Exhibit 4.3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS.
THIS NOTE IS SUBJECT TO A SUBORDINATION AGREEMENT IN FAVOR OF BANKERS TRUST
COMPANY, AS ADMINISTRATIVE AGENT FOR THE LENDERS FROM TIME TO TIME PARTY TO
THE CREDIT AGREEMENT (AS SUCH TERMS ARE DEFINED IN SUCH SUBORDINATION
AGREEMENT) DATED AS OF APRIL 17, 2001 (THE "SUBORDINATION AGREEMENT").
$ _____________ Temecula, California
______________, 2001
SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE DUE 2005
Xxxxxx Respiratory Care Inc., a California corporation (the "Maker"), for
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value received, promises to pay to _______________________ (the "Holder") the
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principal sum of __________ _______________________ Dollars and No Cents
($_________) on March 31, 2005 (the "Maturity Date") as provided herein. The
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Maker also promises to pay interest from the date of this Note until payment in
full on the unpaid principal balance as set forth in Section 1 below.
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1. Payment of Interest.
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(a) The interest rate payable hereunder shall be 10% per annum,
computed on the basis of the actual number of days elapsed and a year of 365
days. At the option of the Maker, interest may (i) be paid semi-annually on
each April 15 and October 15, beginning on October 15, 2001 (each such semi-
annual date that an interest payment is due, an "Interest Payment Date") but
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only through the issuance on any Interest Payment Date of an additional
promissory note of equal ranking to this Note and on the same terms and
conditions provided for herein, such note to be issued in a principal amount
that corresponds with the amount of the interest payment that would otherwise be
due on such Interest Payment Date or (ii) accrue, such accruing amount to be
compounded semi-annually commencing with the first six month anniversary of the
initial Interest Payment Date on which such interest is due and continuing until
paid. In addition, all accrued and unpaid interest on this Note will be due and
payable on the day that all principal is due and payable, whether on the
Maturity Date, by acceleration or otherwise.
(b) Payment shall be made in lawful tender of the United States in
immediately available funds, and shall be credited, prior to the occurrence of
an Event of
Default (as defined below), first to accrued interest then due and payable with
the remainder applied to principal. Prepayment of the principal, in whole or in
part together with accrued interest, may be made at any time without penalty or
premium.
2. Subordination; Ranking.
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(a) This Note and all principal, interest and other amounts, if any,
payable hereunder shall be subject to the Subordination Agreement and is
subordinated in right of payment to the extent and in the manner provided in the
Subordination Agreement. No indebtedness which does not constitute Senior Debt
shall be senior in any respect to this Note. For purposes of this Note, "Senior
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Debt" shall mean the "Senior Debt" as defined in the Subordination Agreement.
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(b) This Note and all principal, interest and other amounts, if any,
payable hereunder shall in all respects rank pari passu in right of payment with
the Maker's 9 1/8% Senior Subordinated Notes due 2008 and shall constitute
"Senior Subordinated Debt" as defined for purposes thereof.
3. Conversion.
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(a) At the option of the Holder, this Note shall be convertible into a
number of shares of common stock, no par value per share, of the Maker ("Common
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Stock"), calculated by dividing the principal amount of this Note by $10.00 (the
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"Conversion Price"), as such Conversion Price is subject to adjustment as set
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forth in subsections (d) through (f) below. In addition, this Note shall
automatically convert into Common Stock, calculated according to the provisions
of this subsection (a), upon the affirmative vote of the holders of an aggregate
principal amount representing a majority of the then outstanding principal
amount of all Notes.
(b) In connection with any conversion of this Note, all interest
accrued and compounded pursuant to Section 1(a)(ii) of this Note, or paid
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through the issuance of additional Notes pursuant to Section 1(a)(i) of this
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Note shall, at the option of the Maker, (1) be convertible into Common Stock
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based upon the terms of this Section 3, (2) be paid in cash or (3) be paid by
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the issuance of an additional promissory note or notes of equal ranking to this
Note and on the same terms and conditions provided for herein, such note to be
issued in a principal amount that corresponds with the amount of the interest
payment that would otherwise be due upon conversion of this Note (the
"Additional Note"); provided, however, that if at the time of the requested
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conversion of this Note, the Maker is unable to issue Common Stock to the
Holder, pay such interest in cash or issue an Additional Note because the terms
of any agreement to which the Maker or its parent is a party, including the
Credit Agreement and the Subordination Agreement, prohibits all of the same,
then this Note shall not be converted into Common Stock at such time.
