EXHIBIT 4.3
[Form of Note]
This security and the shares of common stock issuable upon conversion
of this security have not been registered under the Securities Act of 1933,
as amended or any state securities laws. Neither this security, the shares
of common stock issuable upon conversion of this security, nor any interest
or participation herein or therein may be offered, sold, assigned,
transferred, pledged, encumbered or otherwise disposed of in the absence of
such registration or unless such transaction is exempt from, or not subject
to, registration.
▇▇▇▇▇▇▇ INTERNATIONAL, INC.
10% CONVERTIBLE SUBORDINATED NOTE
DUE MARCH 31, 2003
U.S. $_______________ Fort Worth, Texas
March 31, 2000
FOR VALUE RECEIVED, ▇▇▇▇▇▇▇ International, Inc., a Delaware corporation
(hereinafter referred to as "Obligor"), promises to pay to _____________
(hereinafter referred to as "Holder"), the principal sum of ___________
Dollars (U.S. $__________), together with interest thereon at a rate of ten
percent (10%) per annum (calculated on the basis of a 360 day year comprised
of twelve 30-day months). Interest shall be paid on the then outstanding
principal balance on March 31 and September 30 of each year (each, an
"Interest Payment Date") until maturity, commencing on September 30, 2000
and ending on March 31, 2003 (the "Maturity Date").
This Note is one of a duly authorized issue of promissory notes of
Obligor in the aggregate principal amount of $1,000,000 designated as its
10% Convertible Subordinated Notes Due March 31, 2003 (the "Notes").
Obligor may elect to pay all or a portion of interest due and payable
on September 30, 2000 or March 31, 2001 in cash (as described below) or by
the issuance of additional notes in the principal amount of the accrued and
unpaid interest at such Interest Payment Date and dated the date of such
Interest Payment Date. Any such additional notes shall have the same terms
and conditions as this Note. Interest payments on this Note will be paid to
the person who is the Holder of record of this Note as shown on the register
maintained by ▇▇▇▇▇▇▇ to record the registration and transfer of the Notes
at the close of business on the March 15 or September 15 next preceding each
Interest Payment Date. Interest shall accrue from the next preceding
Interest Payment Date to which interest has been paid on this Note or if no
interest has been paid from the date hereof. Cash payments of principal and
interest will be made in the money of the United States that at the time of
payment is legal tender for payment of public and private debts. Subject to
the first sentence of this paragraph, all payments of principal of and
interest on this Note may be made by check or wire payable in such money.
Cash interest payments may be made by check and mailed to the Holder's
registered address or at such other place as Holder shall notify Obligor in
writing.
1. Subordination. Except as hereinafter provided, ▇▇▇▇▇▇▇ and Holder
agree that the payment of the principal amount of this Note and interest
thereon is subordinated to the prior payment in full of all Senior
Indebtedness (as hereinafter defined) of Obligor, together with all interest
and fees thereon. "Senior Indebtedness" as used in this Note means (i) the
principal amount of, premium (if any) and all interest, fees and expenses
(including attorneys' fees and costs of court) on all indebtedness, whether
outstanding on the date of this Note or hereafter created, incurred or
assumed, and however evidenced (whether by a letter of credit, loan
agreement, promissory note indenture or similar instrument), for money
borrowed from any and all banks and savings and loans and other depository
institutions, finance companies, insurance companies, trust companies,
leasing companies, government agencies and other persons or entities which
regularly engage in commercial or asset-based lending and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
a lender (collectively "Senior Creditors"), for the payment of which the
Obligor is or becomes directly or indirectly liable; (ii) guarantees by
Obligor of indebtedness due to Senior Creditors for borrowed money incurred
by subsidiaries of Obligor or subsidiaries of such subsidiaries; and
(iii) the principal amount of and all interest and fees on any renewal,
extension, refunding, amendment or modifications of any such Senior
Indebtedness, including without limitation of the foregoing, purchase money
mortgages, mortgages made, given or guaranteed by Obligor as mortgagor or
guarantor, and assumed or guaranteed mortgages, upon property, but excluding
any indebtedness to trade creditors or suppliers on open account for work,
labor, services and materials and excluding any indebtedness which by the
terms of the instrument creating or evidencing the same is stated to be not
superior in right of payment to the Notes.
Subject to the following paragraph, Obligor shall pay and holder shall
have the right to receive and retain from Obligor principal and accrued
interest owing hereon so long as Obligor is not in default in respect of any
of its Senior Indebtedness.
