EXHIBIT B to Option Agreement
[PUT NOTE]
THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON ITS CONVERSION
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO ▇▇▇▇▇ & ▇▇▇▇▇ COMPANY, QUALIFIES
AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
THE OBLIGATIONS OF THE MAKER UNDER THIS NOTE ARE SUBORDINATED PURSUANT TO A
SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH IN FAVOR OF CERTAIN
LENDERS TO THE MAKER
CONVERTIBLE SUBORDINATED PROMISSORY NOTE AND SECURITY AGREEMENT
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_____, 2002
$6,000,000
FOR VALUE RECEIVED, ▇▇▇▇▇ & ▇▇▇▇▇ Company (the "Maker"), hereby unconditionally
promises to pay to the order of Warburg, ▇▇▇▇▇▇ Investors, L.P. (the "Holder"),
having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at such
address or at such other place as may be designated in writing by the Holder, or
its assigns, the original aggregate principal sum of Six Million Dollars
($6,000,000), together with interest on the unpaid principal balance of this
Note outstanding at a rate per annum equal to fifteen percent (15%) (computed on
the basis of the actual number of days elapsed in a 360-day year) compounded
quarterly. All principal and accrued interest, plus reasonable, documented
out-of-pocket expenses of the Holder incurred in connection with the issuance of
this Note ("reasonable expenses"), shall be paid at the earlier of (a) at the
option of the Holder, in cash to the Holder, or (b) at the Option of the Holder,
by conversion of some or all of the principal amount then outstanding and
accrued interest thereon plus reasonable expenses into shares of the Maker's
newly created Series A Preferred Stock (as such term is defined in the Maker's
Certificate of Designations, Number, Voting Powers, Preferences and Rights of
Series A Preferred Stock (the "Certificate of
Designation"), or (c) when such amounts are made automatically due and payable
upon the occurrence of an Event of Default (as defined below) or (d) January 1,
2006 (the "Maturity Date); provided, however, that no payments of any nature
whatsoever shall be made with respect to the Note in contravention of the terms
and provisions of the Amended and Restated Credit Agreement, dated as of
December 31, 2000, as amended, among the Company, Various Financial
Institutions, LaSalle Bank National Association, American National Bank and
Trust Company of Chicago and Bank of America as same may be modified, extended,
amended or supplemented at any time or from time to time (the "Credit
Agreement"). Subject to the provisions of the Credit Agreement, the principal
amount of this Note, plus accrued interest thereon and reasonable expenses with
respect thereto, may be prepaid in cash, in whole or in part, at anytime and
from time to time by Maker by the tendering of payment thereof to Holder. In
addition, notwithstanding anything set forth herein to the contrary, Holder
expressly agrees to convert the entire principal amount of this Note, plus all
accrued interest thereon plus all reasonable expenses with respect thereto, into
Series A Preferred Stock upon receipt of written notice from Maker (the
"Conversion Notice") that, in the absence of Holder effecting such conversion,
the Company will not be able to maintain the listing of its securities on the
New York Stock Exchange. Any such conversion of the Series A Preferred Stock in
accordance with the provisions of the immediately preceding sentence shall be
deemed to be effected upon the giving of the Conversion Notice. All cash
payments by the Maker under this Note shall be in immediately available funds.
The number of shares of Series A Preferred Stock to be issued to the Holder upon
any conversion of principal and interest plus reasonable expenses hereunder
shall be equal to the quotient obtained by dividing (i) the aggregate principal
amount outstanding of this Note plus accrued and unpaid interest plus reasonable
expenses to the date of conversion by (ii) the "Stated Value" (as defined in the
Certificate of Designation) rounded up to the nearest whole share.
In lieu of cash payment of interest hereon, on each date on which
interest shall be payable, except in the case of interest due on the Maturity
Date and upon an Event of Default of this Note, the principal amount of this
Note shall be increased by an amount equal to the amount of interest payable on
such interest payment date plus reasonable expenses.
The Note is transferable and assignable to any person to whom such
transfer is permissible under applicable law. The Maker agrees to issue from
time to time replacement Notes in the form hereof to facilitate such transfers
and assignments. In addition, after delivery of an indemnity in form and
substance satisfactory to the Maker, the Maker also agrees to issue a
replacement Note if the Note is lost, stolen, mutilated or destroyed.
As collateral for the repayment in full of the principal of and
interest this Note, together with all costs of enforcement of this Note whenever
incurred including prior to the date hereof (collectively, the "Obligations"),
the undersigned does hereby grant to the Holder a security interest in the
property set forth on Schedule I hereto together with all proceeds thereof (the
"Collateral"). The title to the Collateral shall be held in escrow by the Maker.
Upon the occurrence and continuance of an Event of Default (as defined below),
the Holder shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of the State of New York (the "UCC"). The security
interest created hereunder is a continuing security interest and shall remain in
effect until the indefeasible payment in full of all the Obligations. The Maker
shall take such steps from time to time as may be requested by the Holder to
ensure that
2
the security interest created hereby shall constitute a first priority security
interest under applicable law, including the UCC. In particular, it shall
immediately notify Holder if Maker shall have any commercial tort claims (as
defined in the UCC) against any person and shall amend this Note to add such
claims to the collateral listed on Schedule I.
