Exhibit 4.7
Exhibit A
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NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OF
THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THESE SECURITIES MAY BE PLEDGED IN A MANNER CONSISTENT WITH
THE SECURITIES ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY
SUCH SECURITIES.
No. [ ]
$[ ]
Original Issue Date: [ ]
XXXXXX COMPANIES, INC.
6% CONVERTIBLE DEBENTURE DUE [ ](1)
THIS DEBENTURE is one of a series of duly authorized and
issued debentures of Zoltek Companies, Inc., a Missouri corporation (the
"COMPANY"), designated as its 6% Convertible Debentures due [ ](2), in the
original aggregate principal amount of up to Seven Million Dollars
($7,000,000) (collectively, the "DEBENTURES" and each Debenture comprising
the Debentures, a "DEBENTURE").
FOR VALUE RECEIVED, the Company promises to pay to the
order of [ ] or its registered assigns (the "HOLDER"), the principal sum of
[ ] ($), on [ ](3) or such earlier date as this Debenture is required to be
repaid as provided hereunder (the "MATURITY DATE"), and to pay interest to
the Holder on the aggregate then outstanding principal amount of this
Debenture in
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(1) 30th month anniversary of the Original Issue Date
(2) 30th month anniversary of the Original Issue Date
(3) 30th month anniversary of the Original Issue Date
accordance with the provisions hereof. All holders of Debentures are
referred to collectively, as the "HOLDERS." This Debenture is subject to the
following additional provisions:
1. Definitions. In addition to the terms defined
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elsewhere in this Debenture: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Securities
Purchase Agreement, dated as of the Original Issue Date, among the Company
and the investors identified therein (the "PURCHASE AGREEMENT"), and (b) the
following terms have the meanings indicated below:
"BANKRUPTCY EVENT" means any of the following events: (a) the
Company or any Subsidiary commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction relating to the Company or any
Subsidiary thereof; (b) there is commenced against the Company or
any Subsidiary any such case or proceeding that is not dismissed
within 60 days after commencement; (c) the Company or any
Subsidiary is adjudicated by a court of competent jurisdiction
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (d) the Company
or any Subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 days; (e) under applicable
bankruptcy law the Company or any Subsidiary makes a general
assignment for the benefit of creditors; (f) the Company or any
Subsidiary fails to pay, or states that it is unable to pay or is
unable to pay, its debts generally as they become due; (g) the
Company or any Subsidiary calls a meeting of its creditors with a
view to arranging a composition, adjustment or restructuring of its
debts; or (h) the Company or any Subsidiary, by any act or failure
to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.
"CHANGE OF CONTROL" means the occurrence of any of the
following in one or a series of related transactions: (i) an
acquisition after the date hereof by an individual or legal entity
or "group" (as described in Rule 13d-5(b)(1) under the Exchange
Act) of more than one-third of the voting rights or equity
interests in the Company; (ii) a replacement of more than one-half
of the members of the Company's board of directors in a single
election of directors that is not approved by those individuals who
are members of the board of directors on the date hereof (or other
directors previously approved by such individuals); (iii) a
Fundamental Transaction (as defined in Section 11(c)), a merger or
consolidation of the Company or any Subsidiary or a sale of more
than one-half of the assets of the Company in one or a series of
related transactions, unless following such transaction or series
of transactions, the holders of the Company's securities prior to
the first such transaction continue to hold at least two-thirds of
the voting rights and equity interests in the surviving entity or
acquirer of such assets; (iv) a recapitalization, reorganization or
other transaction involving the Company or any Subsidiary that
constitutes or results in a transfer of more than one-third of the
voting rights or equity interests in the Company, unless following
such transaction or series of transactions, the holders of the
Company's securities prior to the first such transaction continue
to hold at least two-thirds of the voting rights and equity
interests in the surviving entity or acquirer of such assets; (v)
consummation of a "Rule 13e-3 transaction" as defined in Rule 13e-3
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under the Exchange Act with respect to the Company, or (vi) the
execution by the Company or its controlling shareholders of an
agreement providing for or reasonably likely to result in any of
the foregoing events.
"CLOSING PRICE" means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on an Eligible Market, the closing
sale price per share of the Common Stock for such date (or the
nearest preceding date) on the primary Eligible Market or exchange
on which the Common Stock is then listed or quoted; (b) if prices
for the Common Stock are then quoted on the OTC Bulletin Board, the
closing sale price per share of the Common Stock for such date (or
the nearest preceding date) so quoted; (c) if prices for the Common
Stock are then reported in the "Pink Sheets" published by the
National Quotation Bureau Incorporated (or a similar organization
or agency succeeding to its functions of reporting prices), the
most recent sale price per share of the Common Stock so reported;
or (d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in
good faith by a majority in interest of the Investors.
"COMMON STOCK" means the common stock of the Company, $0.01
par value per share, and any securities into which such common
stock may hereafter be reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the
Company or a subsidiary thereof which entitle the holder thereof to
acquire Common Stock at any time, including without limitation, any
debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable
for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock.
"COMPANY PREPAYMENT AMOUNT" for any Debentures which shall
be subject to prepayment pursuant to Section 13, shall equal the
sum of (1) the greater of: (A) 100% of such outstanding principal
amount, plus all accrued but unpaid interest thereon, through the
date of payment, or (B) the product of (x) the Event Equity Value
and (y) the number of the Underlying Shares issuable upon
conversion in full of such principal amount and all such accrued
but unpaid interest thereon (without regard to any conversion
limitation contained herein), and (2) the amount of any unpaid
liquidated damages and other amounts then owing (other than
interest and principal) under the Transaction Documents.
"CONVERSION DATE" means the date a Conversion Notice together
with the Conversion Schedule is delivered to the Company in
accordance with Section 5(a).
"CONVERSION NOTICE" means a written notice in the form
attached hereto as Exhibit A.
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"CONVERSION PRICE" means $[ ](4), subject to adjustment from
time to time pursuant to Section 11.
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(4) 110% of the average VWAP of the Common Stock during the ten Trading
Days immediately preceding the date of the Purchase Agreement or
the Closing Date, whichever is less; provided, that (x) the
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Conversion Price for those Holders who became party to the Purchase
Agreement after December 19, 2003 and who are not officers or
directors of the Company shall equal 110% of the average of the
VWAP for the ten Trading Days immediately prior to the date of the
Purchase Agreement or the date of the Closing, whichever is less,
and (y) the Conversion Price for those Holders who became party to
the Purchase Agreement after December 19, 2003 and who are officers
or directors of the Company shall equal the greater of (1) 110% of
the average of the VWAP for the ten Trading Days immediately prior
to the date of the Purchase Agreement or the date of the Closing,
whichever is less, and (2) the closing bid price of the Common
Stock on the Trading Day immediately prior to the date that such
Holder became party to the Purchase Agreement.
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"DEFAULT" means any event or condition which constitutes an
Event of Default or that upon notice, lapse of time or both would,
unless cured or waived, become an Event of Default.
"ELIGIBLE MARKET" means any of the New York Stock Exchange,
the American Stock Exchange, the Nasdaq National Market or the
Nasdaq Small Cap Market.
"EQUITY CONDITIONS" means that each of the following
conditions is satisfied: (i) the number of authorized but unissued
and otherwise unreserved shares of Common Stock is sufficient for
such issuance; (ii) the Common Stock is listed or quoted (and is
not suspended from trading) on an Eligible Market and such shares
of Common Stock are approved for listing on such Eligible Market
upon issuance; (iii) such Common Stock is registered for resale
under the Registration Statement, (iv) such issuance would be
permitted in full without violating Section 5(b) hereof or the
rules or regulations of the Eligible Market on which such shares
are listed or quoted, (v) no Event of Default nor any event that
with the passage of time and without being cured would constitute a
Event of Default has occurred and not been cured, and (vi) no
public announcement of a pending or proposed Change of Control
transaction has occurred that has not been consummated.
"EVENT EQUITY VALUE" means the average of the Closing Prices
for the five Trading Days preceding either: (a) the date of
delivery of the notice for payment of the Event Equity Value or (b)
the date on which such payment (together with any other payments,
expenses and liquidated damages then due and payable under the
Transaction Documents) is paid in full, whichever is greater.
"EVENT OF DEFAULT" means any one of the following events
(whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):
(i) any default in the payment (free
of any claim of subordination) of principal, interest or liquidated damages in
respect of any Debentures, as and
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when the same becomes due and payable (whether on a Conversion Date, the
Maturity Date or by acceleration or prepayment or otherwise).
(ii) the Company or any Subsidiary
defaults in any of its obligations under any other debenture or any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which
there may be secured or evidenced, any Indebtedness or money due under any
long term leasing or factoring arrangement of the Company or any Subsidiary
in an amount exceeding $350,000, whether such Indebtedness now exists or is
hereafter created, and such default results in such Indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
become due and payable.
(iii) the occurrence or entering into
of any Change of Control transaction.
(iv) the Company shall fail to observe
or perform any covenant, condition or agreement contained in Article 4 or in
Article 5 of the Purchase Agreement, and such failure shall continue
unremedied for a period of 7 days after written notice of such default is
first given to the Company by the Holder.
(v) the Company shall fail to
observe or perform any covenant, condition or agreement contained in any
Transaction Document (other than those specified in clause (i) or (v)
above), and such failure shall continue unremedied for a period of five
Trading Days after the date on which written notice of such default is first
given to the Company by the Holder (it being understood that no prior notice
need be given in the case of a default that cannot reasonably be cured
within five Trading Days).
(vi) the occurrence of an Event of
Default (whether or not declared) under any Debentures.
(vii) any prepayment by the Company
of any Debenture issued by it or any issuance of securities in exchange for
any Debentures issued by it (other than Underlying Shares upon conversion
thereof in accordance with their terms as in effect on the Original Issue
Date thereof), except in each case (i) if the Company offers to the Holder
in writing the same prepayment of this Debenture and all other Debentures
then held by such Holder on the same economic terms on which the Company
prepays or offers to prepay (whichever is more favorable to the holder of
such Debenture) such Debentures, and (ii) in accordance with the prepayment
provisions of Section 13 of this Debenture.
