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EXHIBIT 10.68
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, TRANSFERRED OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
APPLICABLE SECURITIES LAWS.
THIS CONVERTIBLE NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS FURTHER
SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION
AGREEMENT DATED OCTOBER 15, 1998, BETWEEN FOOTHILL CAPITAL CORPORATION
AND THE STEP COMPANY AND ACKNOWLEDGED BY XXXXXXXXX INDUSTRIES L.P. AS
SUCH SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME (THE
"SUBORDINATION AGREEMENT").
XXXXXXXXX INDUSTRIES, L.P.
CONVERTIBLE SUBORDINATED NOTE
$1,400,000 October 15, 1998
FOR VALUE RECEIVED, the undersigned, Xxxxxxxxx Industries, L.P., a
Texas limited partnership with its principal office located at 000 Xxxxxxxx
Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx 00000 (the "Company"), hereby promises to pay to
the order of The Step Company, a Georgia corporation or its registered assigns
(the "Holder"), at 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000,
or at such other place as Holder may from time to time designate, the principal
sum of ONE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($1,400,000),
together with interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal balance of this Convertible Note at the Base
Rate (as defined below). All past due principal and interest will bear interest
at the Base Rate plus four percent per annum (the "Default Rate"); provided,
however, in no event shall the interest charged exceed the Highest Lawful Rate.
This Convertible Note is issued pursuant to the Asset Purchase
Agreement dated October 15, 1998 (the "Asset Purchase Agreement") among Company,
Xxxxxxxxx Industries, Inc. ("Xxxxxxxxx"), and Holder and is subject to the terms
and provisions thereof. All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Asset Purchase
Agreement.
1. PAYMENT OF PRINCIPAL AND INTEREST.
1.1 PAYMENT AMOUNTS. Quarterly amortization payments shall equal the
amount necessary to amortize the remaining principal balance in equal principal
and interest payments over the remaining term at the Base Rate for such calendar
quarter. The first payment under this Convertible Note shall be due on January
4, 1999 and the amount of such payment shall be $87,979.37. The succeeding
payments shall be made on or before the first banking business day
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of each calendar quarter thereafter. These payments shall be calculated on the
basis of the Base Rate in effect for the preceding calendar quarter, the
principal balance outstanding on the first day of the preceding calendar quarter
(adjusted for any prepayments or conversions during such quarter), and the
remaining term.
1.2 MATURITY DATE. The principal amount of this Convertible Note
together with all accrued and unpaid interest shall be due and payable in full
on October 1, 2003 (the "Maturity Date") unless this Convertible Note is
converted or prepaid in full prior to such date. Company will pay all sums
becoming due to Holder under this Convertible Note in lawful money of the United
States of America at the address specified for such purpose herein.
1.3 APPLICATION OF PAYMENTS. All payments made by Company on this
Convertible Note shall be applied first to the accrued but unpaid interest
hereon, and then to the principal balance.
1.4 PREPAYMENT. Unless Holder delivers to Company a Conversion Notice
pursuant to SECTION 5, Company may, at its option and without premium or
penalty, prepay at any time all, or any portion, of the principal amount of this
Convertible Note, plus all accrued and unpaid interest on such principal amount.
This Convertible Note when paid or prepaid in full shall be surrendered to
Company.
1.5 BASE RATE. Base Rate means nine and one-quarter percent (9.25%) per
annum on the date of this Convertible Note. Beginning with the month of January,
1999, this Base Rate shall be changed each calendar quarter to the prime rate as
quoted on the first publication date in such calendar quarter in the money rates
section of the Wall Street Journal, plus an additional one percent (1.0%).