Every amount overdue under this Note shall bear interest from and
after the date on which such amount first became overdue at an annual rate which
is two (2) percentage points above the rate per year specified in the first
paragraph of this Note (the "Default Interest Rate"). The Default Interest Rate
shall be increased at an annual rate which is two (2) percentage points above
the then current Default Interest Rate on the thirtieth day after the date on
which the Note first became overdue and for each month thereafter that the Note
remains overdue; provided, however that the Default Interest Rate shall not
exceed a maximum annual rate of 18%. Such interest on overdue amounts under this
Note shall be payable on demand and shall accrue and be compounded monthly until
the obligation of the Maker with respect to the payment of such interest has
been discharged (whether before or after judgment). In no event shall any
interest charged, collected or reserved under this Note exceed the maximum rate
then permitted by applicable law and if any such payment is paid by the Maker,
then such excess sum shall be credited by the Holder as a payment of principal.
If at the time of conversion of this Note into shares of the Maker's
capital stock, there are insufficient authorized shares of equity securities to
permit conversion of this Note in full, then the Maker shall take all corporate
action necessary to authorize a sufficient number of shares of equity securities
to permit such conversion in full. No fractional shares of the Maker's capital
stock will be issued upon conversion of this Note. In lieu of any fractional
share to which the Holder would otherwise be entitled, the Maker will pay to the
Holder in cash the amount of the unconverted principal and interest balance of
this Note that would otherwise be converted into such fractional share. Upon
conversion of this Note, the Holder shall surrender this Note, duly endorsed, at
the principal offices of the Maker or any transfer agent of the Maker. At its
expense, the Maker will, as soon as practicable thereafter, issue and deliver to
such Holder, at such principal office, a certificate or certificates for the
number of shares to which such Holder is entitled upon such conversion, together
with other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of this Note
and payment for fractional shares as provided above, the Maker will be forever
released from all of its payment obligations and liabilities under this Note
with regard to that portion of the principal amount and accrued interest being
converted.
All payments by the Maker under this Note shall be made without
set-off, defense or counterclaim and be free and clear and without any deduction
or withholding for any taxes or fees of any nature whatever, unless the
obligation to make such deduction or withholding is imposed by law.
No delay or omission on the part of the Holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of
the Holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or any other right on any future occasion.
3
Maker agrees that: (i) upon the failure to pay when due the then
outstanding principal balance, accrued interest and reasonable expenses
hereunder; (ii) if Maker (1) commences any voluntary proceeding under any
provision of Title 11 of the United States Code, as now or hereafter amended, or
commences any other proceeding, under any law, now or hereafter in force,
relating to bankruptcy, insolvency, reorganization, liquidation, or otherwise to
the relief of debtors or the readjustment of indebtedness, (2) makes any
assignment for the benefit of creditors or a composition or similar arrangement
with such creditors, or (3) appoints a receiver, trustee or similar judicial
officer or agent to take charge of or liquidate any of its property or assets;
(iii) upon the commencement against Maker of any involuntary proceeding of the
kind described in paragraph (ii); (iv) the default by the Maker of any of its
other debt obligations, including the breach of any provision of the Credit
Agreement, all unpaid principal and accrued interest under this Note shall
become immediately due and payable upon demand with ten (10) days written notice
(any of (i) through (v), an "Event of Default"). The term "Person" means an
individual, a corporation, a partnership, a limited liability company, an
associate, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
Upon the occurrence and continuance of an Event of Default, the Holder
shall (a) be entitled to vote all Investment Property (as defined in the UCC)
constituting Collateral, (b) be entitled to receive, hold and/or apply to the
payment of the Obligations any dividends payable in respect of the Collateral,
and (c) have all the rights and remedies of a secured party under the UCC. The
Maker shall take such steps from time to time as may be requested by the Holder
to ensure that the security interest created hereby shall constitute a first
priority security interest under applicable law, including the UCC.
This Note may be prepaid in whole or in part at any time or from time
to time without premium or penalty. Any voluntary or mandatory prepayment of
this Note shall be applied first to the payment of interest accrued and unpaid
on this Note and second to the payment of principal.
None of the terms or provisions of this Note may be excluded, modified
or amended except by a written instrument duly executed by the Holder and the
Maker expressly referring to this Note and setting forth the provision so
excluded, modified or amended.
Maker hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note upon ten (10) days written notice.
If action is instituted to collect on this Note, the Maker promises to
pay all costs and expenses, including reasonable attorney's fees, incurred in
connection with such action.
4
This Note shall be governed and construed in accordance with the laws
of the State of Illinois applicable to agreements made and performed entirely in
such State, without regard to conflict of laws principles thereof, and shall be
binding upon the successors or assigns of the Maker and shall inure to the
benefit of the successors and assigns of the Holder.
▇▇▇▇▇ & ▇▇▇▇▇ COMPANY
By:___________________________
Name:
Title:
5
Schedule I
Description of Collateral
The Collateral includes the following items or types of property,
whether now owned or hereafter acquired and wherever located:
All tangible and intangible property now owned or hereafter acquired
wherever located, including equipment, inventory, goods, general intangibles
(including patents, trademarks, copyrights, and other intellectual property),
instruments, chattel paper, investment property, commercial tort claims
(including those specified below), letter-of-credit rights, deposit accounts,
electronic chattel paper, notes, and proceeds thereof.