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(c) As soon as practicable after the conversion of this Note, the
Maker at its expense will cause to be issued in the name of and delivered to the
Holder, a certificate or certificates for the number of shares of Common Stock
to which the Holder shall be entitled on such conversion. No fractional shares
will be issued on conversion of the Note. If on conversion of the Note a
fraction of a share results, the Company will pay the cash value of that
fractional share based on the Conversion Price then in effect.
(d) In the event the outstanding shares of Common Stock shall, after
date hereof, be further subdivided (split), or combined (reverse split), by
reclassification or otherwise, or in the event of any dividend or other
distribution payable on the Common Stock in shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision, combination,
dividend or other distribution shall, concurrently with the effectiveness of
such subdivision, combination or dividend or other distribution, be
proportionately adjusted.
(e) If the Maker at any time shall issue additional shares of Common
Stock, by reason of the declaration or payment of a dividend or other
distribution on the Common Stock payable in additional shares of Common Stock,
then and in each such event, the Conversion Price then in effect shall be
decreased as of the time of such issuance or, if such a record date shall have
been fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction:
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this subsection as of the time of actual payment of such
dividends or distributions.
(f) (i) If at any time or from time to time after the date hereof,
the Maker issues or sells, or is deemed by the express provisions of this
subparagraph (f) to have issued or sold, Additional Shares of Common Stock (as
defined in clause (v) below), other than upon a subdivision or combination of,
or as a dividend or other distribution on, the Common Stock as provided in
subparagraph (e) above, for an Effective Price (as defined in clause (v) below)
less than the then existing Conversion Price (or, if an adjusted Conversion
Price shall be in effect by reason of a previous adjustment, then less than such
adjusted Conversion Price), the then-existing Conversion Price shall be reduced,
as of the opening of business on the date of such issue or sale,
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to a price determined by multiplying the then-existing Conversion Price by a
fraction (i) the numerator of which shall be (A) the number of shares of Common
Stock outstanding at the close of business on the day immediately preceding the
date of such issue or sale, plus (B) the number of shares of Common Stock that
the aggregate consideration received (or by the express provisions hereof deemed
to have been received) by the Maker for the total number of Additional Shares of
Common Stock so issued would purchase at the Conversion Price in effect
immediately prior to such issuance, and (ii) the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of Additional Shares of Common Stock so issued;
provided, however, that for the purposes of this clause (i), all shares of
Common Stock then issuable upon conversion or exercise of then outstanding
rights or options to acquire Common Stock or other stocks or securities
convertible into Common Stock shall be deemed to be outstanding.
(ii) For the purpose of making any adjustment required under this
subparagraph (f), the consideration received by the Maker for any issue or sale
of securities shall (A) to the extent it consists of cash be computed at the
gross amount of cash received by the Maker before deducting any expenses payable
by the Maker and any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Maker in connection with such issue or sale,
(B) to the extent it consists of property, be computed as determined in good
faith by the Board of Directors of the Maker (the "Board"), and (C) if
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Additional Shares of Common Stock, securities convertible into Additional Shares
of Common Stock ("Convertible Securities") or rights or options to purchase
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either Additional Shares of Common Stock or Convertible Securities are issued or
sold together with other stock or securities or other assets of the Maker for a
consideration which covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options, as the case may be.
(iii) For the purpose of the adjustment required under this
subparagraph (g), if the Maker issues or sells any rights or options to purchase
Common Stock or any Convertible Securities and if the Effective Price of the
Additional Shares of Common Stock underlying such rights or options or
Convertible Securities is less than the then applicable Conversion Price, then
the Maker shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Maker for the
issuance of such rights or options or Convertible Securities, plus, in the case
of such rights or options, the minimum amount of consideration, if any, payable
to the Maker upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Maker (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) upon the conversion thereof. No further adjustment
of the Conversion Price, adjusted upon the issuance of such rights, options or
Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights,
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options or the conversion of any such Convertible Securities. If any such rights
or options or the conversion privilege represented by any such Convertible
Securities shall expire without having been exercised, the Conversion Price,
adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the applicable Conversion Price that would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such Additional Shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Maker upon such exercise, plus the consideration, if any, actually received
by the Maker for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Maker (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities.
(iv) For the purpose of the adjustment required under this
subparagraph (g), if the Maker issues or sells any rights or options for the
purchase of Convertible Securities and if the Effective Price of the Additional
Shares of Common Stock underlying such Convertible Securities is less than the
then-applicable Conversion Price, the Maker shall be deemed to have issued at
the time of the issuance of such rights or options the maximum number of
Additional Shares of Common Stock issuable upon conversion of the total amount
of Convertible Securities covered by such rights or options and to have received
as consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by the Maker for
the issuance of such rights or options, plus the minimum amounts of
consideration, if any, payable to the Maker upon the exercise of such rights or
options and plus the minimum amount of consideration, if any, payable to the
Maker (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) upon the conversion of such Convertible Securities.
No further adjustment of the Conversion Price, adjusted upon the issuance of
such rights or options, shall be made as a result of the actual issuance of the
Convertible Securities upon the exercise of such rights or options or upon the
actual issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of clause (iii) above for the
readjustment of the Conversion Price upon the expiration of rights or options or
the rights of conversion of Convertible Securities shall apply, the necessary
changes having been made, to the rights, options and Convertible Securities
referred to in this clause (iv).
(v) "Additional Shares of Common Stock" shall mean all shares of
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Common Stock issued by the Maker after the date hereof, whether or not
subsequently reacquired or retired by the Maker, other than shares of Common
Stock issued (A) upon conversion of any of the Notes; (B) to employees or
directors of or consultants providing bona fide consulting services to the Maker
or any subsidiary pursuant to any stock purchase or stock option plans or other
arrangements that are approved by the Board; (C) upon exercise or conversion, as
applicable, of options, warrants, notes or other rights to acquire securities of
the Company outstanding on the date of this Note; (D) upon exercise of warrants
to purchase Common Stock
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issued to lenders, real or personal property lessors, vendors, customers,
potential or existing strategic partners, trade partners or service providers in
connection with commercial credit arrangements, real or personal property
leases, equipment financings, strategic alliances or similar transactions; (E)
in connection with any stock split or stock dividend of the Maker; or (F)
pursuant to the Maker's acquisition of another corporation or all or a portion
of such corporation's assets by merger, purchase of assets or other corporate
reorganization, in each case if unanimously approved by the Board.
(vi) The "Effective Price" of Additional Shares of Common Stock
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shall mean the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been issued or sold by
the Maker under this subparagraph (f), into the aggregate consideration
received, or deemed to have been received by the Maker for such issue under this
subparagraph (f), for such Additional Shares of Common Stock.
(g) Upon the occurrence of each adjustment or readjustment of a
Conversion Price, the Maker at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
the Holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Maker shall, upon the written request, at any time, of any Creditor, furnish
or cause to be furnished to such holder a like certificate setting forth: (i)
such adjustments and readjustments; (ii) the applicable Conversion Price at the
time in effect; and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of the Note.
4. Events of Default. If any of the following events (each, an "Event of
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Default") shall occur:
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(a) the Maker shall fail to make any payment hereunder when due and
payable, and such failure shall continue unremedied for a period of ten (10)
days after notice thereof from the Holder to the Maker; or
(b) the Maker shall fail to make any payment under any indebtedness of
the Maker that is outstanding in an aggregate principal amount of at least
$15,000,000, including, without limitation, indebtedness of the Maker under the
Credit Agreement, when the same becomes due and payable, and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument evidencing such indebtedness, either (i) when and as the same
becomes due and payable at the stated maturity of such indebtedness or (ii) at
any other time if, as a result of such nonpayment, the maturity of such
indebtedness is accelerated; or
(c) the Maker shall generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily commence
any proceeding or file any petition under any bankruptcy, insolvency or similar
federal, state or foreign law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for
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it or a substantial portion of its property, assets or business or to effect a
plan or other arrangement with its creditors, or shall file any answer admitting
the jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the appointment of, a
receiver, trustee, custodian or liquidator for a substantial portion of its
property, assets or business, or shall by any act or failure to act indicate its
consent to or approval of any of the foregoing, or if any corporate action is
taken by the Maker for the purpose of effecting any of the foregoing; or
(d) involuntary proceedings or an involuntary petition shall be
commenced or filed against the Maker under any bankruptcy, insolvency or similar
federal, state or foreign law or seeking the dissolution, liquidation or
reorganization of it or the appointment of a receiver, trustee, custodian or
liquidator for it or of a substantial part of its property, assets or business,
and such proceedings or petition shall not be dismissed within 60 days; or any
writ, judgment, tax lien, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of its property, assets or
business, and such writ, judgment, lien, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded, within 60 days
after commencement, filing or levy, as the case may be, or any order for relief
shall be entered in any such proceeding; or any winding-up, dissolution,
liquidation or reorganization of the Maker;
then, and in every such event, and at any time thereafter during the continuance
of such event, but in all cases subject to the provisions of the Subordination
Agreement, (i) in the case of an Event of Default under clauses (a) and (b), the
Holders of a majority of the outstanding principal amount of all Notes may
declare all principal and accrued interest and all other fees and other
obligations of the Maker under the Notes to be due and payable, and (ii) in the
case of an Event of Default under clauses (c) or (d), all principal and accrued
interest on all outstanding Notes and all fees and other obligations of the
Maker under the Notes will be immediately due and payable on all outstanding
Notes without any declaration or other act on the part of the Holders, in either
case without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Maker, except the notice provided for in clause
(a) above.
