exhibit (e) (1)
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON
______________________, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAW.
CONVERTIBLE UNSECURED NOTE
$____________ Salt Lake City
______________
FOR VALUE RECEIVED, the undersigned, ALPNET, INC., a Utah corporation (the
"Company"), hereby promises to pay to the order of________________,
at__________________, _______________________ in three (3) annual installments
as described in Paragraph 2 of this Note, the principal amount of $_________or
such lesser principal amount thereof as may remain outstanding, together with
interest thereon calculated from the date hereof, in accordance with the
provisions of this Note.
1. Payment of Interest. Interest shall accrue at a variable interest rate
of two percent (2.0%) per annum above the New York Prime Rate (as defined
below). Interest shall accrue daily on the outstanding balance of the
outstanding Principal both before and after judgment, and shall be calculated on
the basis of a 360-day year.
As used in this Promissory Note, the term "New York Prime Rate" shall be deemed
to mean an index which is determined quarterly by the lowest Prime Rate
published in the Money Rate Section of the West Coast Edition of the Wall Street
Journal. This definition of Prime Rate is to be strictly interpreted and is not
intended to serve any purpose other than providing an index to determine the
variable interest rate used herein. The applicable annual total interest rate,
as computed in accordance with the foregoing, shall be adjusted on the first day
of January, April, July and October of each year. The Company will notify
Lender of the current index rate upon Xxxxxx's request. The interest rate
change will not occur more often than each quarter.
The Company shall pay to the holder of this Note all accrued interest
quarterly, specifically February 1, May 1, August 1, and November 1 of each
year, beginning ___________ (collectively, the "Interest Payment Dates"). Any
accrued interest, which for any reason has not theretofore been paid, shall be
paid in full on the date on which the final principal payment on the Note is
made.
2. Payment of Principal. The principal amount of this Note shall be repaid
in three (3) equal installments due 36, 48, and 60 months, respectively,
from_______________. Maker has a right to pay the full amount, or any portion,
of the indebtedness evidenced by this Note without premium or penalty prior to
maturity upon thirty (30) days prior notice to the holder; provided, however,
that even after receipt of notice from Holder of its intent to make a
prepayment, the holder shall continue to have the right to exercise its
conversion rights until actual receipt of such prepayment.
3. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall be
deemed to have occurred if
(i) the Company fails to pay when due and payable the full amount of interest
then accrued on the Note or the installment amount of any principal payment on
the Note, and such failure shall have continued for a period of 30 days;
(ii) the Company fails to perform or observe any material provision contained
in this Note, and such failure is not cured within sixty (60) days after the
occurrence thereof;
(iii) any information contained in writing required to be furnished by the
Company to any holder of this Note is false or misleading in any material
respect on the date made or furnished; or
(iv) the Company makes an assignment for the benefit of creditors or admits
in writing its inability to pay its debts generally as they become due; or an
order, judgment or decree is entered adjudicating the Company bankrupt or
insolvent.
The foregoing shall constitute Events of Default whatever the reason or cause
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
(b) Consequences of Events of Default. If an Event of Default has occurred,
the aggregate principal amount of the Note (together with all accrued interest
thereon) shall become immediately due and payable without any action on the part
of the holder of this Note, and the Company shall immediately pay to the holder
of the Note all amounts due and payable with respect to the Note.
4. Conversion.
(a) Conversion Procedure.
(i) At any time following the date of issuance of this Note and prior to the
payment of this Note in full, the holder of this Note may convert all or any
portion of the outstanding principal amount of this Note into a number of shares
of the Conversion Stock determined by dividing the principal amount designated
by such holder to be converted by the Conversion Price. Upon payment of this
Note in full, all conversion rights granted herein shall terminate.
(ii) The holder of this Note may convert all or a portion of this Note by
delivering to the Company or its agent a written notice of conversion (the
"Notice of Conversion" in the form of Exhibit A attached hereto), duly signed by
or on behalf of the holder, stating the aggregate principal amount of such
holder's Note to be converted. Such notices may be delivered to the Company or
its agent by telephone line facsimile, and shall be delivered prior to 5 p.m.,
Salt Lake City time, on the day prior to the date of requested conversion. The
Company will confirm its receipt of the Notice of Conversion, and confirm the
calculations therein, or indicate alternative calculations, by return facsimile
by 11:00 a.m., Salt Lake City time, on the following Business Day.
