1
EXHIBIT 4.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR A VALID EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS TOGETHER WITH AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. ANY TRANSFEREE OF THIS NOTE
SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE.
ASSET-BACKED EXCHANGEABLE TERM NOTE
Chicago, Illinois
June 29, 2001 $12,000,000
FOR VALUE RECEIVED, DVI, Inc., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Deephaven/JE Xxxxxxx I, LLC, a Minnesota
limited liability company, or registered assigns in accordance with Section 21
hereof ("Holder"), the principal amount of Twelve Million Dollars ($12,000,000),
on November 30, 2004 (the "Maturity Date"), and to pay interest on the unpaid
principal balance of this Note until payment in full of this Note as described
in Section 2 hereof, at the rate of 9.5% per annum from the date hereof (the
"Issuance Date") until the unpaid principal balance of this Note becomes due and
payable, whether at maturity or upon acceleration or by exchange or redemption
in accordance with the terms hereof, provided that (i)(x) any amount of this
Note which is not paid when due or (y) any Exchange Amount subject to a
Mandatory Redemption Event arising under any of Section 4(a)(i), (ii), (iii),
(iv) or (vii), in each case shall bear interest until such amount is paid in
full at the rate of 15% per annum (or such higher applicable rate as provided
herein), (ii) during the existence of a Mandatory Redemption Event arising under
either of Section 4(a)(v) or (vi), all of the unpaid principal balance of this
Note shall bear interest at the rate of 13% per annum (or such higher applicable
rate as provided herein) during the first 30 days of any such Mandatory
Redemption Event, 15% per annum during the second 30 days of any such Mandatory
Redemption Event and thereafter 18% per annum during the existence of any such
Mandatory Redemption Event (each such rate being a "Default Rate") (the amount
of such interest payment paid at the applicable Default Rate is sometimes
referred to in this Note as "Default Interest"). Interest on this Note shall be
computed on the basis of a 360-day year and actual number of days elapsed.
2
1. DEFINED TERMS.
Each capitalized term used herein, and not otherwise defined, shall have
the meaning ascribed thereto in the Securities Purchase Agreement (defined
below). For purposes of this Note, the following terms shall have the following
meanings:
(i) "Acquiring Entity" is defined in Section 6(a).
(ii) "Approved Company Plan" shall mean any employee benefit plan
of the Company which has been approved by the Board of Directors of the
Company, pursuant to which any equity or other securities may be issued
to any employee, officer, director or consultant for services provided
to the Company.
(iii) "Broker" is defined in Section 2(e)(ii).
(iv) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which commercial banks in the City of Chicago,
Illinois or the Commonwealth of Pennsylvania are authorized or required
by law or executive order to remain closed.
(v) "Common Stock" shall mean (i) shares of the Company's common
stock, par value $.005 per share, as constituted on the date hereof, and
(ii) any stock into which such Common Stock shall have been converted or
exchanged or any stock resulting from any reclassification of such
Common Stock.
(vi) "Company" is defined in the first paragraph hereof.
(vii) "Deephaven Brokerage Amount" is defined in Section
2(e)(iii).
(viii) "Default Interest" is defined in the first paragraph hereof.
(ix) "Default Rate" is defined in the first paragraph hereof.
(x) "DTC" is defined in Section 2(e)(ii).
(xi) "Due Date" is defined in Section 2(a).
(xii) "Event of Default" is defined in Section 10(a).
(xiii) "Exchange Amount" means (i) that portion of the Monthly
Payment Amount not redeemed or deferred, or (ii) in the case of a
Special Event, the unpaid principal balance of this Note, plus all
accrued and unpaid interest thereon, and in each case, interest and
Default Interest, if any, until paid in cash or exchanged for Common
Stock.
(xiv) "Exchange Date" is defined in Section 2(e)(i).
(xv) "Exchange Failure" is defined in Section 2(e)(v)(A).
2
3
(xvi) "Exchange Notice" is defined in Section 2(e)(i).
(xvii) "Exchange Price" means, as of any Exchange Date or other
date of determination and subject to adjustment as provided herein, the
average of the three lowest daily trading prices of the Common Stock (as
reported by Bloomberg) for the 15 consecutive trading days ending on the
trading day immediately preceding the date of submission of an Exchange
Notice by the Holder.
(xviii) "Exchange Rights" shall mean rights to exchange the
applicable Exchange Amount at any time into fully paid and nonassessable
shares of Common Stock at the Exchange Price then in effect, which
rights shall be cumulative. The Exchange Rights may be exercised in
whole or in part.
(xix) "Exchange Shares" means the number of shares of Common Stock
issuable upon exercise of Exchange Rights pursuant to Section 2(c)
determined according to the following formula:
Exchange Shares = Exchange Amount/Exchange Price
(xx) "Exchangeable Securities" shall mean evidences of
indebtedness, shares (including, without limitation, Preferred Shares)
of stock or other securities which are exchangeable into or exchangeable
for, with or without payment of additional consideration, shares of
Common Stock, either immediately or upon the arrival of a specified date
or the happening of a specified event.
(xxi) "Holder" is defined in the first paragraph.
(xxii) "Issuance Date" is defined in the first paragraph hereof.
(xxiii) "Mandatory Redemption Event" is defined in Section 4(a).
(xxiv) "Maturity Date" is defined in the first paragraph hereof.
(xxv) "Monthly Payment Amount" is defined in Section 2(a).
(xxvi) "Notice Date" is the fifth trading day prior to each Due
Date.
(xxvii) "Notice of Redemption" is defined in Section 4(c)(i).
(xxviii)"Optional Monthly Redemption" shall mean, at the Company's
option, the Company's payment of the Monthly Payment Amount in cash, in
whole or in part.
(xxix) "Optional Monthly Redemption Right" is defined in Section
4(b).
(xxx) "Organic Change" is defined in Section 6(a).
(xxxi) "Person" means a natural person, a partnership, a
corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an
3
4
unincorporated organization or a governmental or any department, agency
or political subdivision thereof.
(xxxii) "Preferred Shares," as applied to any Person, shall mean
shares of such Person, which shall be entitled to preference or priority
over any other shares of such Person in respect of either the payment of
dividends or the distribution of assets upon liquidation.
