EXHIBIT 10.2
FORM OF STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of this ___
day of ____________, 1999 between Commodore Holdings Limited, a Bermuda
corporation (the "Company"), and ________________ (the "Purchaser").
R E C I T A L S:
WHEREAS, the Company has authorized the issuance of 1,000,000 shares of
Series B Convertible Preferred Stock (the "Series B Preferred Stock") with
rights, preferences and limitations as set out in EXHIBIT A attached hereto (the
"Preferred Stock Terms");
WHEREAS, the Company desires to sell and the Purchaser desires to
purchase _______ shares of Series B Preferred Stock, which shares provide the
right, in certain circumstances, to convert such Series B Preferred Stock into
shares (the "Conversion Shares") of the Company's common stock, par value $.01
per share (the "Common Stock");
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
warranties and representations contained herein and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. PURCHASE OF SERIES B PREFERRED STOCK; OPTION AND RIGHT OF FIRST
REFUSAL. The Company hereby sells, conveys and transfers to the Purchaser and
the Purchaser hereby purchases from the Company ______ shares of Series B
Preferred Stock (the "Shares"), at a price of $10.00 per share (the "Share
Purchase Price"). The aggregate Purchase Price for the Shares of Series B
Preferred Stock purchased hereunder shall be __________ (the "Purchase Price").
In addition, Purchaser shall have an option to purchase any remaining shares of
Series B Preferred Stock (up to _______ shares of Series B Preferred Stock) (the
"Additional Shares") at the Share Purchase Price for a period of ninety (90)
days after the date hereof (the "Option Period") pursuant to the terms set forth
in this Agreement, subject to any prior sale of Additional Shares by the
Company. In the event Purchaser wishes to exercise such option, Purchaser must
both notify the Company of its intent to exercise such option and deliver the
Share Purchase Price for the number of shares Purchaser elects to purchase
within the Option Period. In the event the Company elects to sell Additional
Shares during the Option Period, Purchaser shall have a right of first refusal
to purchase such Additional Shares at the Share Purchase Price. In the event the
Company receives and wishes to accept such an offer, it shall promptly notify
Purchaser of its intent to accept such offer and provide the terms of such offer
to Purchaser. Purchaser shall have a period of five (5) days after the receipt
of such notice from the Company to exercise its right of first refusal. The
closing of such purchase shall occur on or before the date set forth in the
offer from the third party, and if no closing date is included in such offer,
the closing shall occur within thirty (30) days after Purchaser's exercise of
its right of first refusal.
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2. DELIVERIES BY THE PARTIES. On the date hereof:
(a) The Company is delivering to the Purchaser certificate(s)
evidencing the Shares issued on the date hereof.
(b) The Purchaser is delivering to the Company payment, by
wire transfer or check, of the Purchase Price for the Shares.
3. REPRESENTATIONS OF THE PURCHASER. The Purchaser acknowledges,
represents and warrants to the Company as follows:
(a) RECEIPT OF CORPORATE INFORMATION. The Purchaser is
familiar with the business and financial condition of the Company, has been
provided access and an opportunity to review all material agreements, books and
records of the Company, has had the opportunity to ask questions and receive
answers concerning the terms and conditions of his purchase of the Shares and to
obtain any additional information which the Company possesses or can acquire
without unreasonable effort or expense.
(b) RISKS. The Purchaser acknowledges and understands that the
purchase of the Shares and the underlying Conversion Shares involves a high
degree of risk and is suitable only for persons of adequate financial means who
have no need for liquidity in this investment in that (i) the Purchaser may not
be able to liquidate the investment in the event of an emergency; (ii)
transferability is extremely limited; and (iii) in the event of a disposition,
the Purchaser could sustain a complete loss of its entire investment. The
Purchaser is sufficiently experienced in financial and business matters to be
capable of evaluating the merits and risks of an investment in the Company; has
evaluated such merits and risks, including risks particular to the Purchaser's
situation; and the Purchaser has determined that this investment is suitable for
the Purchaser. The Purchaser has adequate financial resources and can bear a
complete loss of the Purchaser's investment.
