EXHIBIT B
NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
Boca Raton, Florida
December 6, 2000
No. ST--
$________
AUTOINFO, INC.
12.00% CONVERTIBLE DEBENTURE
DUE DECEMBER 31, 2010
THIS DEBENTURE is one of a series of duly authorized and issued debentures
of AutoInfo, Inc., a Delaware corporation, having a principal place of business
at 2061 N.W. 2nd Avenue, Suite 106, Boca Raton, Florida 33431 (the "Company"),
designated as its 12.00% Convertible Debentures, due December 31, 2010, in the
aggregate principal amount of _________ Dollars ($________) (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to the order of
____________, or its registered assigns (the "Holder"), the principal sum of
Fifty Thousand Dollars ($50,000), on December 31, 2010 or such earlier date as
the Debentures are required or permitted to be repaid as provided hereunder (the
"Maturity Date") and to pay interest thereon at the rate of 12.00% per annum,
payable in arrears on each Conversion Date (as defined herein) and on each March
31, June 30, September 30 and December 31 of each year during which this
Debenture remains outstanding (for purposes of payment of interest, each
Conversion Date and each quarterly date being an "Interest Payment Date"), in
cash. Interest shall be calculated on the basis of a 360-day year of twelve
thirty-day months and shall accrue daily (but compound annually) commencing on
the Original Issue Date (as defined in Section 7) until payment (whether through
conversion of all outstanding principal amount hereunder or otherwise) in full
of the principal sum, together with all accrued and unpaid interest and other
amounts which may become due hereunder, has been made. Interest hereunder will
be paid to the Person (as defined in Section 7) in whose name this Debenture is
registered on the records of the Company regarding registration and transfers of
Debentures (the "Debenture Register").
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This Debenture is subject to the following additional provisions:
Section 1. (a) This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.
(b) This Debenture may be prepaid, in whole or in part,
without premium or penalty, upon ninety (90) days prior written notice to the
Holder; provided, however, that no such prepayment may be made unless
simultaneously therewith, all of the Debentures are prepaid in the same
proportion as the Debenture.
(c) At any time on or after December 31, 2003 the Holder may
require that all or any portion of this Debenture be prepaid without premium or
penalty upon ninety (90) days prior written notice to the Company.
Section 2. This Debenture has been issued subject to certain investment
representations of the original Holder and therefore its transfer or exchange to
another Person is restricted. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the Person in whose name this Debenture is duly registered on the Debenture
Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Debenture is overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.
Section 3. Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):
(i) any default in the payment of the principal of, interest
on or any other amount due in respect of, any Debentures, free of any claim of
subordination, by the fifth Business Day (as defined in Section 6) following the
date the same shall become due and payable (whether on an Interest Payment Date
or the Maturity Date, by acceleration or otherwise);
(ii) the Company shall fail to observe or perform any other
covenant, agreement or warranty contained herein, and such failure or breach
shall not have been remedied within twenty Business Days after the date on which
notice of such failure or breach shall have been given;
(iii) the Company or any of its subsidiaries shall commence,
or there shall be commenced against the Company or any such subsidiary, a case
under any applicable
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bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any subsidiary thereof or there is commenced
against the Company or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of sixty days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of sixty days; or the Company or
any subsidiary thereof makes a general assignment for the benefit of creditors;
or the Company shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or the Company
or any subsidiary thereof shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or the
Company or any subsidiary thereof shall by any act or failure to act expressly
indicate its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Company or any subsidiary thereof
for the purpose of effecting any of the foregoing; or
(iv) the Company shall default in any of its payment
obligations under any other Debenture of any mortgage, credit agreement or other
facility, indenture agreement, factoring agreement or other instrument under
which there may be issued, or by which there may be secured or evidenced any
indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company in an amount exceeding five hundred
thousand dollars ($500,000), whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
become due and payable without such indebtedness having been discharged in full
or any acceleration of such indebtedness having been rescinded or annulled in
full within the applicable grace period.
