defined in the Partnership Agreement) of the Company held by
the Limited Partners of the Partnership from time to time; provided, that
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if and to the extent the Company shall convert or be converted into, shall
merge or otherwise combine or consolidate with, a corporation and the
terms of such transaction provide that no such Partnership Interests shall
remain outstanding after such transaction, then all references to Common
Securities shall be to the shares of such corporation which are not
limited to a fixed sum or percentage of par value or stated value in
respect of the rights of the holders thereof to participate in dividends
and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the issuer of such securities.
"Entity" shall mean any person other than a natural person, trust
or estate, including, without limitation, corporations, partnerships,
joint ventures, limited liability companies and unincorporated
associations.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" shall mean the holder of this Debenture.
"Holder Redemption Date" shall mean the date which is 30 days
after any of the Redemption Events described in Section 3(c).
"Net Profits" shall have the meaning given it in the Partnership
Agreement.
"Partners" and "Limited Partners" shall have the respective
meanings given them in the Partnership Agreement.
"Partnership Agreement" shall mean the Company's Amended and
Restated Partnership Agreement, dated as of April 3, 1996, as amended or
amended and restated from time to time after the date hereof.
"Post Recoupment Percentage Interest" shall have the meaning
given it in the Partnership Agreement.
"Preferred Partner's Annual Preference Amount" shall have the
meaning given it in the Partnership Agreement.
1 Interest. Notwithstanding any other provision of this Debenture to
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the contrary, interest shall accrue while this Debenture is outstanding, but no
interest shall be due and payable to the Holder, except to the extent that the
Company has Net Profits and then only to the extent that the Holder would have
received and been paid its Preferred Partner's Annual Preference Amount
(calculated on the assumption that average daily balance of the Holder's
Preferred Partner's Unrecovered Preferred Capital Amount shall equal the
outstanding principal balance of this Debenture) had the Holder converted this
Debenture immediately prior to the distribution of the Preferred Partners'
Preferred amounts to all Partners entitled thereto.
2 Redemption.
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1 The Debentures are subject to redemption on or after December 31,
1997 in full at the election of the Company, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the 12-
month period beginning January 1 of the years indicated:
Redemption
Year Price
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1998 115%
1999 114%
2000 113%
2001 112%
and thereafter at a redemption price equal to 100% of the principal amount, in
each case together with accrued interest to the date fixed for redemption.
2 The Debentures are subject to redemption at any time during the
180 days after a Change in Control of the Company has occurred at a redemption
price equal to 100% of the unpaid principal amount hereof, together with accrued
interest; provided, that not more than 90 nor less than five days prior to the
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occurrence of such Change in Control, the Company has notified the Holder of the
imminence of such Change in Control; provided, further, that no such notice
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shall be required if the Holder has a representative on the management committee
of the Partnership.
3 Each Debenture is subject to redemption in whole at the option of
the Holder thereof on any Holder Redemption Date at a redemption price equal to
100% of the unpaid principal amount thereof, together with accrued interest, if
a Redemption Event shall occur or shall have occurred. For purposes hereof a
"Redemption Event" shall have occurred if (i) the Company's Common Securities
(or other equity securities into which Debentures are then convertible) are
listed for trading on a United States national securities exchange or approved
for trading on an established automated over-the-counter trading market in the
United States or (ii) the Company shall convert or be converted into, shall
merge or otherwise combine or consolidate with, a corporation and the terms of
such transaction provide that no such Partnership Interests shall remain
outstanding after such transaction.
4 Notwithstanding the fact that a Debenture or a portion thereof is
called for redemption by the Company, each Holder desiring to exercise the
option for redemption set forth in Section 3(c) shall, as a condition to such
redemption, on or before the close of business on the fifth day prior to the
Holder Redemption Date, surrender the Debenture to be redeemed in whole or in
part together with the redemption notice hereon duly executed and otherwise
comply with the provisions of Section 3(e). A Holder of a Debenture who has
tendered a redemption notice (i) will be entitled to revoke its election by
delivering a written notice of such revocation together with the Holder's non-
transferable receipt for such Debenture to the office or agency of the Company
designated as the place for the payment of the Debentures to be so redeemed on
or before the Holder Redemption Date and (ii) will retain such Holder's right to
convert its Debentures into Common Securities of the Company on or before the
Holder Redemption Date.