(xxxiii)"Principal Market" means the New York Stock Exchange, or
other national exchange or trading market on which the Common Stock is
listed or included for trading.
(xxxiv) "Purchase Rights" is defined in Section 6(b).
(xxxv) "Redemption Price" is defined in Section 4(e).
(xxxvi) "Securities Purchase Agreement" means that certain
Securities Purchase Agreement dated as of the date hereof by and between
the Company and the Holder.
(xxxvii) "Share Delivery Period" is defined in Section 2(e)(v)(A).
(xxxviii) "Special Event" is defined in Section 2(c)(ii).
(xxxix) "Special Event Trigger Price" means a price equal to $30.00,
subject to adjustment as provided herein.
(xl) "Stock Purchase Rights" shall mean any warrants, options or
other rights to subscribe for, purchase or otherwise acquire any shares
of Common Stock or any Exchangeable Securities, either immediately or
upon the arrival of a specified date or the happening of a specified
event.
(xli) "Transfer Agent" is defined in Section 2(e)(ii).
(xlii) "Void Optional Redemption Notice" is defined in Section
4(d).
(xliii) "Void Optional Redemption Option" is defined in Section
4(d).
(xliv) "Warrants" shall mean any warrant to purchase Common Stock
issued or to be issued to the Holder hereof under this Note or
otherwise.
2. PAYMENTS OF PRINCIPAL AND INTEREST.
Payments of principal and interest due under this Note shall be made as
follows:
(a) Subject to Section 2(c)(i) below, commencing on August 1,
2001 and on the first day of each month thereafter (each a "Due Date")
installments of principal in the amount of $400,000, plus all accrued and unpaid
interest until the outstanding principal balance of this Note is repaid in full,
shall be due and payable (the "Monthly Payment Amount"); provided however, so
long as no Mandatory Redemption Event arising under Section 4(a)(iv) shall have
4
5
occurred and is continuing, the Company may elect to defer (in whole and not in
part) the payment of up to two Monthly Payment Amounts (which shall not have
consecutive Due Dates). If the Company elects to defer the payment of a Monthly
Payment Amount, then the Company shall notify the Holder on the applicable
Notice Date that, in the case of the first such deferred Monthly Payment Amount,
it shall be paid 30 days after all other regularly scheduled Monthly Payment
Amounts are due and payable and in the case of the second such deferred Monthly
Payment Amount, it shall be paid 60 days after all other regularly scheduled
Monthly Payment Amounts are due and payable.
(b) The unpaid principal balance of this Note if not sooner
declared to be due and payable in accordance with the terms hereof, together
with all accrued and unpaid interest, shall be due and payable on the Maturity
Date.
All payments of principal and interest on this Note (to the extent
such principal and/or interest is not exchanged for Common Stock in accordance
with the terms hereof) shall be made in lawful money of the United States of
America by wire transfer of immediately available funds as follows: American
National Bank and Trust Company of Chicago, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
XX 00000, XXX 000000000, FBO Deephaven/JE Xxxxxxx X, LLC, to such account as the
Holder may from time to time designate by not less than five Business Days prior
written notice in accordance with the provisions of this Note. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is
not a Business Day, the same shall instead be due on the next succeeding
Business Day.
(c) Monthly Payment Amount; Exchange Upon Special Event. The
Company shall be obligated to pay to Holder the Monthly Payment Amount on the
following terms and conditions:
(i) Monthly Payment Amount. Subject to the provisions of
Section 2(d), the existence of any Mandatory Redemption Event described in
Section 4(a) or any Event of Default described in Section 10(a), the
Company shall deliver to Holder on each Notice Date a notice in the form
attached hereto as EXHIBIT A, stating whether the Company will defer
payment or satisfy all or a portion of the Monthly Payment Amount through
an Optional Monthly Redemption (if such notice is for an Optional Monthly
Redemption, such notice shall also be a Notice of Redemption) or, so long
as (i) the Company has duly authorized the issuance of Exchange Shares with
respect thereto and (ii) the Exchange Shares issuable with respect thereto
have been listed on the Principal Market (subject to official notice of
issuance), Exchange Rights. If the Company elects to satisfy any portion of
a Monthly Payment Amount through an Optional Monthly Redemption, then the
Company shall pay to the Holder on such Due Date that portion of the
Monthly Payment Amount that the Company elected to pay in cash. If the
Company elects not to redeem in cash an entire Monthly Payment Amount
through an Optional Monthly Redemption, the Exchange Amount (or portion
thereof that is not redeemed by the Company in cash) applicable to such Due
Date shall become Exchange Rights.
(ii) Exchanges Upon Special Event.
(A) In addition to all other rights of Holder contained
herein, upon the occurrence of any Special Event (other than the Special
Event arising under Section
5
6
2(c)(ii)(1)), the Company shall elect by written notice to Xxxxxx, within
three Business Days thereof, to (i) prepay the entire unpaid principal
balance on the Note, together with accrued and unpaid interest thereon, in
accordance with Section 5(a) or (ii) allow all of the unpaid principal
balance of this Note, plus accrued and unpaid interest thereon, to become
Exchange Rights. If the Company elects to so prepay the Note, such
prepayment must be paid to the Holder within five Business Days of the
occurrence of such Special Event. If the Company elects to allow Exchange
Rights to be so issued with respect to the Note, such issuance will be
deemed to have occurred on the third Business Day after the occurrence of
such Special Event. In addition to all other rights of Holder contained
herein, upon the occurrence of a Special Event arising under Section
2(c)(ii)(1), all of the unpaid principal balance of this Note, plus accrued
and unpaid interest thereon, shall thereupon become Exchange Rights. In the
event that any Exchange Rights are issued in connection with the occurrence
of a Special Event, the Company shall cause the Exchange Shares issuable in
connection therewith to be both duly authorized for issuance and listed on
the Principal Market (subject to official notice of issuance) within three
Business Days of the date of issuance of such Exchange Rights. A "Special
Event" shall be deemed to have occurred at such time as any of the
following events:
(1) subject to Section 2(c)(ii)(B), the closing price of
the Common Stock is at or above the Special Event Trigger Price for a
period of 10 consecutive trading days. In this instance only, the
applicable Exchange Price shall be the Special Event Trigger Price;
(2) the date that is 20 Business Days prior to the
consummation of a consolidation, merger or other business combination
of the Company with or into another Person (other than solely pursuant
to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company);
(3) the date that is 20 Business Days prior to the
consummation of a sale or transfer of 50% or more of the Company's
assets on a consolidated basis; or
(4) a purchase, tender or exchange offer made to holders
of more than 30% of the outstanding shares of Common Stock.
