EXHIBIT 4.6
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE. NEITHER THIS NOTE NOR SUCH SHARES MAY BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT UPON (1) SUCH
REGISTRATION, OR (2) DELIVERY TO THE ISSUER OF THIS NOTE OR SUCH SHARES OF AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT
REQUIRED FOR SUCH TRANSFER, OR (3) THE SUBMISSION TO THE ISSUER OF THIS NOTE OR
SUCH SHARES OF OTHER EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE
EFFECT THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER WILL NOT BE IN
VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE, OR ANY RULES OR REGULATIONS PROMULGATED
THEREUNDER.
THE PAYMENT OF THE PRINCIPAL OF, AND INTEREST ON, AND ALL OTHER AMOUNTS OWING IN
RESPECT OF THE INDEBTEDNESS EVIDENCED BY, THIS NOTE, IS AND SHALL BE EXPRESSLY
SUBORDINATED, TO THE EXTENT AND IN THE MANNER SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT DATED EFFECTIVE JULY 1, 1997, OR ANY OTHER SUBORDINATION
AGREEMENT NOW OR HEREAFTER EXECUTED AMONG THE COMPANY AND ITS DIRECT AND
INDIRECT SUBSIDIARIES, THE PAYEE, THE CHASE MANHATTAN BANK, TEXAS COMMERCE BANK
NATIONAL ASSOCIATION (COLLECTIVELY, "LENDERS"), AND THE CHASE MANHATTAN BANK
("AGENT"), AS AGENT FOR LENDERS, OR ANY OTHER SUBORDINATION AGREEMENT HEREAFTER
EXECUTED BY PAYEE IN FAVOR OF A HOLDER OF SENIOR INDEBTEDNESS (IN ANY SUCH
EVENT, THE "SUBORDINATION AGREEMENT").
ISSUE DATE: JULY ___, 1997
INNOVATIVE VALVE TECHNOLOGIES, INC.
5.5% CONVERTIBLE SUBORDINATED NOTE
NO. 1 HOUSTON, TEXAS $ 1,956,000.00
INNOVATIVE VALVE TECHNOLOGIES, INC., a Delaware corporation with
offices at 00000 Xxxxxxx Xxxxx, Xxxxx X000, Xxxxxxx, Xxxxx 00000 (hereinafter
referred to as the "Company"), for value received, hereby promises to pay to the
order of X. XXXXX XXXX (the "Payee"), at 0000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 the sum of ONE MILLION NINE HUNDRED THOUSAND FIFTY-SIX AND
NO/100 DOLLARS ($1,956,000.00), together with interest on the unpaid principal
balance hereof from the date hereof until payment in full, in lawful money of
the United States of America which shall be legal tender for the payment of
debts from time to time, at a per annum rate of Five and One-Half Percent (5.5%)
prior to maturity. All past due principal, and, to the extent permitted by
applicable law, past due interest, on this
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Note shall bear interest from and after maturity until paid at a per annum rate
equal to the lesser of (i) nine percent (9.0%), or (ii) the maximum nonusurious
rate allowable under applicable law.
This 5.5% Convertible Subordinated Note (hereinafter referred to
as the "Note") is being issued by the Company pursuant to the terms of a Stock
Purchase Agreement dated effective of even date with the date hereof (the
"Agreement"), executed by and among the Company, the Payee, X.X. Xxxx, ("Xx.
Xxxx"), Xxxxxxxxxx-Benicia Inc. ("FBI") and Puget Investments, Inc. ("PII"), as
partial consideration for the shares of capital stock of FBI and PII acquired by
the Company from the Payee. This Note is one of two (2) 5.5% Convertible
Subordinated Notes in an aggregate principal amount of Three Million and No/100
Dollars ($3,000,000) (collectively, the "Notes") issued by the Company on the
date hereof to Payee and Xx. Xxxx. The Notes have terms and provisions identical
to one another, other than the principal amounts and the respective payees and
the locations of payment thereof.
1. INTEREST AND PRINCIPAL PAYMENTS. Interest only is payable
quarterly on the last day of each calendar quarter, beginning September 30,
1997, and continuing regularly and quarterly on the last day of every December,
March, June and September thereafter until June 30, 2004, on which date the
entire unpaid principal balance hereof, together with all accrued but unpaid
interest, shall mature and become due and payable. If the IPO (as hereinafter
defined) does not occur on or before July 1, 1998, then principal shall also
become payable in quarterly installments of Forty-Eight Thousand Nine Hundred
and No/100 Dollars ($48,900.00) each, payable on the last day of each calendar
quarter, commencing September 30, 1998, and continuing regularly through June
30, 2004, on which date the entire unpaid principal balance hereof, together
with all accrued but unpaid interest, shall mature and become due and payable.