5 Notices relating to the redemption of Debentures, whether at the
option of the Company or the Holder thereof shall specify: the date fixed for
redemption or the Holder Redemption Date, as the case may be; the redemption
price; the place or places of payment; that payment will be made upon
presentation and surrender of the Debentures to be redeemed, that
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interest accrued to the date fixed for redemption (unless the redemption date
is an interest payment date) will be paid as specified in said notice; and
that on and after said date interest thereon will cease to accrue. In the case
of a redemption by the Company at the option of the Holder of a Debenture, the
notices given by the Company informing the Holder of such ▇▇▇▇▇▇'s entitlement
to redeem shall also specify that the Holder electing redemption will be
entitled to revoke its election by delivering a written notice of such
revocation. In the case of a redemption in part at the option of the Company,
the notice shall specify the aggregate principal amount of Debentures to be
redeemed and the aggregate principal amount of Debentures outstanding after
such partial redemption. In the case of a redemption in whole or in part by
the Company, notices shall specify the date the conversion privilege expires
in accordance with Section 4(a). Such notices shall also state that the
conditions precedent, if any, to such redemption have occurred.
6 If (i) notice of redemption has been duly given with respect to
Debentures to be redeemed at the option of the Company, or (ii) notice of
redemption has been duly given by the Holder of a Debenture to be redeemed, the
Debentures so to be redeemed shall become due and payable on the applicable
redemption date specified in such notice and upon presentation and surrender of
the Debentures at the place or places specified in the notice given by the
Company with respect to such redemption, the Debentures shall be paid and
redeemed by the Company, at the places and in the manner herein specified and at
the redemption price together with accrued interest, if any, to the redemption
date and the only right of a Holder of such Debentures shall be to receive
payment of the redemption price together with accrued interest (unless the
redemption date is an interest payment date) to the redemption date as
aforesaid. If monies for the redemption of the Debentures are not made
available for payment until after the Holder Redemption Date, the Debentures
shall not cease to bear interest until such monies have been so made available.
3 Conversion.
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1 A Holder is entitled, at its option, at any time on or after the
close of business on January 1, 1998, or in case a Debenture is called for
redemption by the Company, or the Holder elects to have such Debenture redeemed
by the Company pursuant to Section 3(c), then in respect of such Debenture until
and including, but (unless the Company defaults in making the payment due upon
redemption) not after, the close of business on the date that is 5 days (or if
such day is a non-business day as described in Section 10 in New York City, then
the next business day) preceding the date fixed for redemption, to convert such
Debenture into the Reserved Post Recoupment Percentage Interest at a price equal
to an outstanding aggregate unpaid principal amount of Debentures held by such
Holder by surrender of the Debenture, or in the case of a Debenture submitted
for redemption pursuant to Section 3(c), satisfactory evidence of such
submission, together with the conversion notice hereon duly executed at the
office of the Company. Upon any such conversion, the Company will establish a
capital account for the Holder in the amount of the aggregate unpaid principal
amount of the Debenture converted by the Holder and including all unpaid and
accrued interest, and the amount of the aggregate principal amount of the
Debenture converted by the Holder shall thereupon become the Holder's Preferred
Partner's Preferred Capital Amount under the Partnership Agreement and the
amount of the unpaid and
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accrued interest on the Debenture converted by the Holder, if any, shall
thereupon be included as the Preferred Partner's Aggregate Preference Amount
in the determination of the Holder's Preferred Partner's Unrecovered Preferred
Capital Amount going forward in the Partnership. Notwithstanding the preceding
sentence of this Section 4(a) and the first sentence of Section 4(b), at its
sole option upon any such conversion, the Company may establish for the Holder
a Preferred Partner's Unrecovered Preferred Capital Amount equal to the
outstanding principal balance of this Debenture together with unpaid and
accrued interest in lieu of paying interest thereon.
2 In the case of a conversion of any Debenture after the close of
business on any Interest Payment Date, the Holder of such Debenture shall be
entitled to receive accrued interest from the immediately preceding Interest
Payment Date until the date of conversion within two business days after
presentment for conversion.