The Company shall give notice of any Special Event to the Holder.
(B) Notwithstanding anything to the contrary contained in
Section 2(c)(ii)(A), after the occurrence of a Special Event that was
triggered by Section 2 (c)(ii)(A)(1), that portion of the Exchange
Rights created by the occurrence of that Special Event that has not
been converted into Common Stock as of the 30th consecutive trading
day on which the closing price of the Common Stock is below the
Special Event Trigger Price on the Principal Market (as reported by
Bloomberg) shall automatically cease to represent Exchange Rights and
revert back to being the remaining unpaid principal balance of the
Note, plus accrued and unpaid interest. From and after such date, the
Company shall resume paying principal and interest pursuant to Section
2.
6
7
(iii) Fractional Shares. The Company shall not issue any
fraction of a share of Common Stock upon any exercise of Exchange
Rights. All shares of Common Stock (including fractions thereof)
issuable upon any exercise of Exchange Rights shall be aggregated for
purposes of determining whether the exercise would result in the
issuance of a fraction of a share of Common Stock. If, after the
aforementioned aggregation, the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock (up if greater or equal to .5 of a
share or otherwise down to the nearest whole share).
(iv) Company's Buy Back Rights and Obligations.
(A) Notwithstanding the provisions of Section
2(c)(i) above, if the Company has elected to satisfy a Monthly Payment
Amount or any portion thereof with Exchange Rights, and the Holder has
not exercised said Exchange Rights or a portion thereof then, (i) at
any time 90 days after the Due Date giving rise to such Exchange
Rights or (ii) during the continuance of a Mandatory Redemption Event,
the Company may redeem, in cash, the unexercised portion of the
Exchange Amount at a price equal to the sum of (1) 103% of the face
value of the Exchange Amount then being redeemed plus (2) all accrued
and unpaid interest then outstanding on the Note, if any; provided,
however, that, with respect to any Exchange Amount existing as a
result of a Special Event, the Company's right to redeem such Exchange
Amount pursuant to the foregoing clause (ii) shall be subject to the
written consent of the Holder. To redeem any Exchange Rights, the
Company shall pay by wire transfer of immediately available funds to
an account identified by Holder for such purpose the applicable amount
required to redeem such Exchange Rights and notify Holder in writing
of such payment.
(B) In addition to the rights set forth in Section
2(c)(iv)(A) above regarding unexercised Exchange Rights, any Exchange
Rights which have not been exercised 270 days following the Due Date
giving rise to such Exchange Rights must be redeemed in cash by the
Company at a price equal to the applicable Exchange Amount plus all
accrued and unpaid interest then outstanding on the Note, if any.
Within ten Business Days of the 270th day following the Due Date
giving rise to such Exchange Rights, the Company shall grant to the
Holder a Warrant to purchase 3,000 shares of Common Stock for each
Monthly Payment Amount being redeemed in cash (and pro rata for any
lesser amount), at a price equal to the closing price of the Common
Stock on the Principal Market (as reported by Bloomberg) on the 269th
day following the applicable Due Date. Delivery of such Warrants shall
be made on or before the tenth day following the applicable 270th day.
Such Warrants will expire one year from their issuance.
(d) Limitation on Beneficial Ownership. So long as the Company's
Common Stock is registered under the Securities Exchange Act of 1934, the
Company shall not effect any issuance of Exchange Rights and the Holder shall
not have the right to exercise any Exchange Rights to the extent that after
giving effect to such issuance or exercise such Person (together with such
Person's Affiliates) would beneficially own in excess of 9.99% of the
outstanding shares of the Common Stock following such action. For purposes of
this Section 2(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. Each Exchange
Notice shall constitute a representation by the Holder that,
7
8
after giving effect to such Exchange Notice, the Holder will not beneficially
own a number of shares of Common Stock in excess of 9.99% of the outstanding
shares of Common Stock, as reflected in the Company's most recent Form 10-Q or
Form 10-K, as the case may be, or more recent public press release by the
Company or other notice by the Company to the Holder setting forth the number of
shares of Common Stock outstanding, but after giving effect to the exercise of
Exchange Rights (including the exercise with respect to which this determination
is being made) by the Holder since the date as of which such number of
outstanding shares of Common Stock was disclosed. Notwithstanding the foregoing,
upon an Event of Default or the occurrence of a Special Event, the Holder shall
have the right to exercise Exchange Rights in its sole discretion and at such
time or times as it deems appropriate.
(e) Mechanics of Exercise. The exercise of Exchange Rights shall be
conducted in the following manner:
(i) The Holder's Delivery Requirements. To convert Exchange Rights
into shares of Common Stock on any date (an "Exchange Date"), the Holder
shall transmit by facsimile (or otherwise deliver), for receipt on or prior
to 11:59 p.m., eastern time on such date, a copy of an executed notice by
the Holder of exercise in the form attached hereto as EXHIBIT B (an
"Exchange Notice") to the Company.
(ii) Company's Response. Upon receipt by the Company of a copy of
an Exchange Notice, the Company shall as soon as practicable, but in no
event later than one Business Day after receipt of such Exchange Notice,
sign such Exchange Notice and send, via facsimile, such Exchange Notice to
the Holder and the transfer agent for the Common Stock ("Transfer Agent"),
which shall constitute an instruction to the Transfer Agent to process such
Exchange Notice in accordance with the terms of such Exchange Notice. Upon
receipt by the Transfer Agent of such Exchange Notice, the Transfer Agent
shall, no later than the second trading day following the date of the
Company's receipt of the Exchange Notice, (A) issue and surrender to a
common carrier for overnight delivery to the brokerage account from time to
time designated by the Holder (the "Deephaven Brokerage Account") with the
broker from time to time designated by the Holder (the "Broker"), a
certificate, registered in the name of Holder or its designee, for the
number of shares of Common Stock to which Holder shall be entitled, or (B)
in the event the Transfer Agent is participating in The Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, upon the
request of Holder, credit such aggregate number of shares of Common Stock
to which Holder shall be entitled to the Broker's balance account with DTC
through its Deposit Withdrawal Agent Commission system to be further
credited to the Deephaven Brokerage Account by the Broker.