All payments received hereon by Payee shall be applied first to accrued but
unpaid interest, and the balance, if any, shall be returned to Maker, except in
those instances in which principal payment is required or prepayment is
permitted hereunder, in which event such balance shall be applied to the
principal remaining unpaid hereon, up to the amount due or permitted to be
prepaid, as applicable. As used herein, the term 'IPO" shall mean an
underwritten public offering of shares of the Common Stock of the Company (or
the common stock of a successor to the Company) (in either such event, the "IPO
Shares"), for the account of the Company or such successor, which offering
results in net proceeds to the Company or such successor of not less than
Fifteen Million Dollars ($15,000,000).
2. LIMITATIONS ON PREPAYMENTS. This Note may not be prepaid, in
whole or in part, prior to July 1, 1998, without the written consent of the
Payee. At any time on or after July 1, 1998, the Company may, upon thirty (30)
days prior written notice (the period commencing on the date on which such
notice is sent and expiring at the close of business on the thirtieth day
thereafter being hereinafter referred to as the "Prepayment Notice Period")
prepay all, but not less than all, of the unpaid balance hereof, provided that
the holder hereof shall maintain its right to convert the outstanding principal
amount hereof into fully paid and non-assessable shares of common stock of the
Company, par value $.001 per share ("Common Stock"), under paragraph 6(a) of
this Note through
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the expiration of the Prepayment Notice Period. Notwithstanding the foregoing or
any provision hereof to the contrary, however, no prepayment of this Note shall
be attempted or permitted if such prepayment would be or would be deemed to be,
with notice or lapse of time or both, or if there has then occurred and is then
continuing, a default or an event of default with respect to any Senior
Indebtedness, as hereinafter defined, under the terms of the instrument under
which such Senior Indebtedness is outstanding; provided however, that the
foregoing shall not preclude nor be deemed to preclude a payment by Allwaste,
Inc., a Delaware corporation ("Allwaste") under its Guaranty Agreement in favor
of Payee of even date herewith (the "Guarantor").
3. SUBORDINATION AND STANDSTILL PROVISIONS. The Company covenants
and agrees, and the Payee, on behalf of Xxxxx and each subsequent holder of this
Note, by acceptance hereof likewise covenants and agrees, that notwithstanding
any provision of this Note to the contrary, the payment of all indebtedness
evidenced by this Note is, to the extent and in the manner hereinafter set
forth, subordinated in right of payment to all Senior Indebtedness (as
hereinafter defined) of the Company, unless by the terms of the instrument
creating or evidencing such Senior Indebtedness it is expressly and specifically
provided that such Senior Indebtedness is subordinate or on parity in right of
payment to the indebtedness evidenced by this Note. Except as permitted in the
immediately following sentence, or unless and until all Senior Indebtedness has
been paid in full and no commitment is in existence to advance or create the
Senior Indebtedness, no payment shall be made by the Company, directly or
indirectly, in respect of the principal of, interest on, premium on, or
otherwise owing in respect of, the indebtedness evidenced hereby, and the Payee
shall not ask, demand, sue for, take any action to enforce, take or receive,
directly or indirectly, in cash or other property, by sale, setoff or in any
other manner whatsoever, any amounts owing in respect of the indebtedness
evidenced hereby. Notwithstanding any provision of the preceding sentence to the
contrary, subject to the terms of the Subordination Agreement (i) so long as
there shall exist no default or event of default of which the Payee shall have
been given notice (or if notice of a default or event of default shall have been
given to the Payee and the Company shall have cured the event without the holder
of any Senior Indebtedness accelerating the maturity of such Senior
Indebtedness), the Company may make, and the Payee may receive and retain for
Xxxxx's account, regularly scheduled accrued interest payments, and regularly
scheduled principal payments (if any), as and when such interest or principal
payments are due on the indebtedness evidenced hereby, and (ii) this Note shall
always be and remain convertible into Common Stock in accordance with the
provisions of Section 6 hereof, notwithstanding any default or event of default
with respect to any Senior Indebtedness. For purposes of this Note, the term
"Senior Indebtedness" shall mean and include (i) indebtedness of the Company for
money heretofore, now or hereafter borrowed by the Company, or by any subsidiary
of the Company and guaranteed by the Company, from any bank or banks, savings
and loan association or associations, insurance company or companies, or other
institutional lender or lenders, including any modifications, renewals,
extensions, rearrangements, increases or refinancings of indebtedness of the
kind described in this clause (i), and (ii) such other indebtedness of the
Company as to which the Payee (or other holder hereof) consents in writing. The
term "Senior Indebtedness" expressly includes all indebtedness, obligations and