3 (i) In case the Company shall make or pay to the Partners any
distribution of cash, securities or other assets owned by the Partnership other
than (A) pursuant to Section 6.1.1 of the Partnership Agreement or (B) in
connection with the total liquidation, dissolution or winding up of the Company,
then and in each such case, upon conversion of this Debenture, the Holder shall
be entitled to receive, in addition to the Post Recoupment Percentage Interest
to be received by the Holder upon conversion of this Debenture, the amount of
cash, securities or assets the Holder would have been entitled to received as a
partner holding the Post Recoupment Percentage Interest to be received by the
Holder upon conversion of this Debenture if the Holder had converted this
Debenture immediately prior to each distribution of such cash, assets or
securities, together with interest at the rate of 8% per annum on any cash to
which such Holder is entitled to receive pursuant to the foregoing from the date
of distribution to the date of conversion and any income earned on the assets or
securities distributed to which such Holder is entitled from the date of
distribution to the date of conversion. At the time of any such distribution,
the Company shall either (x) deposit the assets or securities payable to the
Holder pursuant hereto in trust for the Holder with instructions as to the
investment of such property and any proceeds therefrom so as to protect the
value of such property for the Holder, or (y) distribute to the Holder the
assets or securities to which they would be entitled upon exercise and upon any
such distribution pursuant to the foregoing clause (x) of this Section 4(c)(i)
shall not apply to such event. Such election by the Company shall be made by
the Company giving written notice thereof to the Holder of this Debenture.
1 In case the Company shall reclassify its outstanding
Partnership Interests, issue any reclassified Partnership Interests or amend the
Partnership Agreement so as to reclassify its outstanding Partnership Interests
(including any reclassification in connection with any merger or consolidation
in which the Company is the continuing Entity), then the Post Recoupment
Percentage Interest to be received by the Holder upon conversion of this
Debenture shall be reclassified such that the Holder shall thereafter be
entitled to receive the Post Recoupment Percentage Interest that such Holder
would have owned or been entitled to receive after the happening of any of the
events described above, had such Holder converted this Debenture immediately
prior to the happening of any such event.
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4 In case of any consolidation with, or merger of the Company into,
any Entity, or in case of any merger of another Entity into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding securities of the Company), or in case
of any sale or transfer of all or substantially all of the assets of the
Company, the Entity formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Holder a written undertaking that the Holder of each Debenture shall have
the right during the period such Debenture shall be convertible as specified in
Section 4(a) to convert such Debenture only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Securities of the
Company into which such Debenture might have been converted immediately prior to
such con solidation, merger, sale or transfer. Such amendment shall provide for
adjustments which, for events subsequent to the effective date of such
amendment, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The provisions of this Section 4(d) shall
similarly apply to successive consolidations, mergers, sales or transfers.
4 Events of Default. If any of the following events ("Events of
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Default") shall occur and be continuing:
1 the Company shall fail to pay when due the principal or
premium, if any, on any of the Debentures whether at maturity or
upon redemption or otherwise; or
2 the Company shall fail duly to perform or observe any other
term, covenant or agreement contained in any of the Debentures for a
period of 60 days after the date on which written notice of such
failure, requiring the Company to remedy the same, shall first have
been given to the Company by the Holders of at least 25% in
aggregate principal amount of the Debentures at the time
outstanding; provided, that if the Company shall within the
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aforesaid period of 60 days commence legal action in a court of
competent jurisdiction seeking a determination that the Company had
not failed to duly perform or observe the term or terms, covenant or
covenants or agreement or agreements specified in the aforesaid
notice, such failure shall not be an Event of Default unless the
same continues for a period of 10 days after the date of any final
determination to the effect that the Company had failed to duly
perform or observe one or more of such terms, covenants or
agreements; or
3 a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for
any substantial part of the
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property of it or ordering the winding-up or liquidation of the
affairs of it and such decree or order shall remain unstayed and
in effect for a period of 20 consecutive days; or
4 the Company shall commence a voluntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or shall consent to the
entry of an order for relief in an involuntary case under any such
law, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or similar official) of the Company or for any substantial part of