(c) ACCREDITED INVESTOR STATUS. The Purchaser is an
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
(d) INVESTMENT INTENT. The Purchaser hereby represents that
the Shares and the underlying Conversion Shares are being acquired for the
Purchaser's own account with no intention of distributing such Shares and the
underlying Conversion Shares to others. The Purchaser has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or
otherwise distribute to any person or to have any person sell, transfer or
otherwise distribute for the Purchaser the Shares, the Conversion Shares or any
interest therein. The Purchaser currently is not engaged, nor does the Purchaser
plan to engage within the currently foreseeable future, in any discussion with
any person regarding such a sale, transfer or other distribution of the Shares,
the Conversion Shares or any interest therein.
(e) COMPLIANCE WITH FEDERAL, STATE AND FOREIGN SECURITIES
LAWS. The Purchaser understands that the Shares and the underlying Conversion
Shares have not been
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registered under the Securities Act or applicable state or foreign securities
laws. The Purchaser understands that the Shares and the underlying Conversion
Shares must be held indefinitely unless the sale or other transfer thereof is
subsequently registered under the Securities Act and applicable state and
foreign securities laws or an exemption from such registration is available. The
Purchaser realizes also that his right to transfer the underlying Conversion
Shares is subject to certain volume restrictions set forth in Section 6 of this
Agreement and that he may not be able to sell or dispose of the Shares or the
underlying Conversion Shares as there may be no public or other market for them.
The Purchaser understands that certificates evidencing the Shares and the
underlying Conversion Shares being purchased hereunder shall bear a legend
substantially as follows:
The Shares represented by this certificate have not
been registered under the Securities Act of 1933 or
any applicable state or foreign law. They may not be
offered for sale, sold, transferred or pledged
without (1) registration under the Securities Act of
1933 and any applicable state and foreign law, or (2)
an opinion (reasonably satisfactory to the Company)
of counsel that registration is not required.
(f) AUTHORITY; ENFORCEABILITY. The Purchaser has the full
right, power, and authority to execute and deliver this Agreement and perform
its covenants and agreements hereunder. This Agreement has been duly executed
and delivered and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms except
as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally or by
the principles governing the availability of specific performance, injunctive
relief and other equitable remedies (regardless of whether such enforceability
is considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies hereunder; (ii) applicable
laws and court decisions which may limit or render unenforceable certain terms
and provisions contained herein, but which do not substantially interfere with
the practical realization of the benefits hereof, except for the economic
consequences of any procedural delay which may be imposed by, relate to or
result from such laws and court decisions; and (iii) the limitations on the
enforceability of the securities indemnification provisions set forth herein by
reason of matters of public policy.
(g) NONCONTRAVENTION. Neither the execution of this Agreement,
nor the consummation of the transactions contemplated hereby, will constitute a
violation of or default under, or conflict with, any judgment, decree, statute
or regulation of any governmental authority applicable to the Purchaser or any
contract, commitment, agreement or restriction of any kind to which the
Purchaser is a party or by which its assets are bound. The execution and
delivery of this Agreement does not, and the consummation of the transactions
described herein will not, violate applicable law, or any mortgage, lien,
agreement, indenture, lease or understanding (whether oral or written) of any
kind outstanding relative to the Purchaser.
(h) APPROVALS. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other
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governmental authority is required in connection with the execution and delivery
of this Agreement by the Purchaser or the consummation of the transactions
described herein.
4. REPRESENTATIONS OF THE COMPANY. The Company acknowledges, represents
and warrants to the Purchaser as follows:
(a) CORPORATE ORGANIZATION. The Company is duly organized,
validly existing and in good standing under the laws of Bermuda and has full
corporate power, authority and legal right to own its properties and to conduct
the businesses in which it is now engaged. The Company is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
in each jurisdiction where the ownership or lease of its assets or the operation
of its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, operations,
property or financial or other condition of the Company (a "Material Adverse
Effect").
(b) AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and the Shares and to perform
all of its covenants and agreements hereunder. The execution and delivery by the
Company of this Agreement and the Shares, the performance by the Company of its
covenants and agreements hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action.