Notwithstanding anything contained herein to the contrary, a minimum of $50,000
of the Note must be converted at a time or the entire balance due on the Note if
less than $50,000.
(iii) Except as otherwise expressly provided herein, each conversion of this
Note shall be deemed to have been effected as of the close of business on the
date on which the Notice of Conversion is confirmed by the Company. At such
time as such conversion has been effected, the rights of the holder of this Note
as such holder to the extent of the conversion shall cease, and the Person or
Persons in whose name or names any certificate or certificates for shares of
Conversion Stock are to be issued upon such conversion shall be deemed to have
become the holder or holders of record of the shares of Conversion Stock
represented thereby.
(iv) On receipt by the Company from the holder of this Note of a Notice of
Conversion by telephone line facsimile transmission, meeting the requirements
for conversion in this Note, and confirmation of such by the Company, the
Company shall deliver to the holder as soon as is practicable:
(1) a certificate or certificates representing the number of shares of
Conversion Stock issuable by reason of such conversion in such name or names and
such denomination or denominations as the holder has specified;
(2) payment in an amount equal to the sum of all accrued interest with
respect to the principal amount converted, which has not been paid prior
thereto, plus the amount payable under subparagraph (v) below; and
(3) a new Note representing any portion of the principal amount that was
represented by the Note surrendered to the Company in connection with such
conversion but which was not converted.
(v) If any fractional share of Conversion Stock would, except for the
provisions hereof, be deliverable upon conversion of this Note, the Company, in
lieu of delivering such fractional share, shall pay an amount equal to the
Conversion Price of such fractional share as of the date of such conversion.
(vi) The issuance of certificates for shares of Conversion Stock upon
conversion of this Note shall be made without charge to the holder hereof for
any issuance tax in respect thereof or other cost incurred by the Company in
connection with such conversion and the related issuance of shares of Conversion
Stock. Upon conversion of this Note, the Company shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
(vii) Each Common Stock certificate issued upon conversion of all or any
portion of this Note, shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR REGISTERED OR OTHERWISE QUALIFIED FOR SALE UNDER ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR SOLD OR OFFERED
FOR SALE OR OTHERWISE TRANSFERRED, PLEDGED, HYPOTHECATED OR DISPOSED OF UNLESS
IT HAS BEEN REGISTERED UNDER THE ACT AND REGISTERED OR OTHERWISE QUALIFIED FOR
SALE UNDER SUCH STATE SECURITIES LAWS OR AN EXCEPTION FROM REGISTRATION
THEREUNDER IS AVAILABLE.
(viii) The Company shall at all times reserve and keep available, out of
its treasury stock or authorized and unissued stock, or both, solely for the
purpose of effecting the conversion of this Note, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of this Note.
(b) Conversion Price. As used herein, the term "Conversion Price" shall mean
the average of the closing bid and ask for ALPNET, Inc.'s Common Stock as quoted
on NASDAQ for the five (5) trading days prior to the date of this Note which is
$________ per share.
5. Registration Rights.
(a) Piggyback Rights. If at any time prior to the payment of this Note in
full, the Company proposes to file a registration statement under the Securities
Act, other than a registration on Form S-8 or a registration statement on Form
S-4 (a "Registration Statement"), with respect to an offering for its own
account or for the account of others, of any Common Stock of the Company, then
each such time the Company shall give written notice of such intention to file a
Registration Statement (a "Piggyback Notice") to the holder of this Note at
least thirty (30) days before the anticipated filing date. The Piggyback Notice
shall describe the intended method of distribution and offer the holder of this
Note the opportunity to register pursuant to such Registration Statement such
Registrable Securities as the holder may request in writing to the Company
within thirty (30) days after the date the holder first received the Piggyback
Notice (a "Piggyback Registration"). The Company shall take all necessary steps
so requested to register the Registrable Securities of the holder.