(viii) any of the Company's
representations and warranties set forth in the Purchase Agreement shall be
incorrect as of the Original Issue Date.
(ix) the occurrence of a Bankruptcy
Event.
(x) one or more judgments for the
payment of money in an aggregate amount in excess of $350,000 shall be rendered
against the Company or any Subsidiary or any combination thereof (which
shall not be fully covered by insurance without taking into account any
applicable deductibles) and the same shall remain undischarged or
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unbonded for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
Subsidiary to enforce any such judgment.
(xi) any Transaction Document shall
cease, for any reason, to be in full force and effect, or the Company shall
so assert in writing or shall disavow any of its obligations thereunder.
(xii) the Common Stock is not listed
or quoted, or is suspended from trading, on an Eligible Market for a period of
three Trading Days (which need not be consecutive Trading Days).
(xiii) the Company fails to deliver a
stock certificate evidencing Underlying Shares to a Holder within three Trading
Days after a Conversion Date, or in the case of exercises under a Warrant,
within three Trading Days after a Date of Exercise under the Warrants, or
the conversion or exercise rights of the Holders pursuant to the terms
hereof or the terms of the Warrants are otherwise suspended for any reason.
(xiv) the Company fails to have available
a sufficient number of authorized but unissued and otherwise unreserved shares
of Common Stock available to issue Underlying Shares upon any conversion of
Debentures or upon any exercise of Warrants.
(xv) the Company effects or publicly
announces its intention to effect any exchange, recapitalization or other
transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock, unless following such transaction,
the holders of the Company's securities prior to the first such transaction
continue to beneficially own at least two-thirds of the voting rights and
equity interests in the surviving entity or acquirer of such assets.
(xvi) a Registration Statement under the
Registration Rights Agreement is not declared effective by the Commission by
the 365th day following the Closing Date, or is not effective as to all
Registrable Securities, and available for use by the holders of Registrable
Securities (as defined in the Registration Rights Agreement), for in excess
of 60 Trading Days during the Effectiveness Period.
(xvii) the Company fails to make any cash
payment required under the Transaction Documents (including, without
limitations, as prepayment hereunder) and such failure is not cured within
five Trading Days after notice of such default is first given to the Company
by an Investor.
"ORIGINAL ISSUE DATE" means the date of the first issuance of
any Debentures, regardless of the number of transfers of any
particular Debenture.
"REGISTRATION STATEMENT" shall have the meaning set forth in
the Purchase Agreement.
"TRADING DAY" means (i) a day on which the Common Stock is
traded on an Eligible Market, or (ii) if the Common Stock is not
listed on an Eligible Market, a day on
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which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board or the National Quotation Bureau
Incorporated, or (iii) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in
the event that the Common Stock is not listed or quoted as set
forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.
"UNDERLYING SHARES" means the shares of Common Stock issuable
upon conversion of the Debentures and payment of interest
thereunder, and upon exercise of the Warrants.
"VWAP" means, with respect to any date of determination, the
daily volume weighted average price (as reported by Bloomberg using
the VAP function) of the Common Stock on such date of
determination, or if there is no such price on such date of
determination, then the daily volume weighted average price on the
date nearest preceding such date.
"WARRANTS" shall have the meaning ascribed in the Purchase
Agreement.
2. Interest.
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(a) The Company shall pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture at the rate of 6% per annum, payable quarterly in cash or,
subject to the conditions of Section 2(b), in shares of Common Stock, in
arrears on each December 31, March 31, June 30 and September 30, beginning
March 31, 2004, except if such date is not a Trading Day, in which case such
interest shall be payable on the next succeeding Trading Day (each, an
"INTEREST PAYMENT DATE"). Interest shall be calculated on the basis of a
360-day year and shall accrue daily commencing on the Original Issue Date.
(b) Subject to the conditions and limitations
set forth below, the Company may pay interest on this Debenture either: (i)
in cash or (ii) by delivering by the third Trading Day following the
applicable Interest Payment Date, a number of freely tradable shares of
Common Stock equal to the quotient obtained by dividing the amount of such
interest by 90% of the arithmetic average of the VWAP for each of the 20
Trading Days immediately preceding (but not including) the Interest Payment
Date. The Company must deliver written notice to the Holder indicating the
manner in which it intends to pay interest at least ten Trading Days prior
to each Interest Payment Date, but the Company may indicate in any such
notice that the election contained therein shall continue for subsequent
Interest Payment Dates until revised. Failure to timely provide such written
notice shall be deemed an election by the Company to pay such interest in
cash. All interest payable in respect of the Debentures on any Interest
Payment Date must be paid in the same manner. Notwithstanding the foregoing,
the Company may not pay interest in shares of Common Stock unless, at such
time, the Equity Conditions are satisfied with respect to all of the
Underlying Shares then issuable upon conversion in full of the outstanding
principal amount of Debentures and the interest payable on such Interest
Payment Date.