Upon the happening of an event of default which would permit Senior
Creditors to declare Senior Indebtedness due and payable and upon written
notice thereof given to Obligor by any one or more Senior Creditors (a
"Default Notice"), then, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, Obligor shall not,
directly or indirectly, pay any principal or interest on, redeem or
repurchase any of, the Notes; provided, however, that the foregoing
provisions of this sentence shall not prevent the making of any such payment
for more than 120 days after the Default Notice shall have been given unless
the Senior Indebtedness in respect of which such event of default exists has
been declared due and payable in its entirety, in which case no such payment
may be made until the earliest to occur of (i) such declaration has been
waived, rescinded or annulled, (ii) such Senior Indebtedness shall have been
paid in full or (iii) payment thereof shall be duly provided for in cash or
in any other manner satisfactory to such Senior Creditors. Any number of
Default Notices may be given; provided, however, that not more than one
Default Notice shall be given with respect to the same issue of Senior
Indebtedness within a period of 360 consecutive days, and no specific event
of default which existed or was continuing on the date of any Default Notice
and was known to the Senior Creditors shall be made the basis for the giving
of a subsequent Default Notice by the Senior Creditors.
No rights of any Senior Creditor established in this Section 1 shall at
any time or in any way be prejudiced or impaired by any act or failure to
act on the part of Obligor or by any act or failure to act in good faith by
any Senior Creditor or by any failure by Obligor to comply with the terms of
this Note.
This Note shall not be secured by any interest in any properties of
Obligor.
2. Events of Default. Upon the occurrence and during the continuance
of an Event of Default (as hereinafter defined), other than as described in
Subsections (d) and (e) below, but subject to any restrictions and
limitations by the Holder relating to Senior Indebtedness, the Holder of
this Note shall be entitled, by written notice to Obligor, to declare this
Note to be, and upon such declaration this Note shall be and become,
immediately due and payable, in addition to any other rights or remedies
Holder may have under the laws of the State of Texas. Upon the occurrence
of an Event of Default as described in Subsections (d) and (e) below, this
Note shall be and become immediately due and payable without notice or
declaration by the Holder. The occurrence of any of the following events
shall constitute an "Event of Default":
(a) Failure to Make Payments When Due. Failure of Obligor to pay
any principal, interest or other amount due under this Note when due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, and the failure of Obligor to cure such
default within five (5) days after the due date of any such payment; or
(b) Breach of Covenants. Failure of Obligor to perform or
observe any other material term, covenant or agreement on Obligor's part to
be performed or observed pursuant to this Note, and the failure of Obligor
to cure such default within thirty (30) days after written notice of such
default by Holders owning not less than twenty-five percent (25%) of the
aggregate principal amount of all Notes then outstanding; or
(c) Suspension of Business; Liquidation. Suspension of the usual
business activities of Obligor or the complete or partial liquidation of
Obligor's business; or
(d) Involuntary Bankruptcy, Etc. (i) A court having jurisdiction
in the premises shall enter a decree or order for relief in respect of
Obligor in an involuntary case under Title 11 of the United States Code (as
now and hereinafter in effect, or any successor thereto, the "Bankruptcy
Code") or any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state law;
or (ii) an involuntary case shall be commenced against Obligor under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Obligor or over all or
a substantial part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of Obligor for all or a substantial part of its property shall have
occurred; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of Obligor,
and, in the case of any event described in this clause (d), such event shall
have continued for sixty (60) days unless dismissed, bonded or discharged;
or
(e) Voluntary Bankruptcy, Etc. An order for relief shall be
entered with respect to Obligor or Obligor shall commence a voluntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property, or Obligor shall
make an assignment for the benefit of creditors; or Obligor shall admit in
writing its inability to pay its debts as such debts become due; or the
Board of Directors of Obligor shall adopt any resolution or otherwise
authorize action to approve any of the foregoing.
Notwithstanding the provisions of this Section 2, if this Note is not
paid on the Maturity Date or in the event that this Note becomes due and
payable before the Maturity Date, the Holder shall not be entitled to seek
any judgement, order, decree or other action from any court or governmental
or administrative authority, including any insolvency, bankruptcy,
receivership, reorganization or related case or proceeding, until the
earlier of (i) 90 days after such declaration or (ii) the payment in full of
all Senior Indebtedness.
3. Conversion Rights. A Holder of a Note may convert the principal
amount of such Note (or any portion thereof equal to $50,000 or amounts
equal to the sum of $50,000 and any integral multiple of $1,000) into shares
of Series A Common Stock, par value $.10 per share, of Obligor (the
"Conversion Shares") at any time after April 14, 2000 and prior to the close
of business on March 28, 2003; provided, however, that if the Note is called
for redemption pursuant to Section 4 hereof, the conversion right will
terminate at the close of business on the business day immediately preceding
the redemption date for such Note or such earlier date as the Holder
presents such Note for redemption (unless Obligor shall default in making
the redemption payment when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and
such Note is redeemed). The Holder, at Holder's option and subject to and
in compliance with the provisions of this Section 3, may convert any or all
of the outstanding principal on this Note at the time of such conversion
(the "Conversion Rights") into a number of Conversion Shares equal to the
result obtained by dividing the amount then being converted by $0.50 per
share, as adjusted pursuant to this Section 3 (the "Conversion Price"). No
payment or adjustment shall be made on account of accrued but unpaid
interest upon conversion of this Note.