(b) Underwritten Registrations. In a registration pursuant to this paragraph
5 involving an underwritten offering, whether or not for sale for the account of
the Company, any request pursuant to this paragraph 5 may require that all
Registrable Securities be included in the underwriting on identical terms and
conditions (an "Underwritten Registration"). If the managing underwriter with
respect to such an offering advises the Company that the inclusion of all the
Registrable Securities which the holder has requested to be included in the
Registration Statement would materially jeopardize the success of the offering,
then the Company shall be required to include in the underwriting only that
number, if any, of Registrable Securities which the underwriter advises the
Company may be sold without materially jeopardizing the offering. In the event
that the number of Registrable Securities included in such Piggyback
Registration is limited as described above, then Registrable Securities shall be
included on a pro rata basis based on the total number of outstanding Common
Stock with registration rights, subject to prior registration rights granted by
the Company. Any holder of this Note or a similar Note disapproving of the
terms of any such underwriting may elect to withdraw from it by written notice
to the Company and the underwriter.
(c) Annual Registration. The Company shall undertake to register under the
Securities Act and under any applicable Blue Sky or other state securities laws,
all Registrable Securities within 60 days after the Company files its next
annual From 10-K with the U.S. Securities and Exchange Commission (the "Annual
Registration"). The Company shall take all necessary steps to register the
Registrable Securities of the holder.
6. Registration Expenses. All expenses incident to a Piggyback
Registration, Underwritten Registration or Annual Registration, including,
without limitation, all registration and filing fees, including fees with
respect to filings required to be made with the Commission, the National
Association of Securities Dealers, Inc., fees and expenses of compliance with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters), printing expenses, messenger,
telephone and delivery expenses, and fees and disbursements of counsel of the
Company and of all independent public accountants of the Company (including the
expenses of any special audit and "comfort" letters required by or incident to
such
performance), underwriters fees (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities which
shall be paid by the selling holders on a pro rata basis based on the number of
Registrable Securities being sold by them), securities acts liability insurance
and fees and expenses of other persons or entities retained by the Company will
be borne by the Company whether or not any Registration Statement becomes
effective.
7. Holdback Agreements. A holder of this Note whose Registrable Securities
are included in a Registration Statement as part of an underwritten public
offering shall agree not to effect any public sale or distribution of Common
Stock, including a sale pursuant to Rule 144 or in reliance on any other
exemption from registration under the Securities Act, during the ninety (90) day
period (or other period reasonably required by the Underwriter) beginning on the
effective date of such Registration Statement (except as part of such
registration), but only if and to the extent requested in writing (with
reasonable prior written notice) by the underwriter(s). Any such agreement
shall be in writing in a form satisfactory to a majority in interest of the
holder of this Note and the holders of all similar notes participating in such
registration.
8. Registration Information.
(a) The Company may require the holder of this Note and holders of similar
Notes participating in a registration hereunder to furnish the Company such
information regarding such holder and the distribution of such Registrable
Securities as the Company may from time to time reasonably request and as shall
be required by law to effect such registration.
(b) The holder of this Note or holders of similar Notes who include
Registrable Securities in any registration under paragraph 5 shall distribute
those Registrable Securities in a manner consistent with the distribution
described in the relevant registration statement.
9. Indemnification.
(a) Indemnification by the Company. In the event of any registration of any
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will indemnify and hold harmless any holder of this Note
participating in the registration, its directors, stockholders, officers and
partners and each underwriter involved in such registration and each other
person, if any, who controls each selling holder or underwriter within the
meanings of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") against any losses, claims, damages or liabilities,
joint or several, to which each selling holder or its officers, directors,
stockholders or partners or underwriter or controlling person may become subject
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 in any Registration Statement under
which such Registrable Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in such Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such selling holder, its officers,
directors, stockholders and partners and such underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
any of them as they are incurred in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable to any selling holder or its officers, directors,
stockholders or partners, or controlling persons in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any willful untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement thereto, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
selling holder or its officers, directors, stockholders or partners, or
controlling persons, specifically for use in the preparation of such
Registration Statement, preliminary prospectus or final prospectus or amendment
or supplement thereto.