5. Security. This Note is not secured.
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6. Series of Notes; Actions by Majority. This Note is one of a series of
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Notes of like tenor issued in an original aggregate principal amount of up to
$10,500,000. When actions are specified herein as happening upon the decision
of holders of a majority in principal amount of the Notes, such action shall be
evidenced by a writing executed by such Holders and delivered to all Holders of
Notes and shall be the act of and binding on all Holders.
7. Costs and Expenses. The Maker promises to pay all costs and expenses,
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including reasonable attorneys' fees, incurred by the Holder in connection with
the enforcement of, or collection of any amounts due under, this Note. The
Maker hereby
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waives notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor and all other notices or demands relative to this
instrument, except for notices to which the Maker is expressly entitled under
this Note or the Note Agreement.
8. Successors and Assigns. This Note shall be binding upon, and shall
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inure to the benefit of, the Maker and the Holder and their respective
successors and assigns; provided, however, that neither this Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Maker without the prior written
consent of the Holder except in connection with an assignment in whole to a
successor Maker to the Maker in a merger of the Maker or a sale of all or
substantially all of the Maker's property and assets and then only if the
Holder's rights hereunder are not impaired.
9. Modifications and Amendments; Reissuance of Note. This Note may only
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be modified, amended, or terminated (other than by payment in full) by an
agreement in writing signed by the Maker and the Holders of a majority in
principal amount of all Notes. No waiver of any term, covenant or provision of
this Note shall be effective unless given in writing by the Holders of a
majority in principal amount of all Notes. Upon receipt of evidence reasonably
satisfactory to the Maker of the loss, theft, destruction, or mutilation of this
Note and of an agreement of indemnity reasonably satisfactory to the Maker, and
upon surrender or cancellation of this Note, if mutilated, the Maker will make
and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed, or
mutilated Note.
10. Remedies Cumulative. Each and every right, power and remedy herein
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given to the Holder, or otherwise existing, shall be cumulative and not
exclusive and be in addition to all other rights, powers and remedies now or
hereafter granted (including, without limitation, other rights of set-off under
applicable law) or otherwise existing. Each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient by the
Holder.
11. Notices. All notices and other communications required or permitted
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hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by facsimile, hand or by messenger
(which may be by overnight delivery service), addressed (a) if to the Maker, at
the address and facsimile number set forth on the signature page to this Note or
at such other address and facsimile number as the Maker shall have furnished to
the Holder by first class mail, or (b) if to the Holder, to 00000 Xxxxx Xxxxxx
Xxxx., Xxxxx 0000, Xxx Xxxxxxx, XX 00000, or at such other address and
facsimile number as the Holder shall have furnished to the Maker by first class
mail.
12. Waiver. The Holder shall not by any act (except by a written
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instrument in accordance with the immediately preceding paragraph), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to
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exercise, nor any delay in exercising, on the part of the Holder, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Holder
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. JURISDICTION. ALL LEGAL ACTIONS OR PROCEEDINGS BROUGHT AGAINST THE
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MAKER WITH RESPECT TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY
OF THIS NOTE THE MAKER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
THE JURISDICTION OF THE AFORESAID COURTS. THE MAKER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED
ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS OR ANY SIMILAR BASIS. THE MAKER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY LEGAL
ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY MAIL TO THE ADDRESS
OF THE MAKER SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A HOLDER
TO BRING PROCEEDINGS AGAINST THE MAKER IN THE COURTS OF ANY OTHER JURISDICTION
OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
14. Governing Law. This Note shall be construed in accordance with the
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laws of the State of California, without regard to the conflicts of law
provisions of the State of California or of any other state.
15. Interest. The rate of interest payable under this Note shall in no
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event exceed the maximum rate permissible under applicable law. If the rate of
interest payable on this Note is ever reduced as a result of this paragraph and
at any time thereafter the maximum rate permitted under applicable law exceeds
the rate of interest provided for in this Note, then the rate provided for in
this Note shall be increased to the maximum rate provided for under applicable
law for such period as is required so that the total amount of interest received
by the Holder is that which would have been received by the Holder but for the
operation of the first sentence of this paragraph.
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IN WITNESS WHEREOF, the Maker has caused this Note to be signed on the date
first set forth above.
MAKER: XXXXXX RESPIRATORY CARE INC.
By: ___________________________
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
Notice Address:
00000 Xxxx Xxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
SIGNATURE PAGE TO
SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE DUE 2005
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