its property, or shall make any general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its
debts as they become due or shall take any corporate action in
furtherance of any of the foregoing; or
5 an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding at
least $5,000,000 in aggregate principal amount of indebtedness for
borrowed money, shall happen and be continuing and such default
shall involve the failure to pay the principal of such indebtedness
(or any part thereof), when due and payable after the expiration of
any applicable grace period with respect thereto, and such
indebtedness shall have been accelerated so that the same shall be
or become due and payable prior to the date on which the same would
otherwise have become due and payable, and failure to pay shall not
have been cured by the Company within 30 days after such failure or
such acceleration shall not be rescinded or annulled within 30 days
after notice thereof shall have first been given to the Company;
provided, that if such event of default under such indenture or
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instrument shall be remedied or cured by the Company or waived by
the holders of such indebtedness, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon the
part of any of the Holders of Debentures;
then the Holder of this Debenture may, at such ▇▇▇▇▇▇'s option, declare the
principal of this Debenture, together with accrued interest, to be due and
payable immediately by written notice to the Company, and if any such Event of
Default shall continue at the time of receipt of such written notice, the
principal of this Debenture and the accrued interest shall become immediately
due and payable. Upon payment of such amount of principal and interest, all of
the Company's obligations in respect of payment of principal of and interest on
this Debenture shall terminate. Interest on overdue principal and interest
shall accrue from the date on which such principal and interest were due and
payable to the date such principal and interest are paid or duly provided for,
at the rate borne by the Debentures (to the extent payment of such interest
shall be legally enforceable).
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5 Merger, Consolidation, Sale, Conveyance or Assumption.
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1 The Company will not merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other Entity, unless (i) either
(A) the Company shall be the surviving Entity in the case of a merger or (B) the
surviving, resulting or transferee Entity shall expressly assume the due and
punctual payment of all the Debentures, according to their tenor, and the due
and punctual performance of all of the covenants and obligations of the Company
under the Debentures by supplemental agreement reasonably satisfactory to the
Holder, and (ii) the Company or such successor Entity, as the case may be, shall
not, immediately after such merger, consolidation, sale or conveyance, be in
default in the performance of any covenants or obligations of the Company under
the Debentures.
2 Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 6(a), the successor or assuming Entity shall succeed to and
be substituted for, and may exercise every right and power of and be subject to
all the obligations of, the Company under the Debentures, with the same effect
as if such successor or assuming Entity had been named as the Company therein
and herein and the Company shall be released from its liability as obligor under
the Debentures; provided, that any successor or assuming Entity shall have the
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right to redeem the Debentures pursuant to Section 3(c) only as a result of
circumstances which occur subsequent to such merger, consolidation, sale,
conveyance or assumption and as a result of which the Company would have had
such right if the Company had remained the obligor on the Debentures.
6 Agreement of Subordination of Debentures.
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1 The Company, for itself, its successors and assigns, covenants
and agrees, and each Holder of Debentures by its acceptance thereof, likewise
covenants and agrees, that the payment of the principal of (and premium, if any)
and interest on each and all of the Debentures and coupons is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth in Section
7, in right of payment to the prior payment in full of all Senior Indebtedness
of the Company. As used in the Debenture, "Senior Indebtedness of the Company"
shall mean the principal of (and premium, if any) and interest on the following
whether outstanding at the date hereof or hereafter incurred or created:
(i) any indebtedness of the Company (excluding the Debentures
and indebtedness ranking pari passu with the Debentures, but
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including guarantees given by the Company) for money borrowed,
whether or not evidenced by debentures, notes or similar
instruments, issued, incurred or assumed by the Company and
whether outstanding on the date of this Debenture or thereafter
created or incurred; and
(ii) renewals, extensions, refundings, amendments and
modifications of any such indebtedness or of the instruments
creating or evidencing such
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indebtedness,
unless by the terms of the instrument creating or evidencing such indebtedness
or such renewal, extension, refunding, amendment or modification, it is provided
that such indebtedness or indebtedness as so modified or amended, or such
renewals, extensions or refundings, are not superior in right of payment to the
Debentures.