(b) If any Event of Default occurs, the full principal amount of
this Debenture (and, at the Holder's option, all other Debentures then held by
such Holder), together with interest and other amounts owing in respect thereof,
to the date of acceleration shall become, at the Holder's election immediately
due and payable in cash. Interest shall accrue on such amount from the seventh
Business Day after such amount is due (being the date of an Event of Default)
through the date of payment in full thereof at the rate of 18% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law), to
accrue daily from the date such payment is due hereunder through and including
the date of payment. All Debentures for which the amount due hereunder shall
have been paid in accordance herewith shall promptly be surrendered to or as
directed by the Company. The Holder need not provide and the Company hereby
waives any presentment, demand, protest or other notice of any kind, and the
Holder may immediately enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such declaration
may be rescinded and annulled by Holder at any time prior to payment hereunder.
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No such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 4. Conversion.
(a) Conversion at Option of Holder. The Holder shall effect
conversions hereunder by delivering to the Company by facsimile a completed
conversion notice in the form attached as Exhibit A (a "Holder Conversion
Notice") and delivery to the Company within two Trading Days thereafter of the
principal amount of Debentures to be converted. Each Holder Conversion Notice
shall specify the date on which such conversion is to be effected, which date
may not be prior to the date such Holder Conversion Notice is deemed to have
been delivered hereunder (a "Holder Conversion Date"). If no Holder Conversion
Date is specified in a Holder Conversion Notice, the Holder Conversion Date
shall be the date that such Holder Conversion Notice is deemed delivered
hereunder. Subject to Section 4(b), each Holder Conversion Notice, once given,
shall be irrevocable. If the Holder is converting less than all of the principal
amount represented by the Debenture(s) tendered by the Holder with the Holder
Conversion Notice, or if a conversion hereunder cannot be effected in full for
any reason, the Company shall honor such conversion to the extent permissible
hereunder and shall promptly deliver to such Holder (in the manner and within
the time set forth in Section 4(e)) a new Debenture for such principal amount as
has not been converted.
(b) Conversion at Option of the Company.
(i) If the conditions set forth in this subsection are
satisfied, the Company may require the conversion of all or a portion of the
principal amount of the Debentures. The Company shall only have the right to
require conversions hereunder if the Per Share Market Value as reported by
Bloomberg L.P. (or any successor to its function of reporting share prices)
exceeds $5.00 (subject to equitable adjustment in the event of stock splits and
similar events) for twenty consecutive Trading Days while this Debenture is
outstanding; provided that the Company has available sufficient unreserved and
available shares of Common Stock to fulfill its share delivery requirements upon
such conversion.
(ii) The Company shall exercise its right to require
conversions under Section 4(b)(i) by delivering to the Holder a completed
conversion notice in the form attached as Exhibit B (a "Company Conversion
Notice"). Each of a Company Conversion Notice and a Holder Conversion Notice is
sometimes referred to herein as a "Conversion Notice". Each Company Conversion
Notice shall specify the principal amount of Debentures to be converted and the
date on which such conversion is to be effected, which date may not be prior to
the date such Company Conversion Notice is deemed to have been delivered
hereunder (a "Company Conversion Date"). Each of a Company Conversion Date and a
Holder Conversion Date is referred to herein as a "Conversion Date". If no
Conversion Date is specified in a Company Conversion Notice, the Conversion Date
shall be the date that such Company Conversion Notice is deemed delivered
hereunder. Subject to the Holder's rights under Section 4(b), the conversion
subject to each Company Conversion Notice, once given, shall be irrevocable. Not
more than three Trading Days following receipt of the Company
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Conversion Notice, the Holder shall deliver to the Company the principal amount
of Debentures subject to such Company Conversion Notice against receipt of the
Underlying Shares. If the Company is requiring conversion of less than the full
principal amount represented by the Debenture(s) tendered by the Holder
following a Company Conversion Notice, or if a conversion hereunder cannot be
effected in full for any reason, the Company shall honor such conversion to the
extent permissible hereunder and shall promptly deliver to such Holder (in the
manner and within the time set forth in Section 4(e)) a new Debenture for such
principal amount as has not been converted.
(c) Number of Underlying Shares Issuable Upon Conversion. The number of
shares of Common Stock issuable upon a conversion hereunder shall be the sum of
(i) the quotient obtained by dividing (x) the principal amount of this Debenture
to be converted plus any and all accrued but unpaid interest thereon and (y) the
Conversion Price (as defined herein).
(d) Delivery of Certificates. Not later than five Trading Days after
any Conversion Date (a "Delivery Date"), the Company will deliver to the Holder
(A) a certificate or certificates representing the number of shares of Common
Stock being acquired upon the conversion of Debentures, (B) Debentures in a
principal amount equal to the principal amount of Debentures not converted, and
(C) a bank check in the amount of accrued and unpaid interest, provided, that
the Company shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon conversion of the principal amount of Debentures
until Debentures are delivered for conversion to the Company, or the Holder
notifies the Company that such Debentures have been lost, stolen or destroyed
and provides a bond (or other adequate security) reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection
therewith.
(e) Conversion Price; Adjustment. The Conversion Price of the Debentures
on any Conversion Date (the "Conversion Price") shall equal $0.25, subject to
adjustment as provided for in subsection (i) through (viii) below.
(i) If the Company, at any time while any Debentures are
outstanding, (a) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock
(other than PIK dividend preferred stock), (b) subdivide outstanding
shares of Common Stock into a larger number of shares, (c) combine
(including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (d) issue by reclassification of
shares of the Common Stock any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination
of stockholders entitled to
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receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
(ii) If the Company, at any time while any Debentures are
outstanding, shall issue rights, options or warrants to all holders of
Common Stock (and not to Holders) entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
Conversion Price in effect at the record date mentioned below, then the
Conversion Price shall be multiplied by a fraction, of which the
denominator shall be the number of shares of the Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be
the number of shares of the Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at the Conversion Price. Such
adjustment shall be made whenever such rights or warrants are issued, and
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants. However, upon the expiration of any such right, option or
warrant to purchase shares of the Common Stock the issuance of which
resulted in an adjustment in the Conversion Price pursuant to this
Section, if any such right, option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such
expiration be recomputed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Conversion Price made pursuant to the provisions of
this Section after the issuance of such rights or warrants) had the
adjustment of the Conversion Price made upon the issuance of such rights,
options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of the Common Stock actually purchased
upon the exercise of such rights, options or warrants actually exercised.
(iii) If the Company, at any time while Debentures are outstanding,
shall distribute to all holders of Common Stock (and not to Holders)
evidences of its indebtedness or assets or rights or warrants to subscribe
for or purchase any security, then in each such case the Conversion Price
at which Debentures shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Per Share
Market Value determined as of the record date mentioned above, and of
which the numerator shall be such Per Share Market Value on such record
date less the then fair market value at such record date of the portion of
such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be described
in a statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made
whenever any such
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distribution is made and shall become effective immediately after the
record date mentioned above.
(iv) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, the Holders shall have the right
thereafter to, at their option, (A) convert the then outstanding principal
amount, together with all accrued but unpaid interest and any other
amounts then owing hereunder in respect of this Debenture only, into the
shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of the Common Stock following such
reclassification or share exchange, and the Holders of the Debentures
shall be entitled upon such event to receive such amount of securities,
cash or property as the shares of the Common Stock of the Company into
which the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing hereunder in respect of
this Debenture could have been converted immediately prior to such
reclassification or share exchange would have been entitled.
(v) All calculations under this Section 4 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in the Conversion Price shall be required if such adjustment
is less than $0.01, provided, however, that any adjustments which by
reason of this Section are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(vi) Whenever the Conversion Price is adjusted pursuant hereto, the
Company shall promptly mail to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
(vii) If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders
of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of
the Company, of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company; then, in each case, the Company shall
cause to be filed at each office or agency maintained for the purpose of
conversion of the Debentures, and shall cause to be mailed to the Holders
at their last addresses as they shall appear upon the stock books of the
Company, at least twenty calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants,
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or if a record is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that
the failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the corporate action required to
be specified in such notice. Holders are entitled to convert Debentures
during the twenty-day period commencing the date of such notice to the
effective date of the event triggering such notice.