liabilities of (i) the Company, whether currently outstanding or hereafter
incurred, under any Credit Agreement or similar instrument executed or to be
executed among the Company and/or the direct and
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indirect subsidiaries of the Company, and the Agent, as agent for Lenders, or
any other document or instrument evidencing, securing, guaranteeing, or in any
way pertaining to the Loans, as such term is defined in any such Credit
Agreement, and all other indebtedness, obligations, and liabilities owing by the
Company to the Lenders howsoever evidenced, whether now or hereafter existing
for principal or interest (including without limitation interest accruing after
the commencement of any proceeding referred to in Section 3 of the Credit
Agreement), or for fees, expenses or otherwise, and (ii) the Company under any
Credit Agreement or similar instrument between the Company and/or any of its
direct or indirect subsidiaries and Texas Commerce Bank National Association, or
any other document or instrument evidencing, securing, guaranteeing or in any
way pertaining to the Loans, as such term is defined in any such Credit
Agreement, and expressly including all Obligations, as such term is defined in
such Credit Agreement. Each holder of this Note agrees, solely for the benefit
of holders of Senior Indebtedness, that (i) no consent of any holder of this
Note shall be required for any modification, renewal, extension, rearrangement,
increase or refinancing of any Senior Indebtedness, or waiver of any guaranty
therefor, or release of any collateral securing payment thereof, or any other
alteration of the relationship between the Company and any holder of Senior
Indebtedness, and (ii) at the request of the Company, the holder hereof will
promptly execute a subordination agreement substantially in the form attached to
the Agreement as Exhibit A. The subordination provisions of this Section 3 shall
not limit or impair the obligations of Allwaste under the Guaranty, upon the
expiration of the standstill period described in Section 3(d) hereof.
(a) SUBORDINATION UPON DISTRIBUTION OF ASSETS. Upon any
distribution of the assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency or receivership proceedings, or upon
an assignment for the benefit of creditors, or any other marshaling of
the assets and liabilities of the Company or otherwise), the holders of
all Senior Indebtedness shall first be entitled to receive payment in
full, in accordance with the terms of such Senior Indebtedness, of the
principal thereof (and premium, if any) and the interest accrued but
unpaid thereon, if any, before any holder of this Note is entitled to
receive any payment upon the principal or accrued but unpaid interest
evidenced by this Note; and, upon any such dissolution, winding up,
liquidation or reorganization, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or
securities (other than shares of stock of the Company as reorganized or
adjusted or readjusted, the payment or distribution of which is
subordinate to the payment of all Senior Indebtedness which may at the
time be outstanding and which is provided for by a plan of
reorganization or readjustment which does not alter the rights of the
holders of Senior Indebtedness at the time outstanding), to which the
holder of this Note would be entitled except for the provisions of this
paragraph (a), shall be made by the liquidating trustee or agent or
other persons making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
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under which such instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of (and premium, if any)
and accrued but unpaid interest on the Senior Indebtedness held or
represented by each, to the extent necessary to pay in full all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness. In
the event that, notwithstanding the foregoing, upon any such
dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets of the Company of any kind or character, whether
in cash, property or securities (other than shares of stock of the
Company as reorganized or adjusted or readjusted, the payment or
distribution of which is subordinate to the payment of all Senior
Indebtedness which may at the time be outstanding and which is provided
for by a plan of reorganization or readjustment which does not alter the
rights of the holders of Senior Indebtedness at the time outstanding),
shall be received by a holder of this Note before all Senior
Indebtedness is paid in full, such payment or distribution shall be paid
over to the holders of such Senior Indebtedness or their representative
or representatives or to the trustee under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have been
issued, ratably as aforesaid, for application to the payment of all
Senior Indebtedness remaining unpaid until all of such Senior
Indebtedness shall have been paid in full, after giving effect to any
concurrent payment or distribution to the holders of any such Senior
Indebtedness.
(b) MATURITY OF OTHER INDEBTEDNESS. Upon the maturity of any
Senior Indebtedness by lapse of time, acceleration or otherwise, all
outstanding principal of and accrued but unpaid interest on all such
matured Senior Indebtedness shall first be paid in full before any
payment on account of principal of or interest on this Note is made.
