EXHIBIT 99 a
SUBORDINATED TERM NOTE
$___________________
Elk Grove Village, Illinois
February __, 2000
1. FOR VALUE RECEIVED, Circuit Systems, Inc., an Illinois corporation
("Company"), promises to pay to __________________ ("Payee"), on
February __, 2005 (the "Maturity Date"), the principal sum of
______________________________ ($_________) or so much thereof as may
be outstanding on the Maturity Date, together with interest on the
unpaid principal balance from time to time outstanding from the date of
this Note until paid, at the rate of twelve percent (12%) per annum.
Interest shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.
2. Payments. Company will pay: (a) accrued interest in the amount of
________________ Dollars ($__________) on the first day of August 2000;
(b) interest in quarterly installments of________ Dollars ($_______) on
the first day of November 2000 and on the first day of each February,
May, August, and November thereafter through the _____ day of February
2002; and (c) principal and interest in the amount of_________ Dollars
($_________) on the first day of March 2002 and on the first day of
each month thereafter with a final payment of principal and accrued
interest in the amount of_____________________________________ Dollars
($_________)(together with all other obligations due under this Note)
on the Maturity Date, unless sooner paid.
3. Default; Rate of Interest. Failure of Company to pay any sum
within fifteen (15) days of the date such sum becomes due and payable
under this Note, including without limitation, interest or principal or
both, and either as an installment or on the Maturity Date, shall
constitute an event of default ("Default") hereunder. Upon and after
the occurrence of a Default, this Note shall bear interest on the
principal amount outstanding from time to time at a rate (the "Default
Rate") equal to fifteen percent (15%) per annum until paid.
4. Acceleration. If Default occurs in any payment of principal or
interest under this Note, then the entire principal balance of this
Note then outstanding, together with interest accrued thereon, shall
become immediately due and payable without further demand or notice.
5. Prepayment. Company has the right, exercisable in its sole
discretion, to prepay, in whole or in part, any of the obligations
hereunder without penalty or premium, upon ten (10) days' prior notice
to Payee, subject to the conversion rights set forth herein. Upon
surrender of a Note that is paid in part, the Company shall issue to
Payee a new Note equal in principal amount of the unpaid portion of the
Note surrendered.
6. Conversion into Common Shares. Payee may convert the outstanding
principal amount of this Note, or any portion of the outstanding
principal amount, into fully paid and nonassessable no par value common
shares, of Company ("Common Shares"), on the following terms at any
time after April 1, 2000 and prior to January 31, 2002:
(a) Conversion Rate. As a condition of the borrowing evidenced
hereby, Company hereby grants a conversion right to Payee permitting
the outstanding principal amount of this Note to be repaid, in whole or
in part, through conversion into Common Shares in Company, or its
successor, at a rate equal to $1.00 multiplied by a fraction, the
numerator of which is the principal amount of this Note to be converted
and the denominator is the lower of: (a) $1.00; and (b) the average
closing price for the common shares of Company for the ten (10) trading
days that the Common Shares actually traded preceding the date upon
which any Notice of Conversion (hereinafter defined) is delivered to
the Company ("Conversion Rate"). Common Shares issued upon any
exercise of conversion rights will be unregistered common shares in
Company, or its successor. Payee may exercise conversion rights upon
ten (10) days' prior written notice ("Notice of Conversion") to Company
after April 1, 2000 and at any time prior to January 31, 2002.
(b) Manner of Conversion. To convert this Note, Xxxxx shall
surrender this Note to Company, accompanied by a signed Notice of
Conversion delivered to Company. If less than the full principal
amount of this Note is to be converted, a new Note shall be issued for
the unconverted principal amount. As soon as practicable after the
surrender of this Note, the Company shall issue and deliver: (i) a
certificate for the number of full Common Shares issuable upon
conversion; and (ii) cash as provided in Section 6(d) below for any
fraction of a Common Share which would otherwise be issuable upon
conversion.
(c) Adjustment for Interest. No adjustment or allowance shall
be made for interest on the principal amount of this Note surrendered
for conversion, except that upon conversion interest accrued but unpaid
on the amount surrendered for conversion shall be paid in cash.
(d) Fractional Shares. No fractional Common Shares shall be
issued upon conversion of this Note. In place of a fractional share,
Company shall pay Payee of this Note a dollar amount equal to the
Conversion Rate of the fractional share.
(e) Merger. In case Company shall be consolidated or merged
with another company, or substantially all of its assets shall be sold
to another company in exchange for stock with the view to distributing
such stock to its stockholders, each share of stock into which this
Note is convertible shall be replaced for the purposes hereof by the
securities or property issuable or distributable in respect of one
share of Common stock of Company upon such consolidation, merger or
sale, and adequate provision to that effect shall be made at the time
thereof. Company will provide Payee at least five (5) days' prior
written notice of any event described in this Subsection 6(e).
(f) Reservation of Common Shares. The Company shall take or has
taken all steps necessary to reserve a number of its authorized but
unissued Common Shares sufficient for issuance upon conversion of this
Note pursuant to this Section 6.
7. Security. This Note is unsecured.
8. Attorneys' Fees and Expenses. If, at any time or times, after a
Default occurs, Xxxxx employs counsel for advice or other
representation or incurs legal and/or other costs and expenses in
connection with any attempt to enforce any rights of Payee against
Company under this Note, then, in such event, the reasonable attorneys'
fees arising from such services and all reasonably incurred expenses,
costs, charges, and other fees of such counsel or of Payee shall be
payable on demand by Company to Payee.
9. No Waiver. Payee's failure, at any time or times hereafter, to
require strict performance by Company of any provision of this Note
shall not constitute a waiver, or affect or diminish any right of Payee
thereafter to demand strict performance by Company under this Note nor
shall any such failure constitute a waiver of or affect any other
default by Company under this Note.
10. Waivers by Company. Presentment, notice of dishonor, and protest
are hereby waived by all makers, sureties, guarantors and endorsers
hereof.
11. Binding Nature. This Note shall be binding upon and inure to the
benefit of the successors and assigns of Company and also the personal
representatives of Xxxxx.
12. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given,
delivered, and received:
(a) when delivered, if delivered personally by a commercial
messenger delivery service with verification of delivery;
(b) two (2) days after mailing, when sent by registered or
certified mail, return receipt requested, and postage prepaid;
(c) one business day after delivery to a private courier service,
when delivered to a private courier service providing documented
overnight service;
(d) on the date of delivery if delivered by facsimile and
electronically confirmed before 5:00 p.m. (Chicago, Illinois time) on
any business day; or
(e) on the next business day if delivered by facsimile and
electronically confirmed either after 5:00 p.m. (Chicago, Illinois
time) or on a non-business day, in each case addressed as follows:
If to Payee: The last address as recorded
on the books and records of Company
If to Company: Xx. Xxxxx X. Xxxxx
Vice President and Chief Financial Officer
Circuit Systems, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Telephone: 000- 000-0000
Facsimile: 000- 000-0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Xxxxx and Xxxxxx, P.C.
00 Xxxx Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
or to such other address or addresses as may hereafter by specified by
notice given by any of the above to the others.
13. Subordination. THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH BY
AND BETWEEN COMPANY, PAYEE, AND LASALLE NATIONAL BANK ("SUBORDINATION
AGREEMENT"), THE TERMS AND CONDITIONS OF WHICH ARE INCORPORATED HEREIN
BY THIS REFERENCE THERETO. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS NOTE, NO PAYMENT ON ACCOUNT OF THE OBLIGATIONS
HEREUNDER, WHETHER OF PRINCIPAL, INTEREST OR OTHERWISE, WILL BE MADE,
PAID, RECEIVED OR ACCEPTED, EXCEPT IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THE SUBORDINATION AGREEMENT.
14. Securities Law Restrictions. Neither this Note, nor the Common
Shares issuable upon conversion of this Note, have been registered for
sale under the Securities Act of 1933, and neither this Note, nor those
Common Shares, nor any interest in this Note or those Common Shares,
may be sold, offered for sale, pledged or otherwise disposed of without
compliance with applicable securities laws including, without
limitation, an effective registration statement related thereto or
delivery of an opinion of counsel reasonably acceptable to Company that
such registration is not required under the Securities Act of 1933.
15. Governing Law. This Note shall be enforced in accordance with
the laws of the State of Illinois and shall be construed in accordance
therewith. The parties hereto agree that all actions or proceedings
arising in connection with this Note shall be tried and litigated
exclusively in the State and Federal courts located in the County of
Cook, State of Illinois. The aforementioned choice of venue is
intended by the parties to be mandatory and not permissive in nature,
thereby precluding in the possibility of litigation between the parties
with respect to or arising out of this Note in any jurisdiction other
than that specified in this Section 15. Each party hereby waives any
right it may have to assert the doctrine of forum non conveniens or
similar doctrine or to object to venue with respect to any proceeding
brought in accordance with this Section 15, and stipulates that the
State and Federal courts located in the County of Cook, State of
Illinois shall have in personam jurisdiction and venue over each of
them for the purpose of litigating any dispute, controversy, or
proceeding arising out of or related to this Note. Each party hereby
authorizes and accepts service of process sufficient for personal mail,
return receipt requested, postage prepaid, to its address for the
giving of notices as set forth in this Note. Any final judgment
rendered against a party in any action of proceeding shall be
conclusive as to the subject of such final judgment and may be enforced
in other jurisdictions in any manner provided by law.
Circuit Systems, Inc.
By:
________________________________
Xxxxx X. Xxxxx, Vice President and
Chief Financial Officer
NOTICE OF CONVERSION
The undersigned irrevocably exercises the option to convert
$___________ in aggregate principal amount outstanding and payable
under that Subordinated Term Note dated ________________ ("Note")
issued by Circuit Systems, Inc. ("Company") in favor of the undersigned
into Common Shares in accordance with the terms of the Note and directs
that the Common Shares issuable on conversion be issued and delivered
to the undersigned.
Dated: __________________
_______________________________________