(a) Registration; Conversion Price Adjustment. Pursuant to a
Registration Rights Agreement of even date with this Note (the "Registration
Rights Agreement"), Obligor will use its reasonable best efforts to file
with the Securities and Exchange Commission a registration statement under
the Securities Act of 1933 covering the resale of the Conversion Shares. If
such registration statement shall not have been declared effective within
120 days after the date hereof, the Conversion Price will be reduced to
$0.40 per share. If such registration statement shall not have been
declared effective within 180 days after the date hereof, the Conversion
Price will be further reduced to $0.25 per share and shall remain at such
amount until the Maturity Date. Notwithstanding the preceding provisions of
this Subsection 3(a), any Conversion Price adjustment under this Subsection
3(a) shall be subject to the Holder's having executed and delivered to
Obligor the Registration Rights Agreement and performed all of the
obligations thereunder required to be performed by a Noteholder. The
Conversion Price as reduced by any adjustment under this Subsection 3(a)
shall be subject to further adjustment under Subsection 3(e) hereof.
(b) ▇▇▇▇▇▇ of Exercising Conversion Rights. In order to exercise
the Conversion Rights, the Holder shall deliver to Obligor during normal
business hours at the Obligor's address as set forth in Section 8 below, (i)
the original of this Note and (ii) a completed and executed conversion
notice in the form attached. As soon as practicable after the date (the
"Conversion Date") on which the Obligor receives the required documents in
proper form but in any event no later than fifteen (15) business days
thereafter, Obligor shall issue and deliver to Holder a certificate for the
number of whole Conversion Shares and cash as provided in Subsection 3(c)
below, in respect of any fraction of a Conversion Share. Such conversion
shall be deemed to have been effected on the Conversion Date, and the Holder
shall be deemed to have become the holder of record of the shares
represented thereby on such date. Obligor shall not be obligated, upon
exercise of the Conversion Rights by ▇▇▇▇▇▇, to effect the transfer of any
Conversion Shares, or cause any Conversion Shares to be registered, to any
persons or in any name or names other than the Holder.
(c) Fraction of a Share. Obligor shall not be required to issue
a fraction of a share or scrip representing fractional shares of Conversion
Shares. If any fraction of a Conversion Share would, except for the
provisions of this Subsection (c), be issuable on the conversion of this
Note, Obligor shall pay to the Holder a cash payment equal to the equivalent
fraction of the closing price on the Conversion Date.
(d) Obligor to Reserve Stock. As long as the Holder's Conversion
Rights are in effect, Obligor shall at all times reserve and keep available
out of its authorized but unissued Series A Common Stock, for the purpose of
effecting the conversion of this Note, such number of its duly authorized
shares of Series A Common Stock as shall from time to time be sufficient to
effect the conversion of this Note. Obligor covenants that all shares of
Series A Common Stock which may be issued upon conversion of this Note will
upon issue be fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof.
(e) Additional Conversion Price Adjustments. If Obligor shall
(i) pay a dividend or make a distribution in shares of capital stock
(whether shares of Series A Common Stock or capital stock of any other
class), (ii) effect a stock split or subdivide the outstanding Series A
Common Stock, (iii) effect a reverse stock split or combine the outstanding
Series A Common Stock into a smaller number of shares or (iv) effect any
other reclassification or recapitalization, then the number and types of
shares of capital stock into which this Note is convertible and the
Conversion Price in effect immediately prior thereto shall be adjusted so
that upon the subsequent conversion of this Note the Holder hereof shall be
entitled to receive the number and type of shares of capital stock of
Obligor that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above had this Note been
converted immediately prior to the happening of such event. An adjustment
made pursuant to this paragraph shall become effective immediately after the
record date for any event requiring such adjustment or shall become
effective immediately after the effective date of such event if no record
date is set.
4. Redemption.
(a) Optional Redemption. This Note is subject to redemption, at
any time after (i) either (A) the registration statement covering the resale
of the Conversion Shares shall be effective from the date of notice of
redemption to the redemption date or (B) two years (or such other period as
may hereafter be provided in Rule 144(k) under the Securities Act of 1933,
or any successor rule) shall have elapsed since the original date of this
Note and (ii) the closing market price of the Series A Common Stock shall
not have been less than $3.00 per share for a period of 20 consecutive
trading days prior to the date of notice of redemption. The redemption
price of this Note shall be equal to 100% of the principal amount redeemed,
plus interest accrued and unpaid on the amount redeemed through the date
fixed for redemption (the "Redemption Date"). The redemption price, upon
surrender of this Note or portion thereof, as the case may be, to Obligor at
its principal office, will be paid by check or wire transfer.