(c) DEFAULT ON SENIOR INDEBTEDNESS. Upon a default in the payment
of principal or interest with respect to any Senior Indebtedness, or
upon the happening of any default or event of default with respect to
any Senior Indebtedness, as defined in the instrument under which the
same is outstanding, permitting the holder or holders thereof to
accelerate the maturity thereof, and during the continuance of any such
default or event of default, no amount shall be paid by the Company, and
the holder of this Note shall not be entitled to receive any amount, in
respect of the principal of or interest on this Note, unless and until
such default shall have been remedied or waived.
(d) STANDSTILL. Notwithstanding the provisions of Section 5
hereof, for so long as any Senior Indebtedness, principal or interest,
remains outstanding and unpaid, upon the occurrence of any Event of
Default described under Section 4(a), 4(b) or 4(d) hereof, the holder of
this Note shall have no right to declare the
5
indebtedness evidenced by this Note due and payable, or to exercise any
remedies to enforce the collection of obligations evidenced hereby,
without obtaining the prior written consent of the holders of at least
50% of the principal indebtedness outstanding under the Notes. Once such
written consent has been obtained, the holder of this Note may declare
that the indebtedness evidenced hereby shall become due and payable, and
this Note shall then become due and payable, upon the expiration of
ninety (90) days after the date on which written notice of such
declaration is sent by the holder hereof to the Company. Upon the
occurrence of an Event of Default described under Section 4(c) hereof,
the holder of this Note may exercise such holder's remedies hereunder,
including the right to accelerate payment hereof pursuant to Section 5,
but the holder of this Note shall remain subordinate in right of payment
in all respects to the holders of Senior Indebtedness as set forth in
this Section 3.
(e) SUBROGATION. Subject to the payment in full of all Senior
Indebtedness, the holder of this Note shall be subrogated to the rights
of the holders of all Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior
Indebtedness until this Note shall be paid in full. None of the payments
or distributions to holders of the Senior Indebtedness to which the
holder of this Note would be entitled but for the provisions of the
foregoing paragraphs (a) through (d) of this Section 3 shall, as between
the Company, its creditors, and the holder of this Note, be deemed to be
a payment by the Company to or on account of Senior Indebtedness of the
Company; it being understood that the subordination provisions of this
Note are and are intended solely for the purpose of defining the
relative rights of the holder of this Note, on the one hand, and the
holders of the Senior Indebtedness on the other hand. Nothing contained
in this Note is intended to or shall impair, as between the Company, its
creditors, and the holders of this Note, the obligation of the Company
to pay to the holder of this Note the principal of and interest on this
Note as and when the same shall become due and payable in accordance
with its terms, or to affect the relative rights of the holder of this
Note and the creditors of the Company other than holders of Senior
Indebtedness.
(f) RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS. Each holder of
this Note acknowledges and agrees that each holder of Senior
Indebtedness, whether outstanding at the date of this Note or incurred
hereafter, shall have extended credit to the Company, or shall have
purchased or accepted or will purchase or accept such Senior
Indebtedness, in reliance upon the subordination and standstill
provisions contained in this Note.
(g) EFFECT. If the Company fails because of this Section 3 to
make a payment, principal or interest, otherwise due under this Note,
such failure shall nonetheless become an Event of Default as set forth
in Section 4.
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(h) GUARANTY. No provision of this Section 3 shall preclude, nor
be deemed to preclude, any payment by Allwaste under the Guaranty in
accordance with the terms of the Guaranty.
4. EVENTS OF DEFAULT. The occurrence and continuation of any one
of the following events or conditions shall constitute an "Event of Default":
(a) The Company fails to make any payment, principal or interest,
within ten (10) business days after the date such payment is due under
any of the Notes;
(b) An event of default occurs under any arrangement with any
holder of Senior Indebtedness and the Senior Indebtedness is accelerated
and not reinstated;
(c) The Company makes an assignment for the benefit of creditors
or becomes insolvent or unable to pay its debts generally as they become
due, or applies to any tribunal for the appointment of a trustee or
receiver for a substantial part of the assets of the Company, or
commences any proceedings relating to the Company under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debts,
dissolution or other liquidation law of any jurisdiction; or any such
application is filed, or any such proceedings are commenced against the
Company and the Company indicates its consent to such proceedings, or an
order is entered appointing such trustee or receiver, or approving the
petition in any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or other liquidation proceedings, and
such order remains in effect for one hundred twenty (120) days; or
(d) The Company fails to perform any of its obligations under the
Agreement or this Note (other than the payment obligation described in
Section 4(a) hereof) within thirty (30) days after receipt from Payee of
written notice of such failure to perform.