(iii) Dispute Resolution. In the case of a dispute as to the
determination of the Exchange Price or the arithmetic calculation of the
Exchange Shares, the Company shall instruct the Transfer Agent to issue to
Holder the number of shares of Common Stock that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the Holder
via facsimile within one Business Day of receipt of the applicable Exchange
Notice. If the Holder and the Company are unable to agree upon the
determination of the Exchange Price or arithmetic calculation of the
Exchange Shares within one Business Day of such disputed determination or
arithmetic calculation being
8
9
submitted to the Holder, then the Company shall within one Business Day
submit via facsimile (A) the disputed determination of the Exchange Price
to an independent, reputable investment bank selected by the Company and
approved by the Holder or (B) the disputed arithmetic calculation of the
Exchange Shares to the Company's independent, outside accountant, in each
case at the Company's cost. The Company shall cause the investment bank or
the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later
than the third Business Day after the date it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent manifest error.
(iv) Record Holder. The Person or Persons entitled to receive the
shares of Common Stock issuable upon an exercise of Exchange Rights shall
be treated for all purposes as the record holder or holders of such shares
of Common Stock on the Exchange Date.
(v) Company's Failure to Timely Convert.
(A) Cash Damages. If within five Business Days after
the Holder's delivery of an Exchange Notice (subject to extension in
accordance with Section 2(e)(iii) for a good faith dispute made in
accordance with the terms of Section 2(e)(iii)) (the "Share Delivery
Period"), the Transfer Agent fails to issue a certificate to Broker or
credit Broker's balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the applicable Exchange Notice
(an "Exchange Failure"), in addition to all other available remedies which
the Holder may pursue hereunder and under the Securities Purchase Agreement
(including indemnification pursuant to Article VIII thereof), the Company
shall pay additional damages to the Holder for each day after the end of
the Share Delivery Period until Broker receives a certificate or Broker's
balance account with DTC is credited with the proper number of shares of
Common Stock in an amount equal to 1.5% per month of the applicable
Exchange Amount submitted for exchange by the Holder.
(B) Void Exchange Notice; Adjustment to Exchange Price.
If for any reason the Holder has not received all of the shares of Common
Stock prior to the tenth Business Day after the expiration of the Share
Delivery Period with respect to an Exchange Notice, then the Holder, upon
written notice to the Company, with a copy to the Transfer Agent, may void
such Exchange Notice, and retain or have returned, as the case may be, the
Exchange Rights that have not been converted pursuant to the Holder's
Exchange Notice; provided, that the voiding of the Exchange Notice shall
not affect the obligations of the Company to make any payments which have
accrued prior to the date of such notice pursuant to Section 2(e)(v)(A) or
otherwise. Thereafter, the Exchange Price of the Exchange Rights returned
by the Holder for failure to timely convert shall be adjusted to the lesser
of (i) the Exchange Price as in effect on the date on which the Holder
submitted the Exchange Notice, (ii) the lowest trade price for the Common
Stock during the period beginning on the Exchange Date and ending on the
date the Holder voided the applicable Exchange Notice or (iii) the Exchange
Price in effect on the day such Exchange Rights are resubmitted for
exchange.
9
10
(vi) Book-Entry. Notwithstanding anything to the contrary set forth
herein, the Holder shall not be required to physically surrender this Note
to the Company unless the full Exchange Amount represented by this Note is
being converted. The Holder and the Company shall maintain records showing
the applicable Monthly Payment Amounts, the applicable Exchange Amounts,
the applicable Exchange Rights, and all such conversions. In the event of
any dispute or discrepancy, such records of Lender shall be controlling and
determinative in the absence of manifest error.
(f) Taxes. The Company shall pay any and all transfer taxes (but
not income taxes) that may be payable with respect to the issuance and delivery
of Exchange Rights, Warrants, or Common Stock issued and delivered pursuant to
the Note.
3. ANTI-DILUTION.
The Special Event Trigger Price shall be subject to adjustment from time to
time as set forth in this Section 3.
(a) Issuance of Additional Common Stock. If and whenever the
Company shall issue or sell any shares of its Common Stock for a consideration
per share less than the Special Event Trigger Price in effect immediately prior
to the time of such issuance or sale, then, upon such issuance or sale, the
Special Event Trigger Price shall be adjusted to that price equal to the
fraction (i) the numerator of which shall be equal to (A) (x) the Special Event
Trigger Price in effect immediately prior to such event multiplied by (y) the
total number of outstanding shares of Common Stock immediately prior to such
event plus (B) the consideration received by the Company upon such issuance or
sale, and (ii) the denominator of which shall be the total number of outstanding
shares of Common Stock immediately after such event, treating as outstanding all
shares of Common Stock issuable upon exchanges or exchanges of Exchangeable
Securities (including any Notes held by the Holder) and exercises of Stock
Purchase Rights (including any Warrants held by the Holder) provided that, no
adjustment shall be made with respect to the issuance of shares of Common Stock
issued (1) upon exchange or conversion of Exchangeable Securities outstanding on
the date hereof, (2) in connection with the Common Stock or Exchangeable
Securities issued under an Approved Company Plan, (3) pursuant to the exercise
of Exchange Rights granted under the Note or upon exercise of a Warrant; or (4)
as consideration in connection with arms-length transactions involving the
acquisition of other companies or lines of business in the specialty finance
industry.
(b) Stock Dividends, Subdivisions and Combinations. If and whenever
the Company subsequent to the date hereof:
(i) declares a dividend upon, or makes any distribution in respect
of, any of its capital stock, payable in shares of Common Stock,
Exchangeable Securities or Stock Purchase Rights,
(ii) subdivides its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
10
11
then the Special Event Trigger Price shall be adjusted to that price
determined by multiplying the Special Event Trigger Price in effect
immediately prior to such event by a fraction (A) the numerator of which
shall be the total number of outstanding shares of Common Stock immediately
prior to such event, and (B) the denominator of which shall be the total
number of outstanding shares of Common Stock immediately after such event,
treating as outstanding all shares of Common Stock issuable upon exchanges
or exchanges of Exchangeable Securities (including any Notes held by the
Holder) and exercises of Stock Purchase Rights (including any Warrants held
by the Holder).