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3. Registration of Debentures. The Company shall
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register the Debentures upon records to be maintained by the Company for
that purpose (the "DEBENTURE REGISTER") in the name of each record Holder
thereof from time to time. The Company may deem and treat the registered
Holder of this Debenture as the absolute owner hereof for the purpose of any
conversion hereof or any payment of interest hereon, and for all other
purposes, absent actual notice to the contrary.
4. Registration of Transfers and Exchanges. The
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Company shall register the transfer of any portion of this Debenture in the
Debenture Register upon surrender of this Debenture to the Company at its
address for notice set forth herein. Upon any such registration or transfer,
a new Debenture, in substantially the form of this Debenture (any such new
debenture, a "NEW DEBENTURE"), evidencing the portion of this Debenture so
transferred shall be issued to the transferee and a New Debenture evidencing
the remaining portion of this Debenture not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Debenture by
the transferee thereof shall be deemed the acceptance by such transferee of
all of the rights and obligations of a holder of a Debenture. The Company
agrees that its prior consent is not required for the transfer of any
portion of this Debenture; provided, however, that the Company shall be
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entitled to reasonable assurance that such transfer complies with applicable
federal and state securities laws. This Debenture is exchangeable for an
equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same. No service
charge or other fee will be imposed in connection with any such registration
of transfer or exchange.
5. Conversion.
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(a) At the Option of the Holder. All or any
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portion of the principal amount of this Debenture then outstanding together
with any accrued and unpaid interest thereunder shall be convertible into
shares of Common Stock at the Conversion Price (subject to limitations set
forth in Section 5(b)), at the option of the Holder, at any time and from
time to time from and after the Original Issue Date. The Holder may effect
conversions under this Section 5(a), by delivering to the Company a
Conversion Notice together with a schedule in the form of Schedule 1
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attached hereto (the "CONVERSION SCHEDULE"). If the Holder is converting
less than all of the principal amount represented by this Debenture, or if a
conversion hereunder may not be effected in full due to the application of
Section 5(b), the Company shall honor such conversion to the extent
permissible hereunder and shall promptly deliver to the Holder a Conversion
Schedule indicating the principal amount which has not been converted.
(b) Certain Conversion Restrictions.
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(i) Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by a Holder upon any conversion of Debentures (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such conversion (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and
any other Persons whose beneficial ownership of Common Stock would be
aggregated with such Holder's for purposes of Section 13(d) of the Exchange
Act, does not exceed 9.999% of the total number of issued and outstanding
shares of Common Stock (including for such purpose the shares of Common
Stock
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issuable upon such conversion). For such purposes, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction involving the Company as contemplated herein. This restriction
may not be waived.
(ii) Notwithstanding anything to the
contrary in this Debenture, if the Company has not previously obtained
Shareholder Approval (as defined below), then the Company may not issue
shares of Common Stock in excess of the Issuable Maximum upon conversions of
this Debenture at a conversion price which is less than the Closing Price on
the Trading Day immediately preceding the Original Issue Date. The "ISSUABLE
MAXIMUM" means a number of shares of Common Stock equal to 3,261,467. The
Issuable Maximum shall be reduced, at any given time, by the number of
shares of Common Stock previously issued upon conversion of any Debentures
at such time. Each Holder shall be entitled to a portion of the Issuable
Maximum equal to the quotient obtained by dividing: (x) the principal amount
of Debentures issued and sold to such Holder on the Original Issue Date by
(y) the aggregate principal amount of Debentures issued and sold by the
Company on the Original Issue Date. If any Holder shall no longer hold
Debentures, then such Xxxxxx's remaining portion of the Issuable Maximum
shall be allocated pro-rata among the remaining Holders, giving effect to
the Company's desire to allocate among the class of securities known as the
Debentures this limitation. If on any Conversion Date: (A) the aggregate
number of shares of Common Stock that would then be issuable upon conversion
in full of all then outstanding principal amount of Debentures would exceed
the Issuable Maximum on such date, and (B) the Company shall not have
previously obtained the vote of shareholders, as may be required by the
applicable rules and regulations of the Nasdaq Stock Market (or any
successor entity or any other Eligible Market on which the Company's
securities then trade), applicable to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof
(the "SHAREHOLDER APPROVAL"), then, the Company shall issue to the Holder a
number of shares of Common Stock equal to the Issuable Maximum and, with
respect to the remainder of the principal amount of Debentures then held by
the Holder for which a conversion would result in an issuance of shares of
Common Stock in excess of the Issuable Maximum, the Company must seek
Shareholder Approval as soon as possible, but in any event not later than
the 90th day after such request. The Company and the Holder understand and
agree that shares of Common Stock issued to and then held by the Holder as a
result of conversions of Debentures shall not be entitled to cast votes on
any resolution to obtain Shareholder Approval pursuant hereto.
6. Mechanics of Conversion.
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(a) The number of Underlying Shares issuable
upon any conversion hereunder shall equal the outstanding principal amount
of this Debenture to be converted, divided by the Conversion Price on the
Conversion Date, plus (if indicated in the applicable Conversion Notice) the
amount of any accrued but unpaid interest on this Debenture through the
Conversion Date, divided by the Conversion Price on the Conversion Date.
(b) The Company shall promptly following a
Conversion Date (but in no event later than three Trading Days after such
Conversion Date) issue or cause to be issued
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and cause to be delivered to or upon the written order of the Holder and in
such name or names as the Holder may designate a certificate for the
Underlying Shares issuable upon such conversion, free of restrictive
legends. The Holder, or any Person so designated by the Holder to receive
Underlying Shares, shall be deemed to have become holder of record of such
Underlying Shares as of the Conversion Date. The Company shall, upon request
of the Holder, use its best efforts to deliver Underlying Shares hereunder
electronically (via a DWAC) through the Depository Trust Corporation or
another established clearing corporation performing similar functions.
(c) The Holder shall not be required to
deliver the original Debenture in order to effect a conversion hereunder.
Execution and delivery of the Conversion Notice shall have the same effect
as cancellation of the Debenture and issuance of a New Debenture
representing the remaining outstanding principal amount. Upon surrender of
this Debenture following one or more partial conversions, the Company shall
promptly deliver to the Holder a New Debenture representing the remaining
outstanding principal amount.
(d) The Company's obligations to issue and
deliver Underlying Shares upon conversion of this Debenture in accordance
with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by
the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
such Underlying Shares.
(e) If by the third Trading Day after a
Conversion Date the Company fails to deliver to the Holder such Underlying
Shares in such amounts and in the manner required pursuant to Section 5,
then the Holder will have the right to rescind the Conversion Notice
pertaining thereto by giving written notice to the Company prior to such
Xxxxxx's receipt of such Underlying Shares.
(f) If by the third Trading Day after a
Conversion Date the Company fails to deliver to the Holder the required
number of Underlying Shares in the manner required pursuant to Section 5,
and if after such third Trading Day and prior to the receipt of such
Underlying Shares, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Underlying Shares which the Holder anticipated receiving
upon such conversion (a "BUY-IN"), then the Company shall: (1) pay in cash
to the Holder (in addition to any other remedies available to or elected by
the Holder) the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Underlying Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue by (B) the Closing Price at the time
of the obligation giving rise to such purchase obligation and (2) at the
option of the Holder, either void the conversion at issue and reinstate the
principal amount of Debentures (plus accrued interest therein) for which
such conversion was not timely honored or deliver to the Holder the number
of shares of Common Stock that would have been issued had the Company timely
complied with
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its exercise and delivery obligations hereunder. The Holder shall provide
the Company reasonably detailed evidence or written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
7. Events of Default.
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(a) At any time or times following the
occurrence of an Event of Default, the Holder may elect, by notice to the
Company (an "EVENT NOTICE"), to require the Company to repurchase all or any
portion of the outstanding principal amount of this Debenture, as indicated
in the Event Notice, at a repurchase price, equal to the greater of: (A)
100% of such outstanding principal amount, plus all accrued but unpaid
interest thereon and any unpaid liquidated damages and other amounts then
owing under the Transaction Documents, through the date of payment, or (B)
the Event Equity Value of the Underlying Shares issuable upon conversion of
such principal amount and all such accrued but unpaid interest thereon
(without regard to any conversion limitation contained herein). The
aggregate amount payable pursuant to the preceding sentence is referred to
as the "EVENT PRICE." The Company shall pay the aggregate Event Price to the
Holder (free of any claim of subordination) no later than the third Trading
Day following the date of delivery of the Event Notice, and upon receipt
thereof the Holder shall deliver the original Debenture so repurchased to
the Company.
(b) Upon the occurrence of any Bankruptcy
Event, all outstanding principal and accrued but unpaid interest on this
Debenture and any unpaid liquidated damages and other amounts then owing
under the Transaction Documents shall immediately become due and payable in
full in cash (free of any claim of subordination), without any further
action by the Holder, and the Company shall immediately be obligated to
repurchase this Debenture held by such Holder at the Event Price pursuant to
the preceding paragraph as if the Holder had delivered an Event Notice
immediately prior to the occurrence of such Bankruptcy Event.
(c) In connection with any Event of Default,
the Holder need not provide and the Company hereby waives any presentment,
demand, protest or other notice of any kind, and the Holder may immediately
and without expiration of any grace period enforce any and all of its rights
and remedies hereunder and all other remedies available to it under
applicable law. Any such declaration may be rescinded and annulled by the
Holder at any time prior to payment hereunder. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereto.
8. Ranking. This Debenture ranks pari passu with
-------
all other Debentures now or hereafter issued pursuant to the Transaction
Documents.
9. Charges, Taxes and Expenses. Issuance of
---------------------------
certificates for Underlying Shares upon conversion of (or otherwise in
respect of) this Debenture shall be made without charge to the Holder for
any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificate,
all of which taxes and expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of any
certificates for Underlying Shares or Debentures in a name other than that of
-11-
the Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Debenture or
receiving Underlying Shares in respect hereof.
10. Reservation of Underlying Shares. The Company
--------------------------------
covenants that it will at all times reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Underlying Shares as
required hereunder, the number of Underlying Shares which are then issuable
and deliverable upon the conversion of (and otherwise in respect of) this
entire Debenture (taking into account the adjustments of Section 11), free
from preemptive rights or any other contingent purchase rights of persons
other than the Holder. The Company covenants that all Underlying Shares so
issuable and deliverable shall, upon issuance in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
11. Certain Adjustments. The Conversion Price is
-------------------
subject to adjustment from time to time as set forth in this Section 11.
(a) Stock Dividends and Splits. If the Company,
--------------------------
at any time while this Debenture is outstanding: (i) pays a stock dividend
on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after
such event. Any adjustment made pursuant to clause (i) of this paragraph
shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of
such subdivision or combination.
(b) Pro Rata Distributions. If the Company,
----------------------
at any time while this Debenture is outstanding, distributes to all holders
of Common Stock (i) evidences of its indebtedness, (ii) any security (other
than a distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or (iv)
any other asset (in each case, "DISTRIBUTED PROPERTY"), then, at the request
of the Holder delivered before the 90th day after the record date fixed for
determination of shareholders entitled to receive such distribution, the
Company will deliver to the Holder, within five Trading Days after such
request (or, if later, on the effective date of such distribution), the
Distributed Property that the Holder would have been entitled to receive in
respect of the Underlying Shares for which this Debenture could have been
converted immediately prior to such record date. If such Distributed
Property is not delivered to the Holder pursuant to the preceding sentence,
then upon any conversion of this Debenture that occurs after such record
date, the Holder shall be entitled to receive, in addition to the Underlying
Shares otherwise issuable upon such conversion, the Distributed Property
that the Holder would have been entitled to receive in respect of such
number of Underlying Shares had the Holder been the record holder of such
Underlying Shares immediately prior to such record date. Notwithstanding the
foregoing, this Section 11(b) shall not apply to any distribution of rights
or securities in respect of adoption by the Company of a shareholder rights
plan, which events shall be covered by Section 11(a).
-12-
(c) Fundamental Transactions. If, at any
------------------------
time while this Debenture is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the
Company effects any sale of all or substantially all of its assets in one or
a series of related transactions, (iii) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock tender or exchange their shares for other
securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of
a subdivision or combination of shares of Common Stock covered by Section
11(a) above) (in any such case, a "FUNDAMENTAL TRANSACTION"), then upon any
subsequent conversion of this Debenture, the Holder shall have the right to:
(x) declare an Event of Default pursuant to clause (iii) thereunder, (y)
receive, for each Underlying Share that would have been issuable upon such
conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of one share of Common
Stock (the "ALTERNATE CONSIDERATION") or (z) require the surviving entity to
issue to the Holder and instrument identical to this Debenture (with an
appropriate adjustments to the conversion price). For purposes of any such
conversion, the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any
conversion of this Debenture following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any successor to
the Company or surviving entity in such Fundamental Transaction (or, if
different, the ultimate parent of such successor or entity or the entity
issuing the Alternate Consideration) shall issue to the Holder a new
debenture consistent with the foregoing provisions and evidencing the
Holder's right to convert such debenture into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this paragraph (c) and insuring that
this Debenture (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
(d) Subsequent Equity Sales.(5)
-----------------------
(i) If the Company or any subsidiary
thereof, as applicable, at any time while this Debenture is outstanding,
shall issue shares of Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at a price per share (the
"EFFECTIVE PRICE") less than the Conversion Price (if the holder of the
Common Stock or Common Stock Equivalent so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights issued in connection with such issuance, be entitled to
receive shares of Common Stock at a price less than the Conversion Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price), then, at the option of the Holder for
--------
(5) This provision will not be in the Debentures issued to officers or
directors of the Company.
-13-
such conversions as it shall indicate, the Conversion Price shall be
adjusted to mirror the conversion, exchange or purchase price for such
Common Stock or Common Stock Equivalents (including any reset provisions
thereof) at issue. Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued. The Company shall notify the Holder
in writing, no later than the Trading Day following the issuance of any
Common Stock or Common Stock Equivalent subject to this section, indicating
therein the applicable issuance price, or of applicable reset price,
exchange price, conversion price and other pricing terms. No further
adjustments shall be made to the Conversion Price upon the actual issuance
of Common Stock upon conversion or exercise of the applicable Common Stock
Equivalent.
(ii) If, at any time while this
Debenture is outstanding, the Company or any Subsidiary issues Common Stock
Equivalents with an Effective Price or a number of underlying shares that
floats or resets or otherwise varies or is subject to adjustment based
(directly or indirectly) on market prices of the Common Stock (a "FLOATING
PRICE SECURITY"), then for purposes of applying the preceding paragraph in
connection with any subsequent conversion, the Effective Price will be
determined separately on each Conversion Date and will be deemed to equal
the lowest Effective Price at which any holder of such Floating Price
Security is entitled to acquire Common Stock, whether prior, on or after
such Conversion Date (regardless of whether any such holder actually
acquires any shares on such date).
(iii) Notwithstanding the foregoing,
no adjustment will be made under this paragraph (d) in respect of: (A) the
issuance of securities upon the exercise or conversion of any Common Stock
Equivalents issued by the Company prior to the Original Issue Date of this
Debenture (but will apply to any amendments, modifications and reissuances
thereof), and (B) the grant of options or warrants, or the issuance of
additional securities, under any duly authorized Company stock option, stock
incentive plan, restricted stock plan or stock purchase plan in existence on
the Closing Date; (C) the issuance of Common Stock in payment of interest on
Debentures; or (D) the issuance of Common Stock Equivalents pursuant to a
Strategic Transaction.
(e) Reclassifications; Share Exchanges. In
----------------------------------
case of any reclassification of the Common Stock, or any compulsory share
exchange pursuant to which the Common Stock is converted into other
securities, cash or property (other than compulsory share exchanges which
constitute Change of Control transactions), the Holders of the Debentures
then outstanding shall have the right thereafter to convert such shares only
into the shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holders shall be entitled upon
such event to receive such amount of securities, cash or property as a
holder of the number of shares of Common Stock of the Company into which
such shares of Debentures could have been converted immediately prior to
such reclassification or share exchange would have been entitled. This
provision shall similarly apply to successive reclassifications or share
exchanges.
(f) Calculations. All calculations under
------------
this Section 11 shall be made to the nearest cent or the nearest 1/100th of
a share, as applicable. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered
an issue or sale of Common Stock.
-14-
(g) Notice of Adjustments. Upon the occurrence
---------------------
of each adjustment pursuant to this Section 11, the Company at its expense
will promptly compute such adjustment in accordance with the terms hereof
and prepare a certificate describing in reasonable detail such adjustment
and the transactions giving rise thereto, including all facts upon which
such adjustment is based. Upon written request, the Company will promptly
deliver a copy of each such certificate to the Holder.
(h) Notice of Corporate Events. If the
--------------------------
Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or
purchase any capital stock of the Company or any Subsidiary, (ii) authorizes
and publicly approves, or enters into any agreement contemplating or
solicits shareholder approval for any Fundamental Transaction or (iii)
publicly authorizes the voluntary dissolution, liquidation or winding up of
the affairs of the Company, then the Company shall deliver to the Holder a
notice describing the material terms and conditions of such transaction, at
least 20 calendar days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to participate in or
vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to insure that the Holder is given the
practical opportunity to convert this Debenture prior to such time so as to
participate in or vote with respect to such transaction; provided, however,
that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice.
12. Fractional Shares. The Company shall not be
-----------------
required to issue or cause to be issued fractional Underlying Shares on
conversion of this Debenture. If any fraction of an Underlying Share would,
except for the provisions of this Section, be issuable upon conversion of
this Debenture, the number of Underlying Shares to be issued will be rounded
up to the nearest whole share.
13. Prepayment at Option of Company. Subject to the
-------------------------------
provisions of this Section, at any time after the Effective Date, if the:
(i) VWAP of the Common Stock for each of 30 consecutive Trading Days after
such first year anniversary and prior to the date of the Prepayment Notice
(as defined below) in question is greater than $15.00 (subject to equitable
adjustment as a result of the events set forth in Section 11(a), (b) and
(c)), (ii) the Equity Conditions are satisfied, (iii) there shall not exist
an Event of Default or a default which, with the passage of time or notice,
would result in an Event of Default, (iv) the prepayment contemplated under
this Section shall be free of all subordination rights of other Persons, and
(v) the Company shall not have previously defaulted on its obligation to pay
the full Company Prepayment Amount due in respect of any Prepayment Notice,
then the Company may deliver a written notice (such notice, a "PREPAYMENT
NOTICE") to the Holder stating its irrevocable undertaking to prepay at the
Company Prepayment Amount all (but not less than all) of the outstanding
principal amount of all Debentures held by such Holder, together with all
accrued and unpaid interest, liquidated damages and other amounts then owing
thereon through the date the Company Prepayment Amount is paid. If the
conditions for prepayment pursuant to the Prepayment Notice are satisfied
during the period from the date of the Prepayment Notice through and
including the Prepayment Date, then the Company shall deliver to the Holder
the full Company Prepayment Amount in cash on the 31st Trading Day following
the date of the Prepayment Notice (the "PREPAYMENT DATE"), subject to (i)
reduction for principal and interest
-15-
of the Holder's Debentures that shall have been converted between the date
of the Prepayment Notice and the Prepayment Date and (ii) the right of the
Holder to nullify such Prepayment Notice if any of the conditions set forth
in this Section to the delivery of the Prepayment Notice shall not have been
met from the date of the Prepayment Notice through the Prepayment Date or if
the Company shall fail to honor any Conversion Notice as contemplated in the
immediately following sentence. The Company covenants and agrees that it
will honor all Conversion Notices tendered from the time of delivery of the
Prepayment Notice through 6:30 p.m. (New York City time) on the Trading Day
prior to the Prepayment Date. In addition, if any portion of the Company
Prepayment Amount remains unpaid after the Prepayment Date, the Holder
subject to such prepayment may elect by written notice to the Company to
invalidate ab initio the Prepayment Notice with respect to the unpaid
amount, notwithstanding anything herein contained to the contrary. If the
Holder makes such an election, this Debenture shall be reinstated with
respect to such unpaid amount and the Company shall no longer have any
prepayment rights under this Section.
14. Notices. Any and all notices or other
-------
communications or deliveries hereunder (including without limitation any
Conversion Notice) shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in this Section prior to 6:30 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in this Section on a day that is not a Trading Day or later than 6:30 p.m.
(New York City time) on any Trading Day, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to
be given. The addresses for such communications shall be: (i) if to the
Company, to 0000 XxXxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000, facsimile: (314)
291-9082, attention Chief Financial Officer, or (ii) if to the Holder, to
the address or facsimile number appearing on the Company's shareholder
records or such other address or facsimile number as the Holder may provide
to the Company in accordance with this Section.
15. Miscellaneous.
-------------
(a) This Debenture shall be binding on and
inure to the benefit of the parties hereto and their respective successors
and assigns. This Xxxxxxxxx may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) Subject to Section 15(a), above,
nothing in this Debenture shall be construed to give to any person or
corporation other than the Company and the Holder any legal or equitable
right, remedy or cause under this Debenture. This Debenture shall inure to
the sole and exclusive benefit of the Company and the Holder.
(c) All questions concerning the
construction, validity, enforcement and interpretation of this Debenture
shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all proceedings shall be
commenced exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan (the "NEW YORK COURTS"). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of
-16-
the New York Courts for any proceeding, and hereby irrevocably waives, and
agrees not to assert in any proceeding, any claim that it is not personally
subject to the jurisdiction of any New York Court or that a New York Court
is an inconvenient forum for such proceeding. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Debenture and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding. The prevailing party in a proceeding shall be reimbursed by the
other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such proceeding.
(d) The headings herein are for convenience
only, do not constitute a part of this Debenture and shall not be deemed to
limit or affect any of the provisions hereof.
(e) In case any one or more of the provisions
of this Debenture shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Debenture shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this
Debenture.
(f) No provision of this Debenture may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Investors holding no less than 66 2/3% of
the aggregate outstanding principal amount of Debentures or, in the case of
a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Debenture shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right.
(g) To the extent it may lawfully do so,
the Company hereby agrees not to insist upon or plead or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to
take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding
that may be brought by any Holder in order to enforce any right or remedy
under the Debentures. Notwithstanding any provision to the contrary
contained in the Debentures, it is expressly agreed and provided that the
total liability of the Company under the Debentures for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "MAXIMUM RATE"), and, without limiting the foregoing, in
no event shall any rate of interest or default interest, or both of them,
when aggregated with any other sums in the nature of interest that the
Company may be obligated to pay under the Debentures exceed such Maximum
Rate. It is agreed that if the maximum contract rate of interest allowed by
law and applicable to the Debentures is increased or decreased by statute or
any official governmental action subsequent to
-17-
the date hereof, the new maximum contract rate of interest allowed by law
will be the Maximum Rate of interest applicable to the Debentures from the
effective date forward, unless such application is precluded by applicable
law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Holder with respect to
indebtedness evidenced by the Debentures, such excess shall be applied by
such Holder to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at such
Xxxxxx's election.
(h) Subject to Section 13, the outstanding
principal amount and interest under this Debenture may not be prepaid by the
Company without the prior written consent of the Holder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-18-
IN WITNESS WHEREOF, the Company has caused this Debenture to
be duly executed by a duly authorized officer as of the date first above
indicated.
ZOLTEK COMPANIES, INC.
By:
-----------------------------------
Name:
Title:
-19-
EXHIBIT A
CONVERSION NOTICE
(To be Executed by the Registered Holder
in order to convert Debentures)
The undersigned hereby elects to convert the principal amount of
Debenture indicated below, into shares of Common Stock of Zoltek Companies,
Inc., as of the date written below. If shares are to be issued in the name
of a Person other than undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any. All terms used in this
notice shall have the meanings set forth in the Debenture.
Conversion calculations:
---------------------------------------------------
Date to Effect Conversion
---------------------------------------------------
Principal amount of Debenture owned prior to
conversion
---------------------------------------------------
Principal amount of Debenture to be Converted
---------------------------------------------------
Principal amount of Debenture remaining after
Conversion
---------------------------------------------------
Number of shares of Common Stock to be Issued
---------------------------------------------------
Applicable Conversion Price
---------------------------------------------------
Name of Holder
By:
-----------------------------------------------
Name:
Title:
By the delivery of this Conversion Notice the Holder represents and
warrants to the Company that its ownership of the Common Stock does not
exceed the restrictions set forth in Section 5(b) of the Debenture.
-20-
SCHEDULE 1
Zoltek Companies, Inc.
6% Convertible Debentures due [ ]
CONVERSION SCHEDULE
This Conversion Schedule reflects conversions made under the above
referenced Debentures.
Dated:
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Aggregate
Principal
Amount
Remaining
Amount of Subsequent to Applicable
Date of Conversion Conversion Conversion Conversion Price
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