5. REMEDIES. Subject to the provisions of Section 3(d) hereof,
upon the occurrence of an Event of Default other than as described in Section
4(c) hereof, the Payee or other holder of this Note may declare the entire
unpaid principal of this Note, and all accrued but unpaid interest thereon, at
once due and payable, and upon the occurrence of an Event of Default under
Section 4(c) hereof, the entire unpaid principal of this Note and all accrued
but unpaid interest thereon shall automatically be declared at once due and
payable, and upon any such declaration the principal of this Note and such
accrued but unpaid interest shall become and be immediately due and payable, and
the Payee or any other holder of this Note may, subject to the provisions of
Section 3(d) hereof, thereupon proceed to protect and enforce its rights, either
by suit in equity or by action at law or by other appropriate proceedings,
whether for specific
7
performance (to the extent permitted by law) of any covenant or agreement
contained herein or in aid of the exercise of any power granted herein, or
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the Payee or such other holder. The foregoing shall not
affect the relative rights and obligations as between any holder of Senior
Indebtedness and the Payee or other holder hereof; as between such parties,
Section 3 shall control the exercise of remedies.
6. CONVERSION RIGHTS.
(a) AT THE OPTION OF HOLDER. From the date of the closing of the
IPO (as defined in Section 1 hereof) through the earlier of the maturity
date or the expiration of the Prepayment Notice Period (as defined in
Section 2 hereof), the holder of this Note shall have the right to
convert all, but not less than all, of the outstanding principal amount
of this Note into shares of Common Stock at a price equal to 130% of the
IPO Price, as hereinafter defined (the "Initial Conversion Price") (the
Initial Conversion Price, as same may hereinafter be adjusted from time
to time pursuant to the provisions hereof being referred to herein as
the "Conversion Price"), and otherwise on and subject to the terms and
conditions set forth in paragraphs 6(c) through 6(i). As used herein,
the term "IPO Price" shall mean the initial issuance price per share of
the Common Stock issued in the IPO, without giving effect to any
underwriting discounts or commissions. The holder of this Note may
exercise such holder's right to convert all, but not less than all, of
the outstanding principal amount of this Note into shares of Common
Stock by (i) giving written notice to the Company that such holder
elects to convert the outstanding principal amount into Common Stock,
(ii) stating in such written notice the denominations in which such
holder wishes the certificate or certificates for Common Stock to be
issued, and (iii) surrendering this Note to the Company.
(b) AT THE OPTION OF THE COMPANY. If the average closing price
per share of Common Stock (as reported by the principal securities
exchange or trading market, as the case may be, on which the Common
Stock is then traded) during a period of 20 consecutive trading days
occurring after the expiration of eighteen (18) months from the date of
closing of the IPO (such 20-day average being referred to herein as the
"Average Price") equals or exceeds one hundred fifty percent (150%) of
the IPO Price (a "Special Conversion Event"), the Company may, at its
option exercisable in its sole discretion at any time following such
Special Conversion Event, convert all (but not less than all) of the
outstanding principal balance of this Note into fully paid and
non-assessable shares of Common Stock at the Conversion Price then in
effect. If the Company elects pursuant to this Section 6(b) to convert
this Note into Common Stock, the Company shall send notice (the "Company
Conversion Notice") to the holder hereof at the address specified above
(or such other address as may have been designated in writing by the
holder). Such conversion shall be deemed to have been effected
immediately upon the mailing of the Company Conversion Notice,
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whereupon the person or persons entitled to receive the Common Stock
deliverable upon such conversion shall be treated for all purposes as
the record holder or holders of such Common Stock, and this Note shall
be deemed to represent only the right to receive certificates
representing the number of shares of Common Stock, plus cash in lieu of
fractional shares in accordance with this Section 6, into which this
Note has been so converted. The Company Conversion Notice shall specify
(i) the date the conversion was effected, (ii) the Conversion Price,
(iii) the number or amount of any securities and property as hereinafter
provided into which the Note has been converted, (iv) the place or
places that this Note is to be surrendered upon conversion, and (v) that
on or after the effective date of the conversion, interest will cease to
accrue on this Note.
(c) ACCRUED INTEREST; FRACTIONAL SHARES; CONVERSION DATE. In the
event of any conversion, the Company will, as soon as practicable after
surrender of this Note and compliance by the holder hereof with any
other conditions herein contained, cause to be issued and delivered to
the surrendering holder certