Exhibit 4.5
CONVERTIBLE NOTE
$_________.00 San Antonio, Texas March ___, 1997
FOR VALUE RECEIVED, American TeleSource International, Inc., a Texas
corporation ("Maker"), promises to pay to the order of ________________________
("Payee"), at _______________________________________________________________,
the principal sum of __________________________________ and No/100 United States
Dollars, together with interest (which shall accrue but not compound) on the
unpaid principal amount of this Note from day to day outstanding, at the rate of
10% per annum, such interest being payable on a semi-annual basis on March 1 and
September 1 of each year. Subject to the terms hereof, including conversion of
this Note as provided in Section 1, unpaid principal of this Note, together with
accrued and unpaid interest thereon, shall be due and payable on the third
anniversary of the date hereof (the "Maturity Date").
1. Conversion of Note.
(a) This Note is one of a series of Convertible Notes issued by
Maker to certain qualified persons in the aggregate principal amount of up to
$5.0 million (individually, a "Convertible Note," and collectively, the
"Convertible Notes"). The Convertible Notes are being issued in contemplation of
the authorization of a class of 10% Cumulative Redeemable Preferred Stock, with
such rights, preferences and limitations as are set forth on Exhibit A hereto
(the "Preferred Stock") of (a) American TeleSource International Inc., an
Ontario, Canada corporation and the sole shareholder of Maker ("ATSI Canada") or
(b) after consummation of a Plan of Arrangement under Ontario law (or other
similar reorganization) pursuant to which the shareholders of ATSI Canada will
surrender their shares in exchange for shares of a wholly-owned subsidiary
incorporated under the laws of Delaware for the primary purpose of effecting
such reorganization ("ATSI Delaware"), of ATSI Delaware.
(b) Upon the authorization of the Preferred Stock by ATSI Canada or
ATSI Delaware, as applicable, Maker may, at its option, cause this Note to
convert automatically (without further action by Xxxxx) on or before the
Maturity Date into that number of shares of Preferred Stock equal to (a) the sum
of the unpaid principal amount of this Note plus accrued and unpaid interest
thereon, divided by (b) $1,000.00. No fractional shares of Preferred Stock
shall be issued and any amounts otherwise representing a fractional portion of a
share shall be paid by Maker to Payee upon conversion.
(c) In order to effect the conversion of this Note, Maker shall
deliver to Payee, at the place for payment, written notice thereof at least five
days prior to conversion. Such notice shall set forth the scheduled effective
date of the conversion, the number of shares of Preferred Stock to be issued
upon conversion and the mechanics of conversion, and shall be accompanied by
certified copies of corporate authorizations and charter documents which, in the
reasonable opinion of Xxxxx's counsel, evidence the establishment of the
Preferred Stock and the authority to issue such Preferred Stock upon conversion
of this Note. Maker shall cause to be delivered to Payee, within 10 days after
the effective date of the conversion, one or more certificates representing the
number of shares of Preferred Stock into which this Note has converted and, if
applicable, a check representing any fractional portion of a share of Preferred
Stock.
2. Prepayments. Maker may prepay this Note in whole or in part at any
time without penalty or premium. Prepayments shall be applied first to accrued
and unpaid interest on this Note, then to the unpaid principal amount of this
Note. If Maker desires to prepay any other Convertible Note, then Maker shall
simultaneously prepay this Note in the same proportion as the prepayment amount
of such other Convertible Note bears to the unpaid principal amount of such
other Convertible Note.
3. Default.
(a) If Maker defaults in the payment of this Note, and the default
continues for at least 10 days after Payee gives Maker written notice of the
default, then Xxxxx may declare the unpaid principal amount and
accrued and unpaid interest on this Note immediately due. Maker and each surety,
endorser and guarantor waive all demands for payment, presentations for payment,
notices of intention to accelerate maturity, notices of acceleration of
maturity, protests and notices of protest, to the extent permitted by law.
(b) If this Note is given to an attorney for collection, or if suit
is brought for collection, or if it is collected through probate, bankruptcy or
other judicial proceeding, then, in addition to other amounts due, Maker shall
pay Payee all costs of collection, including reasonable attorneys' fees and
court costs of up to 10% of all amounts due.
(c) Neither a delay on the part of Payee in the exercise of any
power or right under this note, nor a single or partial exercise of any such
power or right, shall operate as a waiver thereof. Enforcement by Payee of any
of its rights hereunder shall not constitute an election by it of remedies so as
to preclude the exercise of any other remedy available to it.
