shall be based upon the Exchange Price in effect on the date upon which
certificates representing such Preferred Shares shall have been surrendered and
such Exchange Notice received by Group.
(iv)
Notwithstanding anything contained in this
Section 2(a) to the contrary, a holder of Preferred Shares shall not be entitled
to exchange such shares for a number of shares of Common Stock which would
exceed the difference between (i) 9.99% of the issued and outstanding shares of
Common Stock and (ii) the number of shares of Common Stock beneficially owned by
such holder.
For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act, as amended, and Regulation 13d-3 thereunder.
.
(b)
Mandatory Exchange
(i)
Each Preferred Share outstanding on the
Mandatory Exchange Date (as defined herein) shall automatically and without any
action on the part of the holder thereof, be exchanged for that number of fully
paid and non-assessable shares of Common Stock (calculated as to each conversion
to the nearest 1/100th of a share) as is determined by dividing the Original
Issue Price by the Exchange Price (as defined in Section 2(d)) in effect at the
time of conversion.
The term "Mandatory Exchange Date" is the date, if any, as
of
which all of the following has occured:
(A)
THE AVERAGE CLOSING PRICE FOR THE SHARES OF
COMMON STOCK HAS BEEN 200% OR MORE THAN THE EXCHANGE PRICE FOR AT LEAST TWENTY
(20) CONSECUTIVE TRADING DAYS (THE "TRIGGERING PERIOD");
(B)
THE AVERAGE DAILY TRADING VOLUME FOR ANY
TWENTY (20) TRADING DAYS DURING THE TRIGGERING PERIOD HAS BEEN 250,000 OR MORE
SHARES;
(C)
THE COMMON STOCK IS LISTED ON THE AMERICAN
STOCK EXCHANGE OR THE NASDAQ NATIONAL MARKET SYSTEM OR SMALLCAP MARKET; AND
(D)
THE COMMON STOCK RECEIVABLE UPON SUCH
MANDATORY EXCHANGE MAY, AT THE TIME OF THE MANDATORY EXCHANGE, BE RESOLD EITHER
(I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
WHICH THE
3
HOLDER OF SUCH PREFERRED SHARE IS ENTITLED TO USE OR (III) UNDER RULE 144(K)
UNDER THE SECURITIES ACT.
(II)
ON THE MANDATORY EXCHANGE DATE, ALL
OUTSTANDING PREFERRED SHARES SHALL BE DEEMED TO BE EXCHANGED AUTOMATICALLY
WITHOUT ANY FURTHER ACTION BY THE HOLDERS OF SUCH SHARES AND WHETHER OR NOT THE
CERTIFICATES REPRESENTING SUCH SHARES ARE SURRENDERED TO GROUP; PROVIDED,
HOWEVER, THAT GROUP SHALL NOT BE OBLIGATED TO ISSUE CERTIFICATES EVIDENCING THE
SHARES OF COMMON STOCK ISSUABLE UPON EXCHANGE OF ANY PREFERRED SHARES UNLESS
CERTIFICATES EVIDENCING SUCH PREFERRED SHARES ARE EITHER DELIVERED TO GROUP OR
THE HOLDER NOTIFIES GROUP OR HOLDINGS THAT SUCH CERTIFICATES HAVE BEEN LOST,
STOLEN, OR DESTROYED, AND EXECUTES AN AGREEMENT SATISFACTORY TO GROUP AND
HOLDINGS TO INDEMNIFY THEM FROM ANY LOSS INCURRED BY THEM IN CONNECTION
THEREWITH. UPON THE OCCURRENCE OF THE AUTOMATIC EXCHANGE OF THE PREFERRED SHARES
PURSUANT TO THIS SECTION 2(B), THE HOLDERS OF THE PREFERRED SHARES SHALL
SURRENDER THE CERTIFICATES REPRESENTING THE PREFERRED SHARES FOR WHICH THE
MANDATORY EXCHANGE DATE HAS OCCURRED TO GROUP,