(c) ENFORCEABILITY. This Agreement and the Shares have been
duly executed and delivered and constitute the valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally or by the principles governing the availability of specific
performance, injunctive relief and other equitable remedies (regardless of
whether such enforceability is considered in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies hereunder; (ii) applicable laws and court decisions which may limit or
render unenforceable certain terms and provisions contained herein, but which do
not substantially interfere with the practical realization of the benefits
hereof, except for the economic consequences of any procedural delay which may
be imposed by, relate to or result from such laws and court decisions; and (iii)
the limitations on the enforceability of the securities indemnification
provisions set forth herein by reason of matters of public policy.
(d) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement and the Shares by the Company, nor the consummation of the
transactions contemplated hereby, nor the performance by the Company of its
covenants and agreements hereunder (i) violate any provision of the Memorandum
of Association or Bye-Laws of the Company; (ii) violate any existing law,
statute, ordinance, regulation, or any order, judgment or decree of any court or
governmental agency to which the Company is a party or by which the Company or
any of its assets is bound; or (iii) conflict with or will result in any breach
of any of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any
indenture, mortgage, real property lease, securities purchase agreement, credit
or
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loan agreement or other material agreement to which the Company is a party or by
which the Company or any of its assets is bound, to the extent such violation
thereof, conflict therewith, breach thereof, default thereunder or termination
thereof would have a Material Adverse Effect.
(e) THE SHARES. The Shares have been duly and validly
authorized and, when issued for the consideration herein provided, will be duly
and validly issued, fully paid and nonassessable.
(f) APPROVALS. Except as may be required under federal, state
and Bermuda securities laws (which have been or, in the case of compliance
required on a post-sale basis, will be complied with), the execution, delivery
and performance of this Agreement by the Company does not require (i) the
consent, waiver, approval, license or authorization of or any filing with any
person or any governmental authority; or (ii) the approval or authorization of
the shareholders of the Company.
5. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. If the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans, or
a registration relating solely to a Rule 145 transaction, or a registration on
any registration form that does not permit secondary sales, the Company will:
i. promptly give written notice to the
Purchaser; and
ii. use its reasonable best efforts to include
in such registration (and any related
qualification under blue sky laws or other
compliance), and in any underwriting
involved therein, all the Conversion Shares,
which may include all or a part of the
Purchaser's Conversion Shares specified in a
written request or requests, made by the
Purchaser and received by the Company within
twenty (20) days after the written notice
from the Company described in clause (i)
above is mailed or delivered by the Company;
provided, however, that if, in the written
opinion of the Company's managing
underwriter, if any, for such offering, the
inclusion of the Conversion Shares requested
to be registered, when added to the
securities being registered by the Company
or the selling security holder(s), would
exceed the maximum amount of the Company's
securities that can be marketed without
otherwise materially and adversely affecting
the entire offering, then the Company may
exclude from such offering all or that
portion of the Conversion Shares requested
to be so registered, so that the total
number of securities to be
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registered is within the maximum number of
shares that, in the opinion of the managing
underwriter, may be marketed without
otherwise materially and adversely affecting
the entire offering.
The Purchaser agrees to sell his Conversion Shares on the same terms as
the sale of other shares of Common Stock in the offering and agrees to execute
such documents as shall be reasonably requested by the Company or its counsel in
connection with such offering.
If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Purchaser as a part of the written notice given pursuant to this
Section. In such event, the right of the Purchaser to registration pursuant to
this Section shall be conditioned upon the Purchaser's participation in such
underwriting, the inclusion of the Purchaser's Conversion Shares in the
underwriting to the extent provided herein and the Purchaser's written agreement
not to sell or otherwise dispose of the Conversion Shares for such period of
time as may be required by the underwriter or underwriters. The Purchaser
proposing to distribute his securities through such underwriting shall (together
with the Company and the other holders of securities of the Company with
registration rights to participate therein distributing his securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the Company.
(b) EXPENSES OF REGISTRATION. All registration expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section (including filing fees, printing expenses, blue sky
fees, and fees and expenses of the Company's counsel and accountants) shall be
borne by the Company. All expenses incurred by the Purchaser for his own counsel
or accountants and all selling expenses relating to the Conversion Shares
(including underwriter discounts, non-accountable expense allowances and
commissions) shall be borne by the Purchaser on the basis of the number of
Conversion Shares so registered on his behalf.
(c) INDEMNIFICATION
i. The Company will indemnify the Purchaser,
each of its officers, directors and
partners, legal counsel, and accountants and
each person controlling the Purchaser within
the meaning of Section 15 of the Securities
Act, with respect to which registration,
qualification, or compliance has been
effected pursuant to this Section, against
all expenses, claims, losses, damages, and
liabilities (or actions, proceedings, or
settlements in respect thereof) arising out
of or based on any untrue statement (or
alleged untrue statement) of a material fact
contained in any prospectus, offering
circular, or other document (including any
related registration statement,
notification, or the like), incident to any
such registration, qualification, or
compliance, or based on any omission (or
alleged omission) to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, or any violation by the
Company of the Securities Act or any rule or
regulation thereunder applicable
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to the Company and relating to action or
inaction required of the Company in
connection with any such registration,
qualification, or compliance, and will
reimburse the Purchaser, each of its
officers, directors, partners, legal
counsel, and accountants and each person
controlling the Purchaser, for any legal and
any other expenses reasonably incurred in
connection with investigating and defending
or settling any such claim, loss, damage,
liability, or action, provided that the
Company will not be liable in any such case
to the extent that any such claim, loss,
damage, liability, or expense arises out of
or is based on any untrue statement or
omission based upon written information
furnished to the Company by the Purchaser
and stated to be specifically for use
therein. It is agreed that the indemnity
agreement contained in this Section shall
not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or
action if such settlement is effected
without the consent of the Company (which
consent has not been unreasonably withheld).
ii. The Purchaser will, if Conversion Shares
held by him are included in the securities
as to which such registration,
qualification, or compliance is being
effected, indemnify the Company, each of its
directors, officers, partners, legal
counsel, and accountants and each
underwriter, if any, of the securities
covered by such a registration statement,
each person who controls the Company or such
underwriter within the meaning of Section 15
of the Securities Act, other shareholder,
and each of their officers, directors, and
partners, against all claims, losses,
damages and liabilities (or actions in
respect thereof) arising out of or based on
any untrue statement (or alleged untrue
statement) of a material fact contained in
any such registration statement, prospectus,
offering circular, or other document, or any
omission (or alleged omission) to state
therein a material fact required to be
stated therein or necessary to make the
statements therein, in light of the
circumstances in which they were made not
misleading, and will reimburse the Company
and other shareholders, directors, officers,
partners, legal counsel, and accountants,
persons, underwriters, or control persons
for any legal or any other expenses
reasonably incurred in connection with
investigating or defending any such claim,
loss, damage, liability, or action, in each
case to the extent, but only to the extent,
that such untrue statement (or alleged
untrue statement) or omission (or alleged
omission) is made in such registration
statement, prospectus, offering circular, or
other document in reliance upon and in
conformity with written information
furnished to the Company by the Purchaser
and stated to be specifically for use
therein provided, however, that the
obligations of the Purchaser hereunder shall
not apply to amounts paid in settlement of
any such claims, losses, damages, or
liabilities (or actions in respect thereof)
if such
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settlement is effected without the consent
of the Purchaser (which consent shall not be
unreasonably withheld), and provided that in
no event shall any indemnity under this
Section exceed the gross proceeds from the
offering received by the Purchaser.
(d) INCOME TAX IMPLICATIONS. In the event the Purchaser sells
his Conversion Shares in an underwritten offering pursuant to this section, the
Company or its subsidiaries, as appropriate, shall have the right to deduct from
all amounts paid in cash, any federal, state or local taxes as required by law
to be withheld from such payments, and in the case of issuances of Conversion
Shares, the Purchaser may be required to pay the Company or its subsidiary, as
appropriate, the amount of any such taxes which the Company or its subsidiary is
required to withhold with respect to such Conversion Shares.
6. PAYMENT OF DIVIDENDS. The Board of Directors shall declare cash
dividends on the Series B Preferred Stock at the end of each calendar quarter
unless prohibited by applicable law. Such dividends shall be paid in accordance
with the Preferred Stock Terms.
7. RESTRICTION ON SALES OF COMMON STOCK. Any holder of Series B
Preferred Stock may not sell more than 25% of the maximum number of Conversion
Shares that it could receive upon conversion of all of its Series B Preferred
Stock during any 90-day period, without the Company's prior written consent. The
number of shares of Series B Preferred Stock that may be sold during any 90-day
period shall be increased to 50% of the maximum number of Conversion Shares that
it could receive upon conversion of all of its Series B Preferred Stock if the
Company delivers a Notice of Conversion (as defined in the Preferred Stock
Terms) to the holders of Series B Preferred Stock.
8. NOTICES. All notices, reports and other communications to the
Purchaser or the Company hereunder shall be in writing, shall refer specifically
to this Agreement and shall be hand delivered or sent by overnight courier,
facsimile transmission or by registered mail or certified mail, return receipt
requested, postage prepaid, in each case to the respective persons and addresses
specified below (or to such other persons or addresses as may be specified in
writing to the other party):
If to the Purchaser, to: ________________________
________________________
________________________
Fax No.: (___) ________
If to the Company, to: Commodore Holdings Limited
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman
Fax No.: (000) 000-0000
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With Copy to: Xxxxxxxx X. Deutsch, P.A.
Xxxxx xxx Xxxxxx
Xxxxx Xxxxxx - Xxxxx 0000
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Fax No.: (000) 000-0000
Any notice or communication given in conformity with this Section shall
be deemed to be effective when received by the addressee if delivered by hand or
overnight courier or by facsimile (with confirmation of transmission), and three
days after mailing, if mailed.
9. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of the
Purchaser or the Company to exercise and no delay in exercising any right,
power, remedy or privilege under this Agreement or provided by statute or at law
or in equity or otherwise, including, without limitation, the right or power to
terminate this Agreement, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a waiver of any breach
of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
10. AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision(s) intended to be
amended, modified, waived, terminated or discharged and signed by the Purchaser
and the Company, and each amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Purchaser and the Company.
11. INTEGRATION. This Agreement, including any Exhibits hereto,
represents the entire understanding and agreement of the parties with respect to
the subject matter hereof. No other representations, statements or warranties
have been made, other than what is written herein.
12. COSTS OF PARTIES; ATTORNEYS' FEES. Each party shall bear its own
costs in connection with this Agreement and the transactions contemplated
hereby. Except as otherwise set forth herein, all costs and expenses, including
reasonable attorneys' fees, incurred in the enforcement of this Agreement, shall
be paid to the prevailing party by the non-prevailing party, upon demand.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
14. GOVERNING LAW. This Agreement shall be enforced, governed and
construed in all respects in accordance with the internal laws, and not the laws
pertaining to conflicts or
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choice of laws, of the State of Florida.
15. NO BROKERS. The Purchaser represents to the Company that he has not
employed or dealt with any broker, agent or finder in respect of the
transactions provided for herein. The Company acknowledges that it has dealt
with such a broker, agent or finder in respect of the transactions provided for
herein and that it shall be solely responsible for compensating such person.
Each party hereto agrees to indemnify and hold harmless the other party hereto
from and against all fees, in any way resulting from any contract or
understanding existing between the indemnifying party and such broker, agent or
finder.
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Agreement as of the date first written above.
COMPANY:
COMMODORE HOLDINGS LIMITED
By:
-----------------------------------
Name: XXXXXXX X. XXXXXX
---------------------------------
Title: CHAIRMAN OF THE BOARD
-------------------------------
PURCHASER:
--------------------------------------
Name: --------------------------------
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EXHIBIT A
COMMODORE HOLDINGS LIMITED
SERIES B CONVERTIBLE PREFERRED STOCK
RIGHTS, PREFERENCES & LIMITATIONS
The Series B Convertible Preferred Stock (the "Series B Preferred
Stock") shall have the following rights, preferences and limitations:
A. DIVIDENDS. The holders of the Series B Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
funds of Commodore Holdings Limited (the "Company") legally available therefor,
cash dividends at the rate of 10% per annum and no more, payable quarterly
within thirty (30) days after the end of each calendar quarter. Such cash
dividends on Series B Preferred Stock shall be cumulative so that, if for any
quarter cash dividends at the specified rate shall not have been declared and
paid or set apart for payment on the Series B Preferred Stock outstanding, the
deficiency shall be declared and paid or set apart for payment prior to the
making of any dividend or other distribution on the Company's common stock, par
value $0.01 per share (the "Common Stock"). Cash dividends on Series B Preferred
Stock shall accrue from the date of issue of such Series B Preferred Stock. Upon
the payment of all dividends, current and accumulated, at the specified rate
upon the outstanding Series B Preferred Stock, the Directors of the Company may
declare and pay dividends upon the Common Stock.
B. CONVERSION.
1. VOLUNTARY CONVERSION. Each share of Series B Preferred
Stock shall be convertible into a number of shares of Common Stock (the
"Conversion Shares") based upon a conversion price per share of Common Stock of
$5.50 (the "Conversion Price"). Unless a holder of Series B Preferred Stock and
the Company agree otherwise, Series B Preferred Stock shall be convertible at
any time commencing eighteen (18) months after the date of issuance. Conversion
shall be effective on the third business day following the receipt by the
Company of the Notice of Conversion (as hereafter defined) from the holder of
the Series B Preferred Stock, together with the original stock certificate
evidencing the Series B Preferred Stock, executed stock powers and signatures
guaranteed.
The Conversion Price provided for herein shall be subject to the
following adjustments:
(i) If the Company shall declare and pay to the holders of the
shares of Common Stock a dividend in shares of Common Stock, the Conversion
Price in effect immediately prior to the date fixed for the determination of
shareholders entitled to such dividends shall be proportionately decreased
(adjusted to the nearest 1/1,000 of a share of Common Stock), such adjustment to
become effective immediately after the date fixed for such determination.
A-1
(ii) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares of Common Stock or combine the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such subdivision or
combination, as the case may be, shall be proportionately decreased or increased
(adjusted to the nearest 1/1,000 of a share of Common Stock), as the case may
require, such decrease or increase, as the case may be, to become effective when
such subdivision or combination becomes effective.
(iii) In the case of any reclassification or change of
outstanding shares of Common Stock issuable upon the conversion of the Series B
Preferred Stock, or in the case of any consolidation or merger of the Company
with or into another corporation, or in the case of any sale or conveyance to
another corporation of all or substantially all of the property of the Company,
the holder of each share of Series B Preferred Stock then outstanding shall have
the right thereafter, so long as such holder's conversion right hereunder shall
exist, to convert such Series B Preferred Stock into the same kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock of the Company into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance, and shall
have no other conversion rights under these provisions; PROVIDED, HOWEVER, that
effective provision(s) shall be made, in the Articles or Certificate of
Incorporation of the resulting, surviving or successor corporation or otherwise,
so that the provisions set forth herein for the protection of the conversion
rights of the shares of Series B Preferred Stock shall thereafter become
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding or other convertible preferred
shares receivable by the holders in place thereof; and provided, further, that
any such resulting, surviving, or successor corporations shall expressly assume
the obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities, or property as the holders of the shares of Series B
Preferred Stock remaining outstanding, or other convertible preferred shares
receivable by the holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provisions for the protection of
the conversion right as above provided.
In case securities or property other than shares of Common Stock shall
be issuable or deliverable upon the conversion as aforesaid, then all references
in this section shall be deemed to apply, so far as appropriate and as nearly as
may be, to such other securities or property. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the Company for the
purposes of this subsection (iii).
Except as provided in the foregoing subsections (i-iii), there shall be
no adjustments to the Conversion Price received upon conversion set forth above.
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2. MANDATORY CONVERSION. Unless a holder of Series B Preferred
Stock and the Company agree otherwise, at any time after the Company files a
registration statement with the Securities and Exchange Commission ("SEC") with
respect to the sale of the Conversion Shares and such registration statement has
been declared effective by the SEC, the Company shall have the right to force
conversion of up to twenty-five percent (25%) of the shares of the Series B
Preferred Stock during any ninety (90) day period at the Conversion Price if at
any time the closing bid price of the Company's Common Stock on The Nasdaq Stock
Market equals or exceeds 150% of the Conversion Price per share for any ten (10)
consecutive trading days (a "Conversion Trigger Date"). For a period of ten (10)
business days after the Conversion Trigger Date, the Company shall have the
right to deliver to any or all of the holders of Series B Preferred Stock a
Notice of Conversion, which states that the Company has elected to exercise its
right to demand conversion of the number of shares of Series B Preferred Stock
into Common Stock as set forth in such Notice of Conversion. The Notice of
Conversion shall state the date that the conversion shall be effective (the
"Conversion Date"), which shall not be earlier than the date the Notice of
Conversion is delivered to the holders of the Series B Preferred Stock.
3. NOTICE OF CONVERSION. In order to convert Series B
Preferred Stock into Common Stock, the holder or the Company, as the case may
be, must deliver a notice of conversion (the "Notice of Conversion"), in the
form attached hereto. Notices of Conversion shall be deemed delivered on the
date sent, if personally delivered or sent by facsimile (with confirmation of
transmission) to the address of record for each holder, or, if sent to the
Company, to the Company's Chief Executive Officer at the Company's principal
place of business, or when actually received if sent by another method. The
Notice of Conversion, if sent by a holder of Series B Preferred Stock, shall be
accompanied by a facsimile (which shall be followed by an original within one
(1) business day) or original certificate evidencing the Series B Preferred
Stock to be converted.
4. CONVERSION PROCEDURE. The Company shall use its reasonable
best efforts to cause its transfer agent to issue the Common Stock within three
(3) business days after the Company receives a fully executed Notice of
Conversion and original certificates for the Series B Preferred Stock with
executed stock powers and signatures guaranteed. The Company shall bear the cost
associated with the issuance of the Common Stock. The Common Stock shall be
issued with a restrictive legend indicating that it was issued in a transaction
which is exempt from registration under the Securities Act of 1933, as amended,
and that it cannot be transferred unless it is so registered, or an exemption
from registration is available, in the opinion of counsel to the Company. The
Common Stock shall be issued in the same name as the person who is the holder of
the Series B Preferred Stock unless, in the opinion of counsel to the Company,
such transfer can be made in compliance with applicable securities laws. The
person in whose name the certificates of Common Stock are so registered shall be
treated as a common stockholder of the Company on the date the Common Stock
certificates are so issued. With respect to Mandatory Conversion, each holder of
Series B Preferred Stock shall deliver to the Company the appropriate number of
shares of Series B Preferred Stock promptly after the Company's delivery of the
Notice of Conversion, together with executed stock powers with signatures
guaranteed. In the event a holder of Series B Preferred Stock fails to deliver
shares of Series B Preferred Stock after the Company's delivery of the Notice of
Conversion, such shares of Series B Preferred
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Stock shall be deemed to have been converted into Common Stock at the Conversion
Price on the Conversion Date and shall be issued and held by the Company until
the appropriate certificates for Series B Preferred Stock are presented for
cancellation with executed stock powers and signatures guaranteed. The
certificates representing the Series B Preferred Stock shall be cancelled, as
reflected in the records of the Company on the date of issuance of the Common
Stock.
5. RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred Stock, the sufficiency of which shall
be determined by using the Conversion Price.
C. NO PREEMPTIVE RIGHTS. No holder of the Series B Preferred Stock
shall be entitled, as a right, to purchase or subscribe for any part of the
unissued capital stock of the Company, or to purchase or subscribe for any
bonds, certificates of indebtedness, debentures, or other securities convertible
into or carrying options or warrants to purchase stock or other securities of
the Company or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of Bermuda.
D. NO VOTING RIGHTS. Holders of Series B Preferred Stock shall not have
voting rights.
E. LIQUIDATION PREFERENCE. Series B Preferred Stock shall have a
liquidation preference equal to $10.00 per share of Series B Preferred Stock
plus accrued and unpaid dividends.
F. NO FRACTIONAL SHARES. The Series B Preferred Stock shall not be
converted into fractions of a share and, where applicable, will be rounded down
to the nearest whole number of shares upon conversion into Common Stock.
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the registered Holder in order to convert Series B
Preferred Stock)
The undersigned hereby irrevocably elects to convert _______ shares of
Series B Preferred Stock into shares of Common Stock of COMMODORE HOLDINGS
LIMITED (the "Company") according to the rights, preferences and limitations of
the Series B Preferred Stock, as of the date written below.
Date of Conversion: *
--------------------
Signature:
--------------------------------
Name:
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Signature Guarantee:
----------------------
Address:
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Social Security No.
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*The Conversion Date shall be the third business day following the Company's
receipt of the original stock certificate evidencing the Series B Preferred
Stock with executed stock powers and signatures guaranteed and the Notice of
Conversion or, in the case of a Mandatory Conversion, the date set forth in the
Notice of Conversion.