2. DEFAULT AND REMEDIES.
2.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any of the
following conditions or events shall occur:
(a) Company defaults in the payment of any principal, interest
or other amount due under this Convertible Note when the same becomes due and
payable, whether at maturity, by declaration or otherwise, and such default is
not cured within five (5) days after Holder has given Company written notice of
such default; or
(b) Company or Xxxxxxxxx defaults or breaches in the
observance or performance of any of the other terms or conditions of this
Convertible Note, and such default is not cured within thirty (30) days after
Holder has given Company written notice of such default; or
(c) Company or Xxxxxxxxx shall (1) apply for, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
assets or revenues; (2) admit in writing its inability to pay its liabilities as
they become due; (3) make an assignment for the benefit of creditors; (4)
commence a voluntary case under Title 11 of the United States Code or any other
Federal, state or foreign
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bankruptcy, insolvency, reorganization or similar law (as now or hereafter in
effect); (5) file a petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of indebtedness; (6) fail to controvert in a timely or appropriate
manner, or acquiesce in, any petition filed against Company or Xxxxxxxxx, as the
case may be, in an involuntary case under Title 11 of the United States Code or
any other Federal, state or foreign bankruptcy, insolvency, reorganization or
similar law (as now or hereafter in effect); (7) have an order for relief
against Company or Xxxxxxxxx entered under Title 11 of the United States Code or
other Federal, state or foreign bankruptcy, insolvency, reorganization or
similar law (as now or hereafter in effect); or (8) take any action for purposes
of effecting any of the foregoing; or
(d) a proceeding or case shall be commenced in any court of
competent jurisdiction, seeking (1) the liquidation, reorganization,
dissolution, winding-up, or readjustment of debts of Company or Xxxxxxxxx; or
(2) the appointment of a trustee, receiver, custodian, liquidator or similar
official of Company or Xxxxxxxxx or of all or a substantial part of its
respective properties, assets or revenues; or (3) the entry of similar relief in
respect of Company or Xxxxxxxxx under any law (domestic or foreign) relating to
bankruptcy, insolvency, reorganization, winding-up, or readjustment of
indebtedness (as now or hereafter in effect) without the consent of Company or
Xxxxxxxxx, as the case may be, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect for sixty (60)
days; or
(e) a termination of the Step License (as defined in the
Purchase Agreement) pursuant to Section 9.2 or 9.3 thereof.
2.2 ACCELERATION. Subject to the Subordination Agreement, upon the
occurrence of an Event of Default and during the Event of Default [excluding
Events of Default under SECTIONS 2.1(c) and 2.1(d), the occurrence of which will
automatically trigger acceleration of all amounts payable under this Convertible
Note], Holder may, at its election and without demand, declare the entire unpaid
principal balance of this Convertible Note and all interest accrued with respect
thereto and other amounts payable hereunder due and payable without any further
notice, action or demand on the part of Company or Holder or any other person or
entity, and Holder shall be entitled to all such other remedies as may be
available to it hereunder, under applicable law, at equity or otherwise, all
such remedies being cumulative, not exclusive, and enforceable alternatively,
successively and/or concurrently.
2.3 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course of
dealing and no delay on the part of Holder in exercising any right, power or
remedy shall operate as a waiver thereof or otherwise prejudice such Holder's
rights, powers or remedies. No right, power or remedy conferred by this
Convertible Note upon Holder shall be exclusive of any other right, power or
remedy referred to herein or now or hereafter available at law, in equity, by
statute or otherwise. Company will pay to Holder on demand such further amount
as shall be sufficient to cover all reasonable costs and expenses of such Holder
incurred in any enforcement or collection of this Convertible Note, including,
without limitation, reasonable attorneys' fees, expenses and disbursements,
together with interest on such amounts at the Default Rate accruing from the
date of demand.
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3. WARRANTIES AND REPRESENTATIONS OF HOLDER. Holder represents and
warrants to Company and Xxxxxxxxx as follows:
3.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Convertible Note is
delivered to Holder in reliance upon Holder's representation to Company and
Xxxxxxxxx, which by Holder's execution of this Convertible Note Holder hereby
confirms, that this Convertible Note and the Common Shares issuable upon
conversion thereof (collectively the "Securities") will be acquired for
investment for Holder's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and Holder has no
present intention of selling, granting any participation in, or otherwise
distributing the same, except in compliance with applicable federal and state
securities laws. Holder does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person with respect to any of the Securities.
3.2 RELIANCE UPON HOLDER'S REPRESENTATIONS. Holder understands that
this Convertible Note has not been, and the Common Shares issuable upon
conversion thereof at the time of conversion may not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
appropriate exemptions therefrom, and that Company's and Xxxxxxxxx'x reliance on
such exemption is predicated on Holder's representations set forth herein.