(b) Indemnification by the Holder. In the event of any registration of any
of the Registrable Securities under the Securities Act pursuant to this
Agreement, each selling holder, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed such Registration Statement, each underwriter involved in such
registration, each other selling holder and their respective officers,
directors, stockholders and partners and each person, if any, who controls the
Company or any such underwriter or selling holder within the meaning of the
Securities Ace or the Exchange Act, against any losses, claims, damages or
liabilities, to which the Company, such directors and officers, such underwriter
or selling holder or its respective officers, directors, stockholders or
partners or controlling person may become subject, 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 a material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained in such Registration Statement, or any amendment
or supplement to such Registration Statement, or arise out of or are based upon
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statement therein not misleading, and will
reimburse the Company, the underwriters, selling holders and their respective
officers, directors, stockholders, partners and controlling person for any legal
or any other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action, if
the statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such selling
holder or its officers, directors, stockholders or partners or controlling
persons, specifically for use in connection with the preparation of such
Registration Statement, preliminary prospectus or final prospectus or amendment
or supplement thereto.
(c) Required Notices. Each party entitled to indemnification under this
Paragraph 9 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after the
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and, with respect to third party claims, shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting from
it, provided that counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation must be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and provided further that
the failure of any Indemnified Party to give notice as provided in this
Paragraph 9(c) shall not relieve the Indemnifying Party of its obligations under
Paragraph 9(a) or (b), as the case may be. The Indemnified Party shall have the
right to employ its own counsel in any claim or litigation, but, with respect to
third party claims or litigation, the fees and expenses of counsel shall be at
the expense of such Indemnified Party, when and as incurred, unless (i) the
Indemnified Party shall have reasonably concluded that there may be a conflict
or interest between the Indemnifying Party and the Indemnified Party in the
conduct of the defense of such claim or
litigation (in which case the Indemnifying Party shall not have the right to
direct the defense of such claim or litigation on behalf of the Indemnified
Party), or (ii) the Indemnifying Party shall fail, within a reasonable time
after notice of the claim, to have given written notice of its intention to
assume such defense, and to have employed counsel to assume the defense of such
claim or litigation, or (iii) the Indemnifying Party fails timely and actively
to assume or to continue to assume the defense of such claim. No Indemnifying
Party, in the defense of any claim or litigation, shall, without the consent of
the Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term the giving by the
claimant or plaintiff to such Indemnified Party, of a release from all liability
in respect of such third party claim or litigation. In no event shall an
Indemnified Party consent to any entry of any judgment in a third party claim or
litigation, or settle a third party claim or litigation without the prior
written consent of the Indemnifying Party unless the Indemnifying Party fails to
timely give notice of its intention to assume defense or timely and actively to
assume and continue such defense.
10. Assignability. The registration rights granted in this Note may be
assigned by the holder together with an assignment of Registrable Securities by
such holder.
11. Notices. All notices or other communications under this Note shall be
given in accordance with the notice provisions of this Note.
12. Definitions. For purposes of this Note, the following capitalized terms
have the following meaning.
"Business Day" means any day other than a Saturday, a Sunday or any day on
which banks in Salt Lake City are authorized or obligated by law or executive
order to close.
"Common Stock," "Common Shares", or "Shares" means the Company's Common Stock,
no par value per share.
"Conversion Stock" means shares of the Company's Common Stock; provided, that if
there is a change such that the securities issuable upon conversion of the Note
are issued by an entity other than the Company or there is a change in the class
of securities, so issuable, then the term "Conversion Stock" shall mean one
share of the security issuable upon conversion of this Note if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Events of Default" has the meaning set forth in Paragraph 3 hereof.
"Interest Payment Dates" has the meaning set forth in Paragraph 1 hereof.
"Notice of Conversion" has the meaning set forth in Paragraph 4(a)(ii) hereof.
"Registerable Securities" means the Common Shares issuable upon conversion of
this Note and any other Common Shares acquired by the holder of this Note as a
result of stock splits, stock dividends, reclassifications, recapitalizations,
or similar events relating to any such Shares. Wherever reference is made in
this Note to a request or consent of holders of a certain percentage of
Registrable Securities, the determination of such percentage shall include
Shares issuable upon conversion of this Note even if such conversion has not yet
been effected. Sixty days prior to the date that the Shares may be transferred
without registration under the Securities Act, pursuant to Regulation S
promulgated thereunder ("Regulation S") or otherwise, the Shares will cease to
be Registrable Shares.
"Securities Act" means the Securities Act of 1933, as amended (the "Securities
Act") or any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission under the Securities Act, as they each may,
from time to time, be in effect.
13. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of a holder's Note, and
in the case of any such loss, theft, or destruction, upon receipt of indemnity
reasonably satisfactory to the Company, the Company shall (at its expense)
execute and deliver in lieu of such Note a new Note of like kind representing
the aggregate principal amount represented by such lost, stolen, destroyed or
mutilated Note and dated the date of such lost, stolen, destroyed or mutilated
Note, and interest shall accrue on the new Note from the date to which interest
has been fully paid on such lost, stolen, destroyed or mutilated Note.
14. Cancellation. After all principal and accrued interest at any time
owned on this Note has been paid in full, this Note shall be surrendered to the
Company for cancellation and shall not be reissued.
15. Payments. All payments to be made to the holders of this Note shall be
made in U.S. Dollars in immediately available funds.
16. Place of Payment. Except as otherwise expressly provided hereunder,
payments of principal and interest shall be delivered (i) in person, (ii) sent
by registered or certified mail, postage prepaid with return receipt requested,
or (iii) sent by reputable overnight courier service, fees prepaid, to the note
holder, at such holder's address as it appears in this Note (unless otherwise
indicated by any such holder).
17. Governing Law and Dispute Resolution. Any controversy or claim arising
out of or relating to this Note, or the breach thereof, shall be settled by
arbitration in accordance with the COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be conducted in the office of the Association
closest to the Company's principle place of business in the United States. If
space is not available in the office of the Association, then the arbitration
will be held at a facility in reasonable proximity to the Association office.
The party found by arbitration to be in breach of this Note shall be required to
pay all other parties' attorneys' fees, costs and expenses incurred in
connection with the arbitration, in addition to any other relief ordered by the
arbitration(s).
18. Integration. There are no representations, warranties, covenants or
agreements between the parties relating to this Note and its contents except as
are specifically set forth or referred to in this Note. This Note contains the
entire agreement between the parties hereto and supersedes all prior agreements,
correspondence, memoranda, representations and understandings of the parties
relating thereto. No representations have been made to induce the parties
hereto to enter into the transactions contemplated in this Note except as are
set forth herein.
IN WITNESS WHEREOF, the Company has executed and delivered this Note
as of the date first written above.
ALPNET, INC.
By: ________________________________
_____________________________
Its: __________________________
Exhibit A
FORM OF NOTICE OF CONVERSION
BY FACSIMILE: or ____________________ (alternate)
ALPNET, Inc. 0000
Xxxxx Xxxxxxxx Xxxxx
Xxxxx #000 Xxxx Xxxx Xxxx, Xxxx 000000-0000
cc: [Name of Transfer Agent]
Re: Convertible Unsecured Note
The undersigned hereby elects to convert the principal amount of the Convertible
Unsecured Note indicated below, into shares of Common Stock, no par value per
share of the Company, as of the following date:
Date to Effect Conversion:
Principal amount of Note being converted:
Conversion Price: $________ per share
The number of shares of Common Stock to be received on conversion of _______
principal amount of the Note is _____________ shares.
Delivery Instructions:
Certificates to be issued in the name(s) of:
Certificates to be delivered to:
Date:____________________ _________________________________________
Authorized signature of Registered Holder
CONFIRMATION OF RECEIPT OF NOTICE OF CONVERSION
AND CONVERSION CALCULATION:
Acknowledged:
ALPNET, INC.
By:
Name:
Title:
