EXHIBIT 3
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES, OR "BLUE SKY," LAWS OF ANY STATE OR
OTHER DOMESTIC OR FOREIGN JURISDICTION. THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT UNDER THE SECURITIES ACT
AND OTHER APPLICABLE LAWS OR A WRITTEN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE FOR SUCH TRANSACTIONS UNDER THE
SECURITIES ACT AND OTHER APPLICABLE LAWS."
FORM OF CONVERTIBLE NOTE
$4,891,001.00 March 5, 2003
FOR VALUE RECEIVED, Indus International, Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Warburg, Xxxxxx Investors,
L.P. (the "Holder") at the address of the Holder indicated on the signature
page(s) hereto, or at such other place as the Holder may designate in writing to
the undersigned, in lawful money of the United States of America, and in
immediately available funds, the principal amount of Four Million Eight Hundred
Ninety-One Thousand, One Dollars ($4,891,001.00) (the "Principal Amount"),
together with interest on the principal balance hereof as hereinafter set forth.
This Note is one of the "Notes" issued pursuant to the Purchase Agreement, dated
as of the date hereof (as amended, modified or supplemented, the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed thereto in the Purchase Agreement.
1. Payment Terms. Until paid in full, interest on the principal balance of
this Convertible Note (this "Note") from time to time outstanding shall accrue
from the date hereof at a rate per annum of eight percent (8.0%). Interest shall
be payable quarterly in arrears on each three month anniversary of the date
hereof, beginning three months from the date hereof. Interest shall be computed
on the basis of a three hundred and sixty-five day year and shall be paid for
the actual number of days on which principal is outstanding. In any event, the
entire outstanding principal balance of this Note, together with any accrued
interest and other charges as may be due hereunder, shall be paid on December 5,
2003 (the "Maturity Date").
In no event shall the amount of interest due or payable under this Note
exceed the maximum rate of interest allowed by applicable law and, in the event
any such payment is inadvertently paid by the undersigned or inadvertently
received by the Holder, then such excess sum shall be credited as a payment of
principal, unless the undersigned shall notify the Holder in writing that the
undersigned elects to have such excess sum returned to it forthwith. It is the
express intent of the parties hereto that the undersigned not pay and the Holder
not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may be lawfully paid by the undersigned under the
applicable law.
2. Solicitation of Stockholder Approval; Conversion. The Company will use
its commercially reasonable efforts to file as promptly as practicable, but in
no event later than thirty (30) days from the date hereof, a Proxy Statement
with the Securities and Exchange Commission to solicit the
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approval of the Company's stockholders (the "Stockholder Approval") to the
issuance of the shares of the Company's common stock, which are issuable upon
conversion of this Note (the "Conversion Shares"). Upon receipt of the
Stockholder Approval (such date, the "Conversion Date"), this Note will
automatically and immediately convert into whole Conversion Shares at a price
equal to $1.50 per share, subject to adjustment pursuant to Section 6 hereof (as
it may be so adjusted, the "Conversion Price"). Any and all accrued interest on
the Note will also be paid to the Holder in whole Conversion Shares. The amount
of accrued interest to be paid in Conversion Shares will be based upon the
Principal Amount of this Note.
At the Conversion Date, or as promptly as practicable thereafter, the
Company shall issue and deliver to the Holder (or such other person as directed
by the Holder) a certificate or certificates for the full number of shares of
Conversion Shares to which the Holder is entitled. The Company will not issue
any fractional interests in Conversion Shares, and the Company will pay to the
Holder is cash the amount of the unconverted principal balance of this Note that
would otherwise be converted into such fractional interests. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the Conversion Date, and the person or persons entitled to receive Conversion
Shares issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Conversion Shares as of such date. At the
Conversion Date, this Note shall evidence the Holder's right to receive the
Conversion Shares to which the Holder is entitled.
3. Prepayment. This Note shall not be subject to prepayment unless the
Stockholder Approval is not obtained by the Company by the Expiration Date,
whereafter the outstanding principal balance of this Note, and accrued interest
thereon, may be prepaid in whole or in part at any time without premium or
penalty and without the prepayment of unearned interest.
4. Costs; Waivers. The Company agrees to pay all costs (including
reasonable attorney's fees, expenses and disbursements) of Holder in connection
with the collection and/or enforcement of this Note. The Company hereby forever
waives 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. No delay or
omission on the part of Holder in exercising any rights hereunder shall operate
as a waiver of such rights or any other rights of Holder, nor shall any delay,
omission or waiver on one occasion be deemed a bar to or waiver of the same or
any other right on future occasions.