3.3 RECEIPT OF INFORMATION. Holder believes that it has received all
the information Holder considers necessary or appropriate for deciding whether
to purchase this Convertible Note. Holder has had an opportunity to ask
questions and receive answers from Company and Xxxxxxxxx regarding the terms and
conditions of this Convertible Note and the Common Shares issuable upon
conversion thereof and the business, properties, prospects and financial
condition of Company and Xxxxxxxxx, and to obtain additional information (to the
extent Company or Xxxxxxxxx possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to Holder or to which Holder had access.
3.4 INVESTMENT EXPERIENCE AND COUNSEL. Holder is experienced in
evaluating and investing in securities of companies such as Xxxxxxxxx, is
represented by legal and/or investment advisory counsel with regard to this
Convertible Note or has voluntarily elected to forego such counsel, can bear the
economic risk of its investment in this Convertible Note and the Common Shares
issuable upon conversion thereof, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in this Convertible Note.
3.5 ACCREDITED INVESTOR. Holder is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D under the Securities Act.
3.6 RESTRICTED SECURITIES. Holder understands that this Convertible
Note, and the Common Shares issuable upon the conversion thereof, may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and, in the absence of an effective
registration statement covering this Convertible Note (or the Common Shares
issuable upon the conversion thereof) or an available exemption from
registration under the Securities Act, this Convertible Note (and the Common
Shares issuable upon conversion thereof) must be held indefinitely.
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3.7 LEGENDS. Holder understands that each certificate evidencing the
Common Shares issuable pursuant to the conversion of this Convertible Note will
be endorsed with the legend set forth below:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO COMPANY, REGISTRATION UNDER SUCH ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER."
4. TRANSFER AND EXCHANGE; SUBSTITUTION OF CONVERTIBLE NOTE.
4.1 TRANSFER AND EXCHANGE OF CONVERTIBLE NOTE. With respect to any
offer, sale or other disposition of this Convertible Note or the Common Shares
issuable upon conversion thereof, Holder will give prior written notice to
Company and Xxxxxxxxx, describing briefly the manner thereof, together with a
written opinion of the counsel identified as Holder's counsel in SECTION 7.2 or
other counsel for Holder who shall be reasonably acceptable to Xxxxxxxxx, to the
effect that such offer, sale or other distribution may be effected without
registration or qualification (under any applicable federal or state securities
laws then in effect). Subject to the foregoing and upon surrender of this
Convertible Note at the principal executive office of Company for registration
of transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by Holder, accompanied by a written acknowledgement and acceptance of
the representations and warranties of Holder under SECTION 3 and a consent to
governing law under SECTION 7.5, and further accompanied by the address for
notices of each transferee of such Convertible Note or part thereof), Company
shall execute and deliver, at Company's expense (subject to the obligation of
Holder requesting any transfer to pay any taxes due in respect of such
transfer), one or more new Convertible Notes (as requested by Holder) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Convertible Note. Each such new Convertible
Note shall be payable to such Person as Holder may request and shall be
substantially in the form specified herein. Each such new Convertible Note shall
be dated and bear interest from the date of surrender of the Convertible Note,
and accrued but unpaid interest on the surrendered Convertible Note shall be
paid as directed by Holder on the next scheduled interest payment date.
4.2 REPLACEMENT OF CONVERTIBLE NOTE. Upon receipt by Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Convertible Note, and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it, or (b) in the
case of mutilation, upon surrender and cancellation thereof, Company at its own
expense shall execute and deliver, in lieu thereof, a new Convertible Note,
dated and bearing interest from the most recent prior principal and interest
installment payment date of such lost, stolen, destroyed or mutilated
Convertible Note.
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5. CONVERSION RIGHTS.
5.1 CONVERSION. At anytime during the term of this Convertible Note and
prior to the payment in full of its outstanding principal balance, Holder shall
have the right, at its option exercisable at the times and in the manner
specified in SECTION 5.2, to convert the outstanding principal balance of this
Convertible Note or any portion thereof, plus accrued and unpaid interest due
thereon to the effective date of the conversion, into fully paid and
non-assessable shares of common stock, par value $0.01 per share, of Xxxxxxxxx
("Common Shares"). If Holder makes such an election, the conversion ratio shall
be one (1) Common Share, subject to adjustments as described in SECTION 5.3, for
each Four and no/100 Dollars ($4.00) of outstanding principal and accrued but
unpaid interest on this Convertible Note.
