EXHIBIT 4.1
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
$[_____] March 5, 2003
FOR VALUE RECEIVED, Indus International, Inc., a Delaware corporation
(the "Company"), hereby promises to pay to the order of [_____] (the "Holder")
at the address of the Holder indicated on the signature page(s) hereto, or at
such other place as the Holder may designate in writing to the undersigned, in
lawful money of the United States of America, and in immediately available
funds, the principal amount of [_____] Dollars ($[_____]) (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
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
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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 arrangement
with such creditors, or (3) appoints a receiver, trustee or similar judicial
officer or agent to
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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.
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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.
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:
----------------------------------------
Name:
Title:
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SCHEDULE OF HOLDERS
On March 5, 2003, Indus International, Inc. executed convertible notes
in the form filed herewith in favor of each of the Holders listed below and in
the principal amounts set forth beside such Holder.
Holder of Convertible Note Principal Amount
-------------------------- ----------------
Xxxxxxx, Xxxxxx Investors, L.P................................................... $4,891,001
Amaranth L.L.C................................................................... $3,000,000
SAS Trust I U/A/D 7/30/93........................................................ $50,000
F.S. Nathan & X.X. Xxxxx Ttees FBO Xxxxxxxx X. Xxxxxx, et al U/ART 3rd - B - U/W
Xxxxx X. Xxxxxx 12/3/92..................................................... $50,000
Xxxxxx-Gept Partners, LP......................................................... $90,000
Xxxxxx-Xxxxxxx Partners, LP...................................................... $15,000
BayStar Capital II, LP........................................................... $900,000
BayStar International II Ltd..................................................... $100,000
DMG Legacy Fund LLC.............................................................. $100,000
Madison Family Trust............................................................. $50,000
Xxxxxx Xxxxxxx................................................................... $50,000
DMG Legacy International Ltd..................................................... $970,000
DMG Legacy Institutional Fund LLC................................................ $930,000
SF Capital Partners Ltd.......................................................... $1,000,000
Xxxxxx Partners LP............................................................... $145,000
Cranshire Capital, LP............................................................ $750,000
Xxxxxxx X. XxXxxx................................................................ $50,000
Xxxx X. XxXxxx................................................................... $50,000
Crestview Capital Fund I, LP..................................................... $250,000
Crestview Capital Fund II, LP.................................................... $250,000
Omicron Master Trust............................................................. $250,000
Xxxxxxx Xxxxx.................................................................... $75,000
P.A.W. Long Term Partners, LP.................................................... $500,000