4. Maximum Interest Rate. Regardless of any provision contained herein
or in any other instrument or agreement concerning the debt evidenced by this
Note, interest on such debt shall not exceed the maximum amount of nonusurious
interest that may be contracted for, taken, reserved, charged or received under
law; any interest in excess of that maximum amount shall be credited on the
principal of the debt or, if that has been paid, refunded. On any acceleration
or required or permitted prepayment, any such excess shall be canceled
automatically as of the acceleration or prepayment or, if already paid, credited
on the principal of the debt or, if the principal of the debt has been paid,
refunded. In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum amount of nonusurious interest, Maker
and Payee shall, to the maximum extent permitted under applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
spread the total amount of interest throughout the entire contemplated term
hereof.
5. Amendment. The terms of this Note may be waived or amended by the
written consent of the holders of 80% of the aggregate unpaid principal amount
of the Convertible Notes outstanding at the time. Any such waiver or amendment,
if effected in accordance herewith, shall be binding upon Payee, whether or not
Payee consented thereto. Notwithstanding the foregoing, no amendment to the
amount due, the interest rate or the Maturity Date of this Note shall be
effective with respect to this Note without Payee's written consent.
6. Assignment. This Note is assignable by Maker to an affiliate with
which Maker effects a Plan of Arrangement under Ontario law (or other similar
reorganization). Following such an assignment, assignee shall be solely
responsible for the indebtedness evidenced hereby and Maker's other obligations
hereunder.
7. Entire Agreement. This Note embodies the final, entire agreement of
Maker and Payee with respect to the indebtedness evidenced by this Note and
supersedes any and all prior commitments, agreements, representations and
understandings, whether written or oral, relating to the indebtedness evidenced
by this Note.
8. GOVERNING LAW. THIS NOTE IS DELIVERED AND IS INTENDED TO BE PAID AND
PERFORMED IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE SHALL GOVERN THE
CONSTRUCTION, VALIDITY, ENFORCEMENT, AND INTERPRETATION HEREOF.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as
of the date first written above.
AMERICAN TELESOURCE INTERNATIONAL, INC.
a Texas corporation
By:
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Name:
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Title:
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EXHIBIT A
TO CONVERTIBLE NOTE
10% Cumulative Redeemable Preferred Stock
Issuer: American TeleSource International Inc., an Ontario, Canada
corporation, or, following the Plan of Arrangement under Ontario
law (or similar reorganization), American TeleSource
International, Inc., a Delaware corporation (as the case may be,
the "Company").
Securities 10% Cumulative Redeemable Preferred Stock, $.01 par value per
share ("Preferred Stock"). The shares have a stated value of
$1,000 per share.
Dividends: The shares of Preferred Stock are entitled to receive semi-annual
dividends at the rate of 10% per annum, based on their stated
value. Dividends accrue (but do not compound) from the date of
issuance and are payable solely in shares of Preferred Stock,
valued at their stated value, within 30 days after March 1 and
September 1 of each year. Shares of Preferred Stock issued as
dividends are not entitled to additional dividends. Shares of
Preferred Stock do not participate in dividends, if any, on
shares of Common Stock.
Conversion: The shares of Preferred Stock are not convertible.
Redemption: The shares of Preferred Stock are redeemable at the Company's
option at any time at a price equal to their stated value, plus
accrued and unpaid dividends (payable in cash). All shares of
Preferred Stock outstanding on the third anniversary of the issue
date of the Convertible Notes from which the Preferred Stock is
convertible must be redeemed by the Company.
Liquidation: In the event of a liquidation, dissolution or winding up of the
Company, the shares of Preferred Stock are entitled to receive a
liquidation preference in an amount equal to their stated value,
plus accrued and unpaid dividends (payable in cash). Any
redemption must be made on a pro rata basis with respect to each
holder based on the number of shares held. Shares of Preferred
Stock do not participate in liquidating distributions, if any, on
shares of Common Stock.
Voting: The shares of Preferred Stock are entitled to vote as a class to
approve (1) the redemption of any securities of the Company other
than the Preferred Stock (excluding redemptions of warrants
pursuant to call provisions, redemptions of securities owned by
employees pursuant to arrangements approved in advance by the
Company's board, and other similar permitted redemptions), (2)
the declaration or payment of dividends on securities of the
Company other than the Preferred Stock, (3) the issuance of
securities of the Company senior in right of liquidation or
redemption to the Preferred Stock, (4) the merger of the Company
with another corporation or the sale of substantially all of the
Company's assets (other than the proposed Plan of Arrangement or
transactions in which the Company's shareholders continue to own
more than 50% of the successor corporation), and (5) the
reclassification of the shares of Preferred Stock. Other than the
foregoing, the shares of Preferred Stock are non-voting except to
the extent required by applicable law.
Antidilution: The shares of Preferred Stock will convert into shares of
preferred stock, with the same terms, of any corporation with
which the Company effects a plan of arrangement or other
reorganization.