5.2 CONVERSION PROCEDURE.
(a) If Holder desires to convert this Convertible Note or any
portion thereof into Common Shares pursuant to SECTION 5.1, Holder shall
surrender this Convertible Note at the principal executive office of Company,
duly endorsed to Company or in blank, or accompanied by proper instruments of
transfer to Company or in blank, and accompanied by an irrevocable written
notice (the "Conversion Notice") to Company. The Conversion Notice shall state
that Holder elects to convert this Convertible Note, or a portion thereof, in
accordance with its terms, and specify the name or names (with address) in which
a certificate or certificates for Common Shares are to be issued. If Holder
desires to convert only a portion of this Convertible Note, then Holder shall
specify in such written notice the percentage amount of the outstanding
principal and accrued interest of this Convertible Note which it desires to
convert. The effective date for such conversion shall be the date of the
Conversion Notice, provided such Conversion Notice is received by Company within
ten days of the date of such notice.
(b) If Holder has surrendered this Convertible Note
accompanied by the Conversion Notice and complied with any other conditions
herein, Xxxxxxxxx shall, as soon as practicable thereafter, deliver or cause to
be delivered, to the Person for whose account such Convertible Note was so
surrendered, certificates for the number of full Common Shares to which such
Person shall be entitled under the Conversion Notice and a cash adjustment for
any fraction of a Common Share as hereinafter provided. Such conversion shall be
deemed to have been made as of the effective date of the Conversion Notice and
the Person entitled to receive the Common Shares deliverable upon conversion
shall be treated for all purposes as the record Holder of such Common Shares on
such date.
(c) In the event that Holder has elected to convert only a
portion of this Convertible Note, Company shall deliver or cause to be delivered
to Holder a new Convertible Note substantially in the form of the surrendered
Convertible Note with appropriate adjustment to the principal and accrued
interest.
5.3 ADJUSTMENTS. The number of Common Shares, or amount of any other
securities and property as hereinafter provided, into which this Convertible
Note is convertible (the "Conversion Rate") shall be subject to adjustment from
time to time effective upon each occurrence of any of the following events. In
case by reason of the operation of this SECTION 5.3 this Convertible Note shall
be convertible into any other shares of stock or other securities or
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property of Company, Xxxxxxxxx or of any other corporation, any reference herein
to the conversion of this Convertible Note shall be deemed to refer to and
include the conversion of this Convertible Note into such other shares of stock
or other securities or property.
(a) If Xxxxxxxxx shall declare or pay any dividend with
respect to its Common Stock payable in shares of Common Stock, subdivide the
outstanding Common Stock into a greater number of shares of Common Stock, or
reduce the number of shares of Common Stock outstanding (by stock split, reverse
stock split, reclassification or otherwise than by repurchase of its Common
Stock) (any of such events being hereinafter called a "Stock Split"), the number
of Common Shares issuable upon conversion of this Convertible Note shall be
appropriately adjusted so as to entitle Holder hereof to receive upon conversion
of this Convertible Note, for the same aggregate consideration provided herein,
the same number of Common Shares, plus cash in lieu of any fractional Common
Share, as Holder would have received as a result of such Stock Split had Holder
hereof converted this Convertible Note in full immediately prior to such Stock
Split.
(b) If Xxxxxxxxx shall merge or consolidate with or into one
or more corporations or other entities and Xxxxxxxxx is the sole surviving
corporation, or Xxxxxxxxx shall adopt a plan of recapitalization or
reorganization in which Common Stock is exchanged for or changed into another
class of stock or other security of Xxxxxxxxx, Holder shall, for the same
aggregate consideration provided herein, be entitled upon conversion of this
Convertible Note to receive in lieu of the number of Common Shares (plus cash in
lieu of any fractional Common Share) into which this Convertible Note would
otherwise be convertible, the number of Common Shares or other securities, plus
cash in lieu of any fractional Common Share, to which such Holder would have
been entitled pursuant to the terms of the agreement or plan of merger,
consolidation, recapitalization or reorganization had such Holder converted this
Convertible Note in full immediately prior to such merger, consolidation,
recapitalization or reorganization.
(c) If Xxxxxxxxx is merged or consolidated with or into one or
more corporations or other entities under circumstances in which Xxxxxxxxx is
not the sole surviving corporation, or if Xxxxxxxxx sells or otherwise disposes
of substantially all its assets, and in connection with any such merger,
consolidation or sale holders of Common Stock receive stock or other securities
convertible into equity of the surviving or acquiring corporations or entities,
after the effective date of such merger, consolidation or sale, as the case may
be, Holder shall, for the same aggregate consideration provided herein, be
entitled upon conversion of this Convertible Note to receive, in lieu of Common
Shares (plus cash in lieu of any fractional Common Share) into which this
Convertible Note would otherwise be convertible, shares of such stock or other
securities (plus cash in lieu of any fractional share of such stock or other
securities) as Holder would have received pursuant to the terms of the merger,
consolidation or sale had such Holder converted this Convertible Note in full
immediately prior to such merger, consolidation or sale. In the event of any
consolidation, merger or sale as described in this SECTION 5.3(C), provision
shall be made in connection therewith for the surviving or acquiring
corporations or partnerships to assume all obligations and duties of Company and
Xxxxxxxxx hereunder or to issue substitute convertible notes in lieu of this
Convertible Note, with all such changes and adjustments in the number or kind of
Common Shares or other securities or property thereafter subject to this
Convertible Note or in the Conversion Rate as shall be required in connection
with this SECTION 5.3.
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(d) If Xxxxxxxxx shall declare or pay any dividend, or make
any distribution, with respect to its Common Stock that is payable in preferred
stock or other securities, assets (other than cash) or rights to subscribe for
or purchase any security of Xxxxxxxxx, or that is payable in debt securities of
Xxxxxxxxx convertible into Common Stock, preferred stock or other equity
securities of Xxxxxxxxx, Holder hereof shall, for the same aggregate
consideration provided herein, be entitled to receive upon conversion of this
Convertible Note in addition to the Common Shares (plus cash in lieu of any
fractional Common Share) into which this Convertible Note would otherwise be
convertible, the same amount of preferred stock and other securities, assets
(other than cash) or rights to subscribe for or purchase any security (plus cash
in lieu of any fractional Common Share) as Holder would have received had Holder
converted this Convertible Note in full immediately prior to any such dividend
or distribution.
5.4 CASH IN LIEU OF FRACTIONAL SHARES. No fractional, or scrip
representing fractional, Common Shares shall be issued upon the conversion of
this Convertible Note. Instead of any fractional Common Share that would
otherwise be issuable upon conversion of this Convertible Note, Company will pay
a cash adjustment in respect of such fractional interest in an amount equal to
$4.00 per Common Share then in effect.
5.5 PROCEDURE.
(a) Xxxxxxxxx shall at all times to reserve and keep
available, out of its authorized and unissued stock, solely for the purpose of
effecting the conversion of this Convertible Note, such number of Common Shares
free of preemptive rights as shall be sufficient to effect the conversion of
this Convertible Note in full.
(b) Company or Xxxxxxxxx will pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of Common Shares
on conversion of this Convertible Note. Company and Xxxxxxxxx shall not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of Common Shares (or other securities
or assets) in any name or names other than that in which this Convertible Note
was initially issued, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to Company or its designee the
amount of such tax or has represented, to the reasonable satisfaction of
Company, that such tax has been paid.
(c) Before taking any action that would cause an adjustment
increasing the Conversion Rate such that the effective consideration for the
Common Shares would be below the then par or stated value of the Common Stock,
Company and Xxxxxxxxx will use its best efforts to take such corporate action as
may, in the opinion of counsel to Company and Xxxxxxxxx, be necessary in order
that Xxxxxxxxx may validly and legally issue fully paid and non-assessable
Common Shares in the amount as so adjusted.
(d) In case Company or Xxxxxxxxx, as appropriate, proposes:
(1) to pay any dividend upon the Common Stock or make any
distribution or offer any subscription or other rights to holders of Common
Stock, or
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(2) to effect any capital reorganization or
reclassification of capital stock of Xxxxxxxxx, or
(3) to effect the consolidation, merger, sale of all or
substantially all of the assets, liquidation, dissolution or winding up of
Xxxxxxxxx, or
(4) to liquidate and dissolve,
(5) to prepay this Convertible Note, or
(6) to otherwise take any of the actions described in
SECTION 5.3,
then Company and Xxxxxxxxx, as appropriate, shall cause
notice of any such intended action to be given to each then Holder not less than
ten (10) nor more than sixty (60) days prior to the date on which the transfer
books of Xxxxxxxxx shall close or a record be taken for such dividend or
distribution, or the date when such capital reorganization, reclassification,
consolidation, merger, sale, liquidation, dissolution or winding up shall be
effected, or the date of such prepayment or the occurrence of any such other
event, as the case may be.
6. DEFINED TERMS. Capitalized terms used herein have meanings set forth
below:
6.1 "AFFILIATE" means, at any time and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of Company
or any subsidiary or any corporation of which Company and its subsidiaries
beneficially own or hold, in the aggregate, directly or indirectly, 10% or more
of any class of voting or equity interests. As used in this definition,
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of Company.
6.2 "COMMON STOCK" means the shares of common stock, $0.01 par value,
of Xxxxxxxxx.
6.3 "HIGHEST LAWFUL RATE" means with respect to any indebtedness owed
to any Holder under this Convertible Note and any document relating thereto, the
maximum nonusurious interest rate, if any, that at any time or from time to time
may be contracted for, taken, reserved, charged or received by such Holder with
respect to such indebtedness under law applicable to such Holder.
6.4 "HOLDERS" shall mean The Step Company for so long as it holds this
Convertible Note and its successors and assigns who acquire or are otherwise the
transferee of this Convertible Note, directly or indirectly, from The Step
Company (or any subsequent Holder), for so long as such successors and assigns
hold this Convertible Note.
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6.5 "PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
6.6 "REQUIRED HOLDERS" means, at any time, Holder or Holders of at
least 66 2/3% in principal amount of this Convertible Note at the time
outstanding (exclusive of any portion of this Convertible Note then owned by
Company or any of its Affiliates).
7. MISCELLANEOUS.
7.1 AMENDMENT AND WAIVER. This Convertible Note may be amended,
modified or terminated only by an agreement in writing signed by Company,
Xxxxxxxxx and the Required Holders. Any amendment or waiver consented to as
provided in this SECTION 7.1 applies equally to all Holders of Convertible Notes
and is binding upon them and upon each future Holder of any Convertible Note and
upon Company without regard to whether such Convertible Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between Company, Xxxxxxxxx, and Holder of any Convertible Note nor any
delay in exercising any rights hereunder or under any Convertible Note shall
operate as a waiver of any rights of any Holder of such Convertible Note.
7.2 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery, or first class certified mail, return
receipt requested, postage prepaid, addressed to the applicable party at the
address provided herein or such other address as may hereafter be designated in
writing by such party to the other party in accordance with the provisions of
this SECTION 7.2:
If to Company or Xxxxxxxxx, to:
Xxxxxxxxx Industries, L.P.
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Xxxxx & Holland, L.L.P.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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If to Holder to:
The Step Company
Attn: Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
With a copy to:
Xxxxxxxx Xxxxxxx L.L.P.
Attn: Xxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
If to any subsequent Holder, to the address of such Person set forth in
the records of Company.
All such notices and other communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when receipt
is acknowledged, if telecopied; when actually delivered, if delivered by a
courier; and upon receipt, if sent by mail.
7.3 LIMITATION ON INTEREST. Each provision in this Convertible Note is
expressly limited so that in no event whatsoever shall the amount paid, or
otherwise agreed to be paid, by Company for the use, forbearance or detention of
the money to be loaned under this Convertible Note or otherwise (including any
sums paid as required by any covenant or obligation contained herein or in any
of the documents relating hereto which is for the use, forbearance or detention
of such money), exceed that amount of money which would cause the effective rate
of interest thereon to exceed the Highest Lawful Rate, and all amounts owed
under this Convertible Note and any of the documents relating hereto shall be
held to be subject to reduction to the effect that such amounts so paid or
agreed to be paid which are for the use, forbearance or detention of money under
this Convertible Note or in any of the documents relating hereto shall in no
event exceed that amount of money which would cause the effective rate of
interest thereon to exceed the Highest Lawful Rate. Notwithstanding any
provision in this Convertible Note to the contrary, if the maturity of this
Convertible Note is accelerated for any reason, or in the event of prepayment of
all or any portion of this Convertible Note by Company or in any other event,
earned interest on this Convertible Note may never exceed the maximum amount
permitted by applicable law, and any unearned interest otherwise payable under
this Convertible Note that is in excess of the maximum amount permitted by
applicable law shall be canceled automatically as of the date of such
acceleration or prepayment or other such event and if theretofore paid, shall be
credited to the principal of this Convertible Note or, if the principal of this
Convertible Note has been paid in full, refunded to Company. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Highest Lawful Rate, Company and Holder shall, to the maximum extent
permitted by applicable law, amortize, prorate, allocate and spread, in equal
parts during the period of the actual term of Convertible Note, all interest at
any time contracted for, charged, received or reserved in connection with this
Convertible Note.
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7.4 SUCCESSORS AND ASSIGNS. Subject to the restrictions on transfer
described in SECTION 4, all covenants and other agreements contained in this
Convertible Note shall be binding upon the successors, assigns, heirs,
administrators and executors of Company and Xxxxxxxxx, and inure to the benefit
of Holder, its successors, endorsees, assigns, heirs, administrators and
executors (including without limitation, any subsequent Holder of a Convertible
Note) whether so expressed or not.
7.5 GOVERNING LAW. This Convertible Note shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Texas excluding choice-of-law principles, except to the
extent the Delaware Business Corporation Act governs the affairs of Xxxxxxxxx.
7.6 TREATMENT OF CONVERTIBLE NOTE. To the extent permitted by generally
accepted accounting principles and applicable laws, Company and Xxxxxxxxx will
treat, account and report this Convertible Note as debt and not as equity for
accounting purposes and with respect to any returns filed with federal, state or
local tax authorities.
7.7 NO SHAREHOLDER RIGHTS. Nothing contained in this Convertible Note
shall be construed as conferring upon Holder or any other person the right to
vote or to consent or to receive notice as a shareholder in respect of meetings
of shareholders for the election of directors of Xxxxxxxxx; and no dividends or
interest shall be payable or accrued in respect of this Convertible Note or the
interest represented hereby or the Common Shares obtainable hereunder until, and
only to the extent that, this Convertible Note shall have been converted.
7.8 SUBORDINATION. This Convertible Note is subject to certain rights
and restrictions concerning recoupment or set-off as more particularly set forth
in the Asset Purchase Agreement.
7.9 WAIVER OF NOTICE, DEMAND, ETC. Except as expressly provided in this
Convertible Note, Company waives demand, protest, notice of protest, notice of
default or dishonor, notice of intention to accelerate, notice of acceleration,
notice of payment and nonpayment, notice of any default, and notice of
nonpayment at maturity.
XXXXXXXXX INDUSTRIES L.P.
By: /s/ XXXXX XXXXXXXXX
----------------------------------------------
Xxxxx Xxxxxxxxx, CEO of Xxxxxxxxx Operating Corp.,
its general partner
Executed effective even date herewith for purposes of agreement and acceptance
of the provisions of Sections 5.2(b), 5.3, 5.5, 7.2, 7.4, 7.5, and 7.6.
XXXXXXXXX INDUSTRIES INC.
By: /s/ XXXXX XXXXXXXXX
------------------------
Xxxxx Xxxxxxxxx, CEO
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Executed effective even date herewith for purposes of agreement and acceptance
of the provisions of Sections 3, 7.1, 7.2, 7.5 and 7.8.
THE STEP COMPANY
By: /s/ XXXXXXX X. XXXXX
--------------------------
Xxxxxxx X. Xxxxx, President