2 (i) In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company or to its creditors, in their
capacity as such creditors, or to its property, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy, or in the event of
any assignment for the benefit of creditors of the Company or any marshalling of
assets of the Company, then the holders of Senior Indebtedness of the Company
shall first be entitled to receive payment in full of the principal of (and
premium, if any) and interest, including interest thereon accruing after the
commencement of any such proceeding, on all Senior Indebtedness of the Company
before the Holders of any Debentures or coupons shall be entitled to receive any
payment on account of the principal of (or premium, if any) or interest on the
Debentures, and to that end the holders of Senior Indebtedness of the Company
shall be entitled to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash, property or securities,
which may be payable or deliverable in any such proceedings in respect of the
Debentures, other than securities of the Company as reorganized or readjusted or
securities of the Company or any other Entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in this Section 7 with respect to the Debentures, to the
payment of all Senior Indebtedness of the Company; provided, that the rights of
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the holders of Senior Indebtedness of the Company are not altered by such
reorganization or readjustment. For the purposes of this Section 7 no
consolidation, merger, conveyance or transfer made pursuant to the provisions of
Section 6, and no termination of the Company which is followed, pursuant to the
terms of the Partnership Agreement, by an election of the Partners required
thereby not to wind up or terminate the business of the Company, shall be deemed
to be a liquidation, reorganization, dissolution or other winding up of the
Company.
1 If under the circumstances set forth in paragraph (i) of this
Section 7(b), and notwithstanding the provisions thereof, any payment or
distribution of assets of the Company of any kind, whether in cash, property or
securities (other than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinated, at least to
the extent provided in this Section 7 with respect to the Debentures, to the
payment of all Senior Indebtedness of the Company; provided, that the rights of
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the holders of Senior Indebtedness of the Company are not altered by such
reorganization or readjustment), shall be received by the Holders of the
Debentures before the principal of (and
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premium, if any) and interest on all Senior Indebtedness of the Company is
paid in full, such payment or distribution shall be paid over to the holders
of Senior Indebtedness of the Company ratably, for application to the payment
of the principal of (and premium, if any) and interest on all Senior
Indebtedness of the Company remaining unpaid until all the principal of (and
premium, if any) and interest on Senior Indebtedness of the Company shall have
been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness of the Company.
2 Upon any distribution of assets of the Company referred to in
this Section, the Holders of the Debentures shall be entitled to rely upon any
final order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and the Holders of the Debentures shall be entitled to rely upon a certificate
of the liquidating trustee or agent or other person making any distribution to
the Holders of Debentures for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness of
the Company and other indebtedness 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.
3 (i) Upon the maturity of any Senior Indebtedness of the Company
by lapse of time, acceleration or otherwise, all principal thereof (and premium,
if any) and interest due thereon, including interest thereon accruing after the
commencement of any proceeding of the type referred to in paragraph (i) of
Section 7(b), shall first be paid in full, or such payment duly provided for in
cash, before any payment, directly or indirectly, is made on account of the
principal of (or premium, if any) or interest on the Debentures.
1 Upon the happening of an event of default with respect to any
Senior Indebtedness of the Company, as defined therein or in the instrument
under which it is outstanding, permitting the holders to accelerate the maturity
thereof, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no payment shall be made by the Company,
directly or indirectly, on account of the principal of (or premium, if any) or
interest on the Debentures.
4 In case cash, securities or other property otherwise payable or
deliverable to the Holders of the Debentures and coupons shall have been
applied, pursuant to Sections 7(b) or 7(c), to the payment of Senior
Indebtedness of the Company, then, upon the payment in full of the principal of
(and premium, if any) and interest on all Senior Indebtedness of the Company,
the Holders of the Debentures and coupons shall be subrogated to any rights of
any holders of Senior Indebtedness of the Company to receive any further payment
or distributions applicable to Senior Indebtedness of the Company until the
principal of (and premium, if any) and interest on the Debentures shall have
been paid in full, and such payments or distributions received by the Holders of
the Debentures, by reason of such subrogation, of cash, securities or other
property which otherwise would be paid or distributed to the holders of Senior
Indebtedness of the Company shall, as between the Company and its creditors
other than the holders of Senior Indebtedness of the Company, on the one hand,
and the Holders of the Debentures, on the other hand, be deemed to be a payment
by the Company on account of Senior Indebtedness of the Company and not on
account of the Debentures.