5. Change of Control. If at any time after the date of issuance of this
Note and prior to the Maturity Date, the Company shall undergo a Change of
Control (as defined below), then the holder hereof shall have the option to
accelerate the Maturity Date to the date of the consummation of such Change of
Control and demand payment of all outstanding principal and unpaid accrued
interest on this Note in full in lawful money of the United States of America
payable at the principal office of the Company, or at such other place as the
holder hereof may from time to time designate in writing to the Company. A
"Change of Control" shall be deemed to have occurred at the time that the
holders, as of the date hereof, of the Company's outstanding capital stock,
assuming for purposes hereof that all of the Shares are issued and outstanding
as of such date, no longer retain stock or other equity interests representing a
majority of the voting power of the Company.
6. Event of Default. The Company agrees that: (i) upon the failure to pay
when due the principal balance and accrued interest hereunder; (ii) if the
Company (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
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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 the Company of any involuntary
proceeding of the kind described in paragraph (ii); or (iv) upon the
acceleration of any other indebtedness of the Company for borrowed money in
excess of $250,000 (any of (i) through (iv), an "Event of Default"), all unpaid
principal and accrued interest under this Note shall become immediately due and
payable without presentment, demand, protest or notice of any kind. Upon the
occurrence and continuance of an Event of Default, the Holder shall have all the
rights and remedies under the Uniform Commercial Code of the State of Delaware.
7. Adjustments.
(a) Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on the Common Stock or subdivides the Common Stock in a transaction
that increases the amount of Common Stock into which this Note may be converted,
or if the Company combines the Common Stock in a transaction that decreases the
amount of Common Stock into which this Note may be converted, then upon any
subsequent conversion of this Note, for each share acquired, Holder shall
receive the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Common Stock on the record date for the
dividend, subdivision or combination. If the outstanding Common Stock are
combined or consolidated, by reclassification or otherwise, into a lesser number
of Common Stock, the Conversion Price shall be proportionately increased. If the
outstanding Common Stock are divided into a greater number of Common Stock, the
Conversion Price shall be proportionately decreased.
(b) Reclassification, Exchange or Substitution. In case of any
reclassification or change of securities of the class issuable upon conversion
of this Note (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision,
combination or stock dividend referred to above), or, subject to Section 5
hereof, in case of any merger of the Company with or into another entity (other
than a merger with another entity in which the Company is the acquiring and the
surviving entity and which does not result in any reclassification or change of
outstanding securities issuable upon conversion of this Note), or in case of any
sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing entity, as the case may be, shall duly execute and
deliver to the Holder a new Note, so that the Holder shall have the right to
receive upon conversion of this Note, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a the Holder of the number of Common Stock that would
otherwise have been deliverable upon the conversion of this Note if such Note
had been converted in full immediately prior to such event.
(c) No Adjustment for Exercise of Certain Options, Warrants, Etc. The
provisions of this Section 7 shall not apply to any Common Stock issued or
issuable: (i) to any person pursuant to any stock option, stock purchase or
similar plan or arrangement for the benefit of employees, consultants,
suppliers, vendors or directors of the Company or its subsidiaries (provided,
that such issuances shall not exceed 5% of the Company's outstanding equity,
and, to the extent that such issuances do exceed 5% of the Company's outstanding
equity, the adjustment provisions of this Section 7 shall apply only to those
issuances in excess thereof), or (ii) pursuant to options, warrants and
conversion rights in existence on the date of issuance hereof.
(d) Adjustment is Cumulative. The provisions of this Section 7 shall
similarly apply to successive stock dividends, stock splits or combinations,
reclassifications, exchanges, substitutions or other events.
8. Governing Law. This Note shall have the effect of an instrument executed
under seal and shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to conflict or choice of law principles
thereof.
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9. Binding Effect. This Agreement shall be binding upon and enforceable by,
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
10. No Recourse Against Others. No director, officer, employee, consultant,
advisor or stockholder of the Company or any affiliate of the Company, as such,
shall have any liability for any obligations, including, without limitation,
indebtedness, of the Company under this Note or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Holder by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Note.
11. Amendment. 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 Company expressly referring to this Note and setting forth
the provision so excluded, modified or amended.
12. Prohibition on Transfer. This Note or any portion thereof may not be
sold, mortgaged, pledged, hypothecated, assigned or otherwise transferred
without the prior express written consent of the Company, not to be unreasonably
withheld, other than to Affiliates of the Holder.
13. Pari Passu Indebtedness. The Holder acknowledges and agrees that the
payment of all or any portion of the outstanding principal amount of this Note
and all interest hereon shall be pari passu in right of payment and in all other
respects to the other Notes issued pursuant to the Purchase Agreement or
pursuant to the terms of such Notes.
THE COMPANY:
INDUS INTERNATIONAL, INC.,
By:
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Name:
Title:
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