(b) Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address. Notes in denominations larger than $50,000 may be redeemed in
part, but only in amounts equal to the sum of $50,000 and any integral
multiple of $1,000. On and after the Redemption Date interest will cease to
accrue on Notes or any portion of the Notes called for redemption.
5. Costs and Expenses of Collection. If this Note is collected by or
through an attorney at law as a result of a failure of Obligor to pay, when
due hereunder, any payment of principal of and interest on this Note,
Obligor shall pay all of ▇▇▇▇▇▇'s reasonably incurred costs of collection
including, but not limited to, ▇▇▇▇▇▇'s reasonable attorneys' fees.
6. Waivers by Obligor. The Obligor waives presentment for payment,
protest, notice of dishonor and protest and consents to any extensions of
time with respect to any payment due under this Note, and to the addition or
release of any party or of any collateral securing this Note. No waiver of
any payment under this Note shall operate as a waiver of any other payment.
7. Effect of Delay or Waiver by ▇▇▇▇▇▇. No delay or failure of the
Holder of this Note in the exercise of any rights or remedy provided for
hereunder shall be deemed a waiver of any other right or remedy which the
Holder may have.
8. Notices to Obligor. Any notice or demand to Obligor shall be at
the address as set forth on the signature page of this Note and to the
Holder as provided to Obligor in the manner set forth herein, or to either
Obligor or the Holder at any address previously furnished in writing by
Obligor or Holder. Such notice shall be deemed to have been received 72
hours after its deposit, postage prepaid, with the United States Postal
Service, or upon receipt in the case of personal delivery by courier or
otherwise, or upon confirmation of receipt if delivered by facsimile
transmission, provided that the original thereof is sent by mail, in the
manner set forth above, within the next business day after the facsimile
transmission is sent.
9. Governing Law; Headings. This Note is made in and shall be
governed by and construed according to the laws of the State of Texas. The
Section headings in this Note are for convenience of reference only and
shall not be considered in, nor shall they affect, the interpretation or
application of any of the provisions of this Note.
10. Transfer, Exchange. The Notes are in registered form without
coupons. A Holder may register the transfer of or exchange Notes only on
the books of the Obligor maintained for that purpose. The Obligor may
require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes or other governmental charges
that may be imposed in relation thereto by law and proof of compliance with
all applicable securities laws.
11. Persons Deemed Owners. The Holder of a Note may be treated as the
owner of the Note for all purposes.
12. Recourse Against Others. A director, officer, employee or
shareholder, as such, of Obligor shall not have any liability for any
obligations of Obligor under the Notes nor for any claim based on, in
respect of or by reason of such obligations or their creation. The Holder of
this Note 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.
▇▇▇▇▇▇▇ INTERNATIONAL, INC.
By: ____________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Treasurer
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CONVERSION NOTICE
To convert this Note into Series A Common Stock, check the box:
To convert only part of this Note, state the principal amount to be
converted (must be $50,000 or an amount equal to the sum of $50,000 and any
integral multiple of $1,000): $____________.
Your Signature:
Date: ______________ _______________________________________________
(Sign exactly as your name appears on this Note)
Name: _____________________________________
Address: _____________________________________
CERTIFICATE TO BE DELIVERED UPON REGISTRATION OF TRANSFER
10% Convertible Subordinated Notes Due March 31, 2003 (the "Notes")
of ▇▇▇▇▇▇▇ International, Inc. (the "Company")
This certificate relates to $________________ principal amount of Notes
owned by _______________________ (the "Transferor") to be transferred to
____________________________________________________________________________
___________________________________________________________________________.
(Insert Transferee's name, address and social security or tax I.D. number)
The Transferor has requested the Company to register the transfer of
such Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes and the transfer of such Note is being
made pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act") (check applicable box) or the
transfer or exchange, as the case may be, of such Note does not require
registration under the Securities Act because (check applicable box):
[ ] Such Note is being transferred pursuant to an effective
registration statement under the Securities Act.
[ ] Such Note is being transferred pursuant to and in compliance
with an exemption from the registration requirements under the Securities
Act in accordance with Rule 144 (or any successor thereto) ("Rule 144")
under the Securities Act.
[ ] Such Note is being transferred pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
(other than pursuant to Rule 144), and if Obligor so requests, an opinion of
counsel satisfactory to Obligor to the effect that the transfer is in
compliance with the Securities Act.
Date: ______________ _________________________
(Signature of Transferor)