(c) Issuance of Exchangeable Securities or Stock Purchase Rights.
If and whenever the Company shall issue or sell any Exchangeable Securities or
Stock Purchase Rights (other than the granting of Stock Purchase Rights to
officers, employees, directors and consultants of the Company pursuant to the
Approved Company Plan) under which a consideration per share for which shares of
Common Stock may at any time thereafter be issuable upon exercise thereof (or,
in the case of Stock Purchase Rights exercisable for the purchase of
Exchangeable Securities, upon the subsequent exchange or exchange of such
Exchangeable Securities) shall be less than the Special Event Trigger Price in
effect immediately prior to the time of such issuance or sale, then upon such
issuance or sale, the Special Event Trigger Price shall be adjusted as provided
in Section 3(a); provided that, no adjustment shall be made with respect to the
issuance of shares of Common Stock (1) upon exchange or conversion of
Exchangeable Securities outstanding on the date hereof, (2) in connection with
the exercise of Exchangeable Securities granted under the Approved Company Plan,
or (3) pursuant to the exercise of Exchange Rights granted under the Note or
upon exercise of a Warrant; or (4) as consideration in connection with
arms-length transactions involving the acquisition of other companies or lines
of business in the specialty finance industry.
(d) Readjustment of Exchange Price. Upon (i) each change in the
purchase price payable for any Stock Purchase Rights or Exchangeable Securities
referred to in Section 3(c), (ii) each change in the consideration, if any,
payable upon exercise of such Stock Purchase Rights or upon the exchange or
exchange of such Exchangeable Securities, (iii) each change in the number of
shares of Common Stock issuable upon the exercise of such Stock Purchase Rights
or the rate at which such Exchangeable Securities are exchangeable into or
exchangeable for shares of Common Stock or (iv) the expiration of any Stock
Purchase Rights not exercised or of any right to convert or exchange under any
Exchangeable Securities not exercised, the Special Event Trigger Price in effect
at the time of such event shall forthwith be readjusted to the Special Event
Trigger Price which would have been in effect at such time had such Stock
Purchase Rights or Exchangeable Securities not been issued or sold.
(e) Reorganization, Reclassification or Recapitalization of the
Company. In the event that the Company effects (i) any reorganization or
reclassification or recapitalization of the capital stock of the Company (other
than in the cases referred to in Section 3(b)), (ii) any consolidation or merger
of the Company with or into another Person, (iii) the sale, transfer or other
disposition of the property, assets or business of the Company as an entirety or
substantially as an entirety or (iv) any other transaction or event as a result
of which holders of Common Stock become entitled to receive any shares of stock
or other securities and/or property (including, without limitation, cash, but
excluding any cash dividend that is paid out of the earnings or surplus of the
Company legally available therefor) with respect to or in exchange for
11
12
the Common Stock of the Company, there shall thereafter be deliverable upon the
exchange of this Note or any portion thereof (in lieu of or in addition to the
Common Stock theretofore deliverable, as appropriate) the highest number of
shares of stock or other securities and/or the greatest amount of property
(including, without limitation, cash) to which the holder of the number of
shares of Common Stock which would otherwise have been deliverable upon the
exchange of this Note or any portion thereof at the time would have been
entitled upon such transaction or event.
(f) Maximum Exchange Price. At no time shall the Special Event
Trigger Price exceed the Special Event Trigger Price set forth in Section 1
hereof, except as a result of an adjustment thereto pursuant to this Section 3.
(g) Waiver. In the event that the Holder consents in writing to
limit, or waive in its entirety, any anti-dilution adjustment to which it would
otherwise be entitled hereunder, the Company shall not be required to make any
adjustment whatsoever with respect to this Note in excess of such limit or at
all, as the terms of such consent may dictate.
(h) Notice of Adjustments to Special Event Trigger Price. As
promptly as practicable after the occurrence of any event requiring any
adjustment under this Section 3 to the Special Event Trigger Price (or to the
number or kind of securities or other property deliverable upon the exchange of
this Note), the Company shall, at its expense, mail to the Holder a certificate
of an officer of the Company setting forth in reasonable detail the events
requiring the adjustment and the method by which such adjustment was calculated
and specifying the adjusted Special Event Trigger Price.
(i) Anti-Dilution Provisions in Other Securities. If the Company
issues any Stock Purchase Rights or Exchangeable Securities or other securities
containing provisions protecting the holder or holders thereof against dilution
in any manner more favorable to such holder or holders thereof than those set
forth in this Note, such provisions (or any more favorable portion thereof)
shall be deemed to be incorporated herein as if fully set forth in this Note
and, to the extent inconsistent with any provision of this Note, shall be deemed
to be substituted therefor.
4. REDEMPTION.
This Note shall be subject to mandatory redemption, in cash, upon the
occurrence of certain events and optional redemption at the option of the
Company, each as discussed below.
(a) Mandatory Redemption. If a Mandatory Redemption Event occurs
under any of clauses (i), (ii), (iii), (iv) or (vii) below, the Company will
accrue interest on the Exchange Amount at the applicable Default Rate for the
entire month in which the Mandatory Redemption Event occurs, regardless of the
duration of such event, and for any subsequent months (or portion thereof) into
which a Mandatory Redemption Event continues to be uncured. If a Mandatory
Redemption Event occurs under either of clauses (v) or (vi) below, the unpaid
principal balance of this Note shall bear interest at the applicable Default
Rate. If a Mandatory Redemption Event has occurred and has not been cured as of
a Notice Date, the Company will be required to pay the Monthly Payment Amount
for that month in cash on the applicable Due Date. A "Mandatory Redemption
Event" shall mean any of the following:
12
13
(i) the failure of the Company to satisfy the minimum bid
requirements of its Principal Market necessary to maintain the
continued listing of the Common Stock, for 30 consecutive trading
days, provided that such Mandatory Redemption Event shall be cured
if the Company subsequently satisfies the minimum bid requirements
of its Principal Market for 15 consecutive trading days;
(ii) the receipt by the Company of a notice from its Principal
Market regarding the commencement of a de-listing proceeding,
provided that such Mandatory Redemption Event shall be cured upon
the receipt by the Company of an official notice from the Company's
Principal Market stating that the Principal Market has ceased
pursuit of delisting the Company;
(iii) the suspension of the Common Stock from trading for three
consecutive trading days or for a total of ten trading days out of
the preceding 365 calendar days;
(iv) if for any reason (A) sales or resales, as the case may be,
of Exchange Shares or Warrant Shares cannot be made pursuant to the
Registration Statement following the date any Exchange Rights or
Warrants are issued (whether because of a failure to keep the
Registration Statement effective, to provide that the latest
available prospectus meets the requirements of Section 10 of the
1933 Act to disclose such information as is necessary for sales to
be made pursuant to the Registration Statement, to register
sufficient shares of Common Stock, or otherwise) for three
consecutive trading days or for a total of ten trading days out of
the preceding 365 calendar days or (B) upon issuance of Exchange
Rights, the Exchange Shares or Warrant Shares issuable upon exercise
of such Exchange Rights are not listed on the Principal Market
(subject to official notice of listing);
(v) any breach under any of the Transaction Documents that does
not give rise to an Event of Default hereunder (after giving effect
to any applicable cure period);
(vi) any default under any Material Debt (as defined in the
Security Agreement) with respect to which the Company or any of its
Subsidiaries has provided the applicable lender with notice of the
existence thereof or with respect to which such lender has provided
the Company or one of its Subsidiaries with notice of the existence
thereof, that is not waived or cured; or
(vii) if, without prior approval of the Company's stockholders,
the issuance of any of the Shares would result in the issuance of
more than 19.99% of the aggregate number of outstanding shares of
the Common Stock.
(b) Optional Redemption. On each Notice Date, the Company shall
have the option to notify the Holder of its intent to redeem in cash (the
"Optional Monthly Redemption Right") the Monthly Payment Amount for such month
at a price equal to the Monthly Payment Amount, or portion thereof. Such payment
shall be due and payable on the Due Date.
13
14
(c) Mechanics of Company Redemption. Within one day after the
occurrence of a Mandatory Redemption Event, or on the Notice Date in the event
the Company has elected to make an Optional Monthly Redemption, the Company
shall deliver a written notice thereof via facsimile ("Notice of Redemption") to
the Holder, which notice shall specify the type of redemption (and the nature of
the Mandatory Redemption Event, if any). The Company shall pay the Monthly
Payment Amount, or portion thereof, to the Holder in cash on or before the
relevant Due Date by wire transfer delivered to the Holder as follows: American
National Bank and Trust Company of Chicago, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
XX 00000, ABA 000000000, FBO Deephaven/JE Xxxxxxx X, LLC, to such account or
accounts as the Holder may designate in writing to the Company from time to
time.
(d) Void Redemption. In the event that the Company does not pay the
Monthly Payment Amount to the Holder on a timely basis as described in this
Section 4, in addition to any remedy otherwise available to the Holder hereunder
or under the Securities Purchase Agreement, such unpaid amount shall bear
interest at the applicable Default Rate until paid in full. In the event that
the Company does not pay the Monthly Payment Amount, or applicable portion
thereof, within the time period set forth in Section 4(c), at any time
thereafter and until the Company pays such unpaid Monthly Payment Amount in
full, the Holder shall have the option (the "Void Optional Redemption Option")
to, in lieu of redemption, require the Company to pay interest and Default
Interest and to rescind the Notice of Redemption for that portion of the Monthly
Payment Amount (together with any interest and Default Interest thereon) which
has not been paid, by sending written notice thereof to the Company via
facsimile (the "Void Optional Redemption Notice"). Upon the Company's receipt of
such Void Optional Redemption Notice, (i) the Notice of Redemption pursuant to
an Optional Monthly Redemption Right shall be null and void with respect to that
portion of the Monthly Payment Amount subject to the Void Optional Redemption
Notice, (ii) the Company shall immediately rescind such Notice of Redemption,
and (iii) the Exchange Price of that portion of the Monthly Payment Amount
returned shall be adjusted to the lesser of (A) the Exchange Price as in effect
on the date on which the Void Optional Redemption Notice is delivered to the
Company, (B) the lowest trade price for the Common Stock (as reported by
Bloomberg) during the period beginning on the date on which the Notice of
Redemption is delivered to the Holder and ending on the date on which the Void
Optional Redemption Notice is delivered to the Company and (C) the Exchange
Price in effect on the day that amount is resubmitted for exchange.
(e) Disputes; Miscellaneous. In the event of a dispute as to the
determination of the lowest trade price or the arithmetic calculation of the
amount to be paid on redemption ("Redemption Price"), such dispute shall be
resolved pursuant to Section 2(e)(iii) above with the term "lowest trade price"
being substituted for the term "Exchange Price" and the term "Redemption Price"
being substituted for the term "Exchange Shares." The Holder's delivery of a
Void Optional Redemption Notice and exercise of its rights following such notice
shall not affect the Company's obligations to make any payments which have
accrued prior to the date of such notice. In the event of a redemption pursuant
to this Section 4 of less than all of the principal amount and interest of this
Note, subject to Section 2(e)(vi), the Company shall promptly cause to be issued
and delivered to the Holder a new Note representing the remaining unpaid
principal amount which has not been redeemed.
5. APPLICATION OF PAYMENTS/PREPAYMENT.
14
15
(a) Upon the exercise by the Holder of its Exchange Rights or upon
a redemption in cash, of all or a portion of a Monthly Payment Amount, the
amounts received by the Holder shall be applied first to pay accrued interest on
the Note through and including the date of the exercise of the Exchange Right or
the redemption of a Monthly Payment Amount, as applicable, second to pay any
penalties due the Holder from the Company and third to reduce the principal
balance of the Note. At any time during the term of this Note (other than during
the period when Exchange Rights arising from the occurrence of a Special Event
under Section 2(c)(ii)(1) remain unexercised), the Company may prepay the Note,
in whole or in part, at a price equal to (x) the outstanding principal balance
on the Note being prepaid times (other than in the case of Section 5(b) below)
108% plus (y) accrued and unpaid interest on the Note. Any such principal
prepaid shall be applied to the Monthly Payment Amount due under this Note in
the inverse order of their maturities.
(b) If all or any part of the outstanding principal amount of the
Purchase Price Note is not due and payable because an applicable Note Condition
(as defined in the Purchase Price Note) has not been satisfied when required,
then the outstanding principal amount of this Note shall be reduced by an amount
equal to the then outstanding principal balance of the Purchase Price Note not
so due and payable. Such reduction shall be applied to Monthly Payment Amounts
due under this Note in the inverse order of their maturities.
(c) If all or any part of the outstanding principal amount of the
Purchase Price Note is due and payable and the payor of the Purchase Price Note
has not made payments as required, then the outstanding principal amount of this
Note shall be reduced by an amount equal to the then outstanding principal
balance of the Purchase Price Note due and payable and not paid when required.
Upon such reduction, the outstanding principal balance of the Purchase Price
Note shall be deemed satisfied to the extent of the aforesaid reduction. Such
reduction shall be applied to Monthly Payment Amounts due under this Note in the
inverse order of their maturities.
6. OTHER RIGHTS OF THE HOLDER.
(a) Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to another
Person or other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "Organic Change." Prior to the
consummation of any (i) sale of all or substantially all of the Company's assets
to an acquiring Person or (ii) other Organic Change following which the Company
is not a surviving entity, the Company will secure from the Person purchasing
such assets or the successor resulting from such Organic Change (in each case,
the "Acquiring Entity") a written agreement (in form and substance satisfactory
to the Holder) to deliver to the Holder in exchange for this Note, a note of the
Acquiring Entity evidenced by a written instrument substantially similar in form
and substance to this Note, and satisfactory to the Holder. Prior to the
consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the Holder) to insure that the
Holder will thereafter have the right to acquire and receive in lieu of or in
addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the
15
16
exercise of Exchange Rights pursuant to this Note such shares of stock,
securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of shares of Common Stock
which would have been acquirable and receivable upon the exercise of Exchange
Rights pursuant to this Note as of the date of such Organic Change (without
taking into account any limitations or restrictions on the convertibility of
this Note). Notwithstanding anything set forth in this subsection (a) to the
contrary, in the event of an Organic Change in which the Acquiring Company is
not a publicly held entity which trades on the Principal Market or other
national exchange or trading market, the Company shall prepay this Note and all
obligations due and outstanding thereunder in accordance with the prepayment
price set forth in Section 5 above.
(b) Purchase Rights. If at any time the Company grants, issues or
sells any options, Exchangeable Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock generally (the "Purchase Rights"), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exchange of
the Note (without taking into account any limitations or restrictions on the
convertibility of the Note) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
7. RESERVATION OF SHARES.
The Company shall, so long as any principal amount of the Note, any
Exchange Rights or any Warrants are outstanding, reserve and keep available out
of its authorized and unissued Common Stock, such amount of shares of Common
Stock required by Section 4.6 of the Securities Purchase Agreement.
8. VOTING RIGHTS.
The Holder shall have no voting rights as a stockholder, except (a) as
required by law, (b) as expressly provided in this Note or (c) to the extent the
Holder holds voting securities of the Company.
9. RESTRICTION ON REDEMPTION AND CASH DIVIDENDS.
Until all of the outstanding principal amount of this Note has been
converted, redeemed or otherwise satisfied as provided herein, the Company shall
not, directly or indirectly, redeem, or declare or pay any cash dividend or
distribution on, the Common Stock or Preferred Stock without the prior express
written consent of the Holder.
10. DEFAULTS AND REMEDIES.
(a) Events of Default. An "Event of Default" shall occur if (i) the
Company fails to pay any amount due under this Note when due, (ii) there is
a breach of Section 3.8 of the Securities Purchase Agreement as of the
Closing Date or there exists any fact or circumstance that would give rise
to a valid claim by Xxxxxx under Section 11 of the 1933
16
17
Act, (iii) the Company, Financial or DVI Business Credit Corporation
("Business Credit") shall (A) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, examiner or
liquidator of itself or of all or a substantial part of its property, (B)
make a general assignment for the benefit of its creditors, (C) commence a
voluntary case under United States Bankruptcy Code of 1978, as amended from
time to time (the "Bankruptcy Code"), (D) file a petition seeking to take
advantage of any other law of the United States or any state or territory
thereof or of any foreign jurisdiction, relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (E) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (F) take any
corporate or other action for the purpose of effecting any of the
foregoing, or (iv) a proceeding or case shall be commenced, without the
application or consent of the Company, Financial or Business Credit, in any
court of competent jurisdiction, seeking (X) its respective reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its respective debts, (Y) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Company,
Financial or any such subsidiary or of all or any substantial part of any
of their respective property, or (Z) similar relief in respect of the
Company, Financial or Business Credit under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days, or (v) there is an Event of Default under and as defined in the
Security Agreement, (vi) the Company fails to issue Exchange Shares or
Warrant Shares in accordance with the terms of the Transaction Documents,
or (vii) a breach of Section 3(b) of the Purchase Price Note.
(b) Remedies. If an Event of Default occurs and is continuing, the
Holder may notify the Company that it is declaring the outstanding
principal balance of this Note, in its entirety (including all Exchange
Rights not yet exercised by the Holder) and all accrued interest and
Default Interest and other amounts due or to become due, to be due and
payable in cash immediately, except that in the case of an Event of Default
arising from events described in clauses (iii) or (iv) of Section 10(a) of
this Note, this Note, in its entirety (including all Exchange Rights not
yet exercised by the Holder) and all accrued and Default Interest and other
amounts due and to become due, shall become automatically due and payable
without further action or notice by the Holder. In addition to any remedy
the Holder may have under this Note or the Securities Purchase Agreement,
such unpaid amount shall bear interest at the applicable Default Rate until
paid in full.
11. AMENDMENT.
This Note and any provision hereof may only be amended by an instrument in
writing signed by the Company and the Holder. The term "Note" and all references
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.
17
18
12. LOST OR STOLEN NOTE.
Upon receipt by the Company of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any Note, and, in the case of loss,
theft or destruction, of an indemnification undertaking by the Holder to the
Company in a form reasonably acceptable to the Company and, in the case of
mutilation, upon surrender and cancellation of the Note, the Company shall
execute and deliver a new Note of like tenor and date; provided, however, the
Company shall not be obligated to re-issue the Note if the Holder
contemporaneously requests the Company to convert such remaining principal
amount into Common Stock.
13. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
If: (i) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding; or (ii) an
attorney is retained to represent the Holder in any bankruptcy, reorganization,
receivership or other proceedings affecting creditors' rights and involving a
claim under this Note; or (iii) an attorney is retained to represent the Holder
in any other proceedings whatsoever in connection with this Note, then the
Company shall pay to the Holder all reasonable attorneys' fees, costs and
expenses incurred in connection therewith, in addition to all other amounts due
hereunder.
14. CANCELLATION.
After all principal and accrued interest at any time owed on this Note has
been paid in full and all Exchange Rights have been exercised, this Note shall
automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.
15. WAIVER OF NOTICE.
To the extent permitted by law, the Company hereby waives demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note and the Securities
Purchase Agreement.
16. GOVERNING LAW.
All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by the internal laws of the State
of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Delaware. The Company hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. The Company hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to the
Company and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any
18
19
right to serve process in any manner permitted by law. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
17. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.
The remedies provided in this Note shall be cumulative and in addition to
all other remedies available under this Note or any other Transaction Document
(including a decree of specific performance and/or other injunctive relief),
together with any right of the Holder to bring any action under any Federal or
state securities laws or for fraud, all of which shall be the Holder's exclusive
remedies, no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit the
Holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Note. The Company covenants to the Holder that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, exchange and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
18. SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION.
No specific provision contained in this Note shall limit or modify any more
general provision contained herein. This Note shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
person as the drafter hereof.
19. FAILURE OR INDULGENCE NOT WAIVER.
No failure or delay on the part of this Note in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
20. USURY.
If the interest provisions herein shall result in an effective rate of
interest which exceeds the limit of usury in the State of Delaware, all sums in
excess of those lawfully collectible as interest of the period in question
shall, without further agreement or notice between or by any party hereto, be
applied upon principal immediately upon receipt of such monies by the Holder,
with the same force and effect as though the payer has specifically designated
such extra sums to
19
20
be so applied to principal and the Holder had agreed to accept such extra
payment(s) as a prepayment (but not without premium).
21. TRANSFER.
The Holder may not assign this Note without the prior written consent of
the Company, which consent shall not be unreasonably withheld, provided, that,
the Holder may assign all or any part of this Note to any financial institution
having assets of at least $10 billion. Buyer may assign all or any part of its
rights hereunder to any Affiliate of Xxxxxx, provided, however, that any such
assignment shall not release the Buyer from its obligations hereunder unless
such obligations are assumed by such assignee. "Affiliate" means any Person
which, directly or indirectly, controls or is controlled by or is under common
control with the Holder.
[Remainder of page intentionally blank; signature page follows]
20
21
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
and delivered as of the date first written above.
DVI, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
----------------------------
[Name]
Authorized Signatory
----------------------------
[Title]
21
22
EXHIBIT A
VIA FACIMILE AND OVERNIGHT MAIL
Deephaven/JE Xxxxxxx X, LLC
c/o JE Xxxxxxx
1849 Green Bay Road, Suite 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
RE: DVI, INC.
This notice is being issued pursuant to that certain Asset-Backed Exchangeable
Term Note (the "Note") dated as of June ___, 2001 issued by DVI, Inc. to
Deephaven/JE Xxxxxxx X, LLC. Capitalized terms used in this notice are defined
in the Note.
In accordance with the Note, we notify you as follows:
1. Notice Date: ____________________
2. Due Date: _____________ 1, 200__
3. The Monthly Payment Amount is equal to $___________________
($400,000 plus interest)
4. The Monthly Payment Amount will [check one]: ___ [Be paid in cash]
5.
___ [not paid in cash and shall
automatically become Exchange Rights]
___ [will be paid with $____ in cash
and the remainder shall automatically
become Exchange Rights].
6. [A Mandatory Redemption Event has occurred (provide detail).]
7. [A Special Event has occurred (provide detail).]
8. Outstanding principal balance of the Note (after $____________________
the payment of the Monthly Payment Amount
on the Due Date)
22
23
To the extent that the Company has elected to issue Exchange Rights as provided
above, the undersigned represents and warrants that (i) the issuance of Exchange
Shares with respect thereto has been duly authorized by the Company and (ii) the
Exchange Shares issuable with respect thereto have been listed on the Principal
Market (subject to official notice of issuance).
DVI, INC.
By:
--------------------
23
24
EXHIBIT B
VIA FACSIMILE AND OVERNIGHT COURIER
DVI, Inc.
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 18929
Attn: ___________________
RE: EXCHANGE NOTICE PURSUANT TO THAT CERTAIN ASSET-BACKED
EXCHANGEABLE TERM NOTE (THE "NOTE") DATED AS OF JUNE __,
2001 ISSUED BY DVI, INC. TO DEEPHAVEN/JE XXXXXXX X, LLC
Dear ___________________:
Reference is made to the Note for the definitions of all capitalized
terms used herein. In accordance with the Note, the undersigned hereby elects to
exercise Exchange Rights with respect to an Exchange Amount equal to
$____________________ to be converted into ________ Exchange Shares calculated
as follows:
(a) Exchange Amount applicable to the exercised Exchange Rights $_______________
(b) Applicable Exchange Price $_______________
(c) Exchange Shares (line (a) divided by line (b)) $_______________
Therefore, please instruct the transfer agent of your Common Stock to
immediately issue _______ shares of Common Stock to ___________________________.
Very truly yours,
DEEPHAVEN/JE XXXXXXX X, LLC
By:
------------------------
Its:
------------------------
Agreed and Accepted by
DVI, Inc. this _____ day of
__________, 200___
By:
------------------------
Its:
------------------------
Acceptance of this
notice by DVI, Inc. shall be irrevocable
instructions to ____________________,
the transfer agent of its Common Stock
to issue the Common Stock as aforesaid.
24