(viii) In case of any (1) merger or consolidation of the Company
with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company (based upon then fair market value)
in one or a series of related transactions, a Holder shall have the right
to (A) require prepayment of the outstanding principal and accrued but
unpaid interest of this Debenture, or (B) convert its aggregate principal
amount of Debentures then outstanding into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and
such Holder shall be entitled upon such event or series of related events
to receive such amount of securities, cash and property as the shares of
Common Stock into which such aggregate principal amount of Debentures
could have been converted immediately prior to such merger, consolidation
or sales would have been entitled, or (C) in the event that the Holder
shall have elected under clause (A) above and the Company shall not have
failed to pay the amounts due by the second Business Day prior to the
closing of such transaction, or shall have indicated its intention to do
so, then in the case of a merger or consolidation at the closing thereof,
(x) require the surviving entity to issue shares of convertible preferred
stock or convertible debentures with such aggregate stated value or in
such face amount, as the case may be, equal to the aggregate principal
amount of Debentures then held by such Holder, plus all accrued and unpaid
interest and other amounts owing thereon, which newly issued shares of
preferred stock or debentures shall have terms identical (including with
respect to conversion) to the terms of this Debenture (except, in the case
of preferred stock, as may be required to reflect the differences between
equity and debt) and shall be entitled to all of the rights and privileges
of a Holder of Debentures set forth herein and the agreements pursuant to
which the Debentures were issued (including, without limitation, as such
rights relate to the acquisition, transferability, registration and
listing of such shares of stock other securities issuable upon conversion
thereof), and (y) simultaneously with the issuance of such convertible
preferred stock or convertible debentures, shall have the right to convert
such instrument only into shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger or consolidation. In the case of clause (C), the
conversion price applicable for the newly issued shares of convertible
preferred stock or convertible debentures shall be based
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upon the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Conversion Price in effect
immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall
include such terms so as to continue to give the Holders the right to
receive the securities, cash and property set forth in this Section upon
any conversion or redemption following such event. This provision shall
similarly apply to successive such events.
(f) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of the Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b)) upon the conversion of the
outstanding principal amount of the Debentures and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable.
(g) Upon a conversion hereunder the Company shall not be required to issue
stock certificates representing fractions of shares of the Common Stock, but may
if otherwise permitted, make a cash payment in respect of any final fraction of
a share based on the Per Share Market Value at such time. If the Company elects
not, or is unable, to make such a cash payment, the Holder shall be entitled to
receive, in lieu of the final fraction of a share, one whole share of Common
Stock.
(h) The issuance of certificates for shares of the Common Stock on
conversion of the Debentures shall be made without charge to the Holders thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of such Debentures so converted and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
(i) Any and all notices or other communications or deliveries to be provided by
the Holders hereunder, shall be in writing and delivered personally, by
facsimile, sent by a nationally recognized overnight courier service or sent by
certified or registered mail, postage prepaid, addressed to the Company, at 2061
N.W. 2nd Avenue, Suite 106, Boca Raton, Florida 33431, Facsimile No.: (561)
361-8212, attention President, or such other address or facsimile number as the
Company may specify for such purposes by notice to the Holders
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delivered in accordance with this Section, with a copy to (other than for
Conversion Notices) to Morse, Zelnick, Rose & Lander LLP, 450 Park Avenue, Suite
902, New York, New York 10022. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service or sent by certified or registered mail, postage prepaid,
addressed to each Holder at the facsimile telephone number or address of such
Holder appearing on the books of the Company, or if no such facsimile telephone
number or address appears, at the principal place of business of the Holder. Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time), (ii) the date
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section later than
6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date, (iii) four days after deposit in the United States
mail, (iv) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (v) upon actual receipt by the party to
whom such notice is required to be given.
Section 5. Unconditional Obligation. Except as expressly provided herein,
no provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, interest
and liquidated damages (if any) on, this Debenture at the time, place, and rate,
and in the coin or currency, herein prescribed. This Debenture is a direct
obligation of the Company. This Debenture ranks pari passu with all other
Debentures now or hereafter issued under the terms set forth herein. As long as
there are Debentures outstanding, the Company shall not and shall cause it
subsidiaries not to, without the consent of the Holders, (i) amend its
certificate of incorporation, bylaws or other charter documents so as to
adversely affect any rights of the Holders (creation of a class of preferred
stock that does not otherwise alter the relative rights, preferences or terms of
this Debenture or otherwise breach other provisions of the Transaction Documents
will not violate this clause); or (ii) enter into any agreement with respect to
the foregoing.
Section 6. Definitions. For the purposes hereof, the following terms shall
have the following meanings:
"Business Day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on which
banking institutions in the State of New York are authorized or required by law
or other government action to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, par value $.001 per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Original Issue Date" shall mean the date of the first issuance of
the Debentures regardless of the number of transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such
Debenture.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of Common Stock on such date on the NASDAQ, or if
there is no such price on such date, then the closing bid price on the NASDAQ on
the date nearest preceding such date, or (b) if the shares of Common Stock are
not then listed or quoted on a NASDAQ, the closing sale or bid price, as
applicable, for a share of Common Stock on a Subsequent Market, at the close of
business on such date, or (c) if the shares of Common Stock are not then listed
or quoted on a Subsequent Market, then the average of the "bulletin board"
quotes on such date, as determined in good faith by the Holder, or (d) if the
shares of Common Stock are not then publicly traded the fair market value of a
share of Common Stock as determined by an Appraiser selected in good faith by
the Holders of a majority in interest of the principal amount of Debentures then
outstanding.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means (a) a day on which the shares of Common Stock
are traded on a The Nasdaq NMS, or (b) if the shares of Common Stock are not
listed on The Nasdaq NMS, a day on which the shares of Common Stock are traded
on a Subsequent Market, or (c) if the shares of Common Stock are not quoted on
the NASDAQ or any Subsequent Market, a day on which the shares of Common Stock
are quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided that in the event that the shares of
Common Stock are not listed or quoted as set forth in (a), (b) and (c) hereof,
then Trading Day shall mean any Business Day.
"Underlying Shares" means the shares of Common Stock issuable upon
conversion of Debentures.
Section 7. This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Company, including, without limitation, the right
to vote, to receive dividends and other distributions, or to receive any notice
of, or to attend, meetings of stockholders or any other proceedings of the
Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.
Section 8. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed debenture, a
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new Debenture for the principal amount of this Debenture so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such Debenture, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Company.
Section 9. No current indebtedness of the Company is, and no future
indebtedness of the Company will be, senior to this Debenture in right of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise other than Senior Indebtedness (as defined below),
indebtedness secured by purchase money security interests (which will be senior
as to the underlying asset covered thereby) and capital lease obligations (which
will be senior as to the property covered thereby).
Section 10. Subordination. This Debenture and the indebtedness evidenced
hereby, including the principal and interest and any renewals or extensions
thereof, shall at all times be wholly subordinate and junior in right of payment
to the prior payment in full of all Superior Indebtedness, whether outstanding
on the date hereof or hereafter created, all in the manner and with the force
and effect hereinafter set forth.
For the purposes hereof, "Superior Holders" shall mean any holders of the
"Superior Indebtedness," and "Superior Indebtedness" shall mean all indebtedness
of the Company whether absolute or contingent, direct or indirect, for
principal, premium, if any, and interest (including any interest accruing
subsequent to the commencement of bankruptcy, insolvency or similar proceedings,
whether or not such interest is an allowable claim in any such proceedings)
outstanding at any time, payable to any bank, financial institution or other
institutional investor in each case not affiliated with the Company.
Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, securities or other property to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization or
readjustment of the Company, whether voluntary or involuntary, in bankruptcy,
insolvency, receivership or other cases or proceedings, all principal of,
premium, if any, and interest due or to become due upon all Superior
Indebtedness shall first be paid in full before the Holder shall be entitled to
receive any assets so paid or distributed; and upon any such dissolution or
winding up or liquidation or reorganization or readjustment, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities to which the Holder would be entitled except for the
provisions of this paragraph, including any such payment or distribution which
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of this Debenture, shall be
paid or distributed by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution
directly to the Superior Holders (pro rata to each such Superior Holder on the
basis of the respective amounts of Superior Indebtedness held by such Superior
Holder) or their representatives, to the extent necessary to pay all Superior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the Superior Holders, before any payment or distribution
in respect to this Debenture (for principal, premium, if any, or interest) is
made to the Holder.
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If any payment or distribution of any character, whether in cash, property
or securities including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of this Debenture, shall be received by the
Holder in contravention of any of the terms of this Debenture and before all the
Superior Indebtedness shall have been paid in full, such payment or distribution
shall be held in trust by the Holder for the benefit of the Superior Holders and
shall forthwith be paid over or delivered and transferred to the Superior
Holders (pro rata to each such Superior Holder on the basis of the respective
amounts of Superior Indebtedness held by such Superior Holder) or their
representatives, to the extent necessary to pay all Superior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or for
the Superior Holders.
The foregoing subordination shall apply, notwithstanding the availability
of any collateral to the Superior Holders or the actual date and time of
execution, delivery, recordation, filing or perfection of the Superior Holders'
interest in collateral, or the lien or priority of payment thereof, and
notwithstanding the fact that any monies owed to the Superior Holders or any
claim for the Superior Indebtedness is declared to be fraudulent or
preferential, subordinated, avoided, set aside or disallowed, in whole or in
part, pursuant to Title 11 of the United States Code (the "Bankruptcy Code") or
other applicable federal or state law. In the event of a proceeding, whether
voluntary or involuntary, for insolvency, liquidation, reorganization,
dissolution, bankruptcy or other similar proceeding pursuant to the Bankruptcy
Code or other applicable federal or state law, the Superior Indebtedness shall
include all fees and interest accrued on the Superior Indebtedness in accordance
with and at the rates specified in the documents underlying and evidencing the
Superior Indebtedness, both for periods before and for periods after the
commencement of any of such proceedings, even if the claims for such fees or
interest are not allowed pursuant to applicable law.
Section 11. This Debenture shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflicts of laws thereof. The Company and the Holder hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in Palm
Beach County, Florida, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument 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 right to serve
process in any manner permitted by law.
Section 12. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of
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such provision or of any breach of any other provision of this Debenture. The
failure of the Company or the Holder to insist upon strict adherence to any term
of this Debenture on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Debenture. Any waiver must be in writing.
Section 13. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
Section 15. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.
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SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.
AutoInfo, Inc.
By: _________________________________
Name: William Wunderlich
Title: Chief Financial Officer
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EXHIBIT A
HOLDER CONVERSION NOTICE
(To be Executed by the Registered Holder
in order to Convert the Debenture)
The undersigned hereby elects to convert the attached Debenture into shares of
the Common Stock (the "Common Stock") of AutoInfo, Inc. (the "Company")
according to the conditions hereof, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.
Conversion calculations: __________________________________________________
Date to Effect Conversion
--------------------------------------------------
Principal Amount of Debentures to be Converted
--------------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------------
Applicable Conversion Price
--------------------------------------------------
Signature
--------------------------------------------------
Name
--------------------------------------------------
Address
<PAGE>
EXHIBIT B
COMPANY CONVERSION NOTICE
(To be Executed by the Company to Require
Conversion of Debentures)
The undersigned authorized officer of the AutoInfo, Inc. (the "Company") hereby
requires the conversion of the principal amount of the Company's Debentures held
by the registered holder addressee hereof of the Company's Common Stock (the
"Common Stock") pursuant to the conditions of the Dentures as of the date
written below. No fee will be charged to the holder for any conversion, except
for such transfer taxes, if any.
Conversion calculations: _____________________________________________
Date to Effect Conversion
---------------------------------------------
Principal Amount of Debentures to be
Converted
---------------------------------------------
Number of shares of Common Stock to be Issued
---------------------------------------------
Applicable Conversion Price
---------------------------------------------
Signature
---------------------------------------------
Name and Office
2