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5 No present or future holder of any Senior Indebtedness of the
Company shall be prejudiced in any way in the right to enforce the subordination
of the Debentures by any act or failure to act on the part of the Company. The
provisions of this Section are solely for the purpose of defining the relative
rights of the holders of Senior Indebtedness of the Company, on the one hand,
and the Holders of the Debentures, on the other hand, against the Company and
its assets, and nothing contained in this Section shall impair, as between the
Company and the Holder of any Debenture, the obligation of the Company, which is
unconditional and absolute, to pay to the Holder thereof the principal thereof
(and the premium, if any) and interest thereon as and when the same shall become
due and payable in accordance with the terms thereof, or prevent the Holder of
any Debenture, upon default hereunder or under such Debenture, from exercising
all rights, powers and remedies otherwise provided herein or therein or by
applicable law, all subject to the rights of the holders of Senior Indebtedness
of the Company under this Section to receive cash, property or securities
otherwise payable or deliverable to the Holders of the Debentures.
6 Nothing contained in this Section or in any of the Debentures
shall prevent at any time, except under the conditions described in Sections
7(b) and (c) or during the pendency of any dissolution, winding up, liquidation
or reorganization proceedings therein referred to, the Company from making
payments at any time of principal of (or premium, if any) on the Debentures.
Nothing contained in this Section shall prevent conversion of any of the
Debentures.
7 Replacement, Transfer and Exchange of Debentures.
------------------------------------------------
1 In case any Debenture shall at any time become mutilated,
destroyed, stolen or lost and such Debenture or evidence of the loss, theft or
destruction thereof shall be delivered to the Company, a new Debenture of like
tenor and date with appropriate interest coupons, if any, will be issued by the
Company in exchange for the Debenture so mutilated, or in lieu of the Debenture
so destroyed, stolen or lost, but, in the case of a destroyed, stolen or lost
Debenture only upon receipt of evidence satisfactory to the Company that such
Debenture was destroyed, stolen or lost, and, if required by the Company, upon
receipt also of indemnity satisfactory to the Company. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Debenture shall be borne by
the owner of the Debenture so mutilated, destroyed, stolen or lost.
2 The costs and expenses of effecting any exchange or registration
of transfer pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail (if any) and except, if the Company shall so
require, the payment of a sum sufficient to cover any tax or other governmental
charge or insurance charges that may be imposed in relation thereto, will be
borne by the Company.
8 Modifications and Amendments.
----------------------------
1 Without the consent of any Holders of the Debentures,
modifications of or
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amendments to the Debentures may be made for any of the following purposes:
1 to evidence the succession of another Entity to the Company
and the assumption by any such successor of the covenants of the
Company in the Debentures; and
2 to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions
arising under this Debenture; provided, that such action pursuant to
--------
this clause (ii) shall not adversely affect the interests of any
Holder of the Debentures.
2 Modifications and amendments to these Debentures may be made, and
future compliance with or past default by the Company under any of the
provisions hereof may be waived, with the consent of the Holders of at least a
majority in aggregate principal amount of the Debentures at the time
outstanding; provided, that no such modification, amendment or waiver may,
--------
without the consent of the Holder of each such Debenture affected thereby:
1 waive a default in the payment of the principal of, premium,
if any, or interest on any Debenture;
2 change the stated maturity of the principal or premium, if
any, on, or any installment of interest on, any Debenture, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof or change the coin or
currency in which any Debenture or any premium or the interest
thereon is payable, or adversely affect the right to redeem
(pursuant to Section 3(c)) or convert any Debentures as provided in
Section 4 or modify the provisions of the Debentures with respect to
subordination of the Debentures in a manner adverse to the Holders;
3 reduce the percentage in principal amount of the outstanding
Debentures the consent of whose Holders is required for any
amendment or modification of the terms and conditions of the
Debentures or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of the Debentures or
certain defaults hereunder and thereunder and their consequences)
provided for herein; or
4 modify any of the provisions of this Section 9(b), except to
increase any such percentage or to provide that certain other
provisions of the Debentures cannot be modified or waived without
the consent of the Holder of each outstanding Debenture affected
thereby.
It shall not be necessary for any act of Holders under this Section to approve
the particular form of
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any proposed amendment, modification or waiver, but it shall be sufficient if
such act shall approve the substance thereof. Any modifications, amendments or
waivers to the terms and conditions of the Debentures made in compliance
herewith will be conclusive and binding on all Holders, whether or not they
have given such consent and on all future Holders of Debentures. Any
instrument given by or on behalf of any Holder in connection with any consent
to any such modification, amendment or waiver will be irrevocable once given
and will be conclusive and binding on all subsequent Holders of such
Debenture.
9 Non-Business Days. In any case where the date of maturity of the
-----------------
principal of, premium, if any, or interest on the Debentures or the date fixed
for redemption of any Debenture shall be at any place of payment a Saturday,
Sunday, a legal holiday or a day on which banking institutions are authorized or
obligated by law to close, then payment of principal, premium, if any, or
interest need not be made on such date at such place but may be made on the next
succeeding day at such place of payment which is not a Saturday, Sunday, a legal
holiday or a day on which banking institutions are authorized or obligated by
law to close, with the same force and effect as if made on the date of maturity
or the date fixed for redemption, and no interest shall accrue for the period
after such date.
10 Notices. All notices sent hereunder shall be in writing. If sent to
-------
the Company, such notices shall be addressed to the Company at its address in
the Partnership Agreement. If sent to the Holder, such notices shall be
addressed to the Holder at its address in the Partnership Agreement or at such
other address as the Holder shall advise the Company in writing. Any notice
shall be deemed to have been duly given if personally delivered or sent by
United States mails or by facsimile confirmed by letter and will be deemed
given, unless earlier received: (a) if sent by certified mail, return receipt
requested, or by first-class mail, three business days after being deposited in
the United States mail, postage prepaid; (b) if sent by United States Express
mail, one business day after being deposited in the United States mail, postage
prepaid; (c) if sent by facsimile transmission, on the date sent provided
confirmatory notice is sent on the same day by first-class mail, postage
prepaid; (d) if delivered by hand, on the date of receipt; or (e) if sent by
overnight courier, one business day after being deposited with such courier,
delivery charges prepaid.
11 Consent to Jurisdiction. The Company agrees that any legal suit,
-----------------------
action or proceeding arising out of or relating to the Debentures may be
instituted in a state, city or federal court in the State of California. To the
extent permitted by law, the Company irrevocably waives trial by jury and any
objection which it may now or hereafter have to the venue of any suit, action or
proceeding, arising out of or relating to the Debentures brought in the State of
California and to the extent permitted by law hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in the State of
California has been brought in an inconvenient forum. If any agent appointed by
the Company refuses to accept service, the Company agrees that service upon it
by certified mail, return receipt requested, sent to the address specified by
the Company in the Partnership Agreement, shall constitute sufficient notice.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Holder to bring
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proceeding against the Company in the courts of any other jurisdiction.
12 Governing Law. The Debentures shall be governed by and construed in
-------------
accordance with the internal laws of the State of California without giving
effect to conflicts of laws principles.
13 Descriptive Headings. The descriptive headings appearing in this
--------------------
Debenture are for convenience of reference only and shall not alter, limit or
define the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed in its corporate name by a duly authorized officer.
Dated: January 17, 1997
AHN PARTNERS, L.P.
By: America's Health Network, L.L.C.
(General Partner)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________________
Title: Executive Manager
__________________________________________
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CONVERSION NOTICE
The undersigned holder of this Debenture hereby irrevocably exercises the
option to convert this Debenture, into the Post Recoupment Percentage Interest
of AHN Partners, L.P. specified in this Debenture in accordance with the terms
of this Debenture, and directs that such interests, together with a check in
payment for any fractional share ____ accrued interest from the immediately
preceding interest payment date be delivered to the undersigned unless a
different name has been indicated below. If shares or Debentures are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Dated:
_______________
_______________________________________________
Signature
REDEMPTION NOTICE
The undersigned holder of this Debenture hereby requests and instructs the
Company to redeem this Debenture in accordance with the terms of Section 3(__)
of this Debenture, and directs that a check in payment of the redemption amount
be delivered to and any Debentures representing any unredeemed principal amount
hereof, be delivered to the undersigned. The undersigned understands that this
request can be revoked by delivering written notice to the Company on or before
the Holder Redemption Date, together with the undersigned's non-transferable
receipt for such Debenture.
Dated:
_______________
_______________________________________________
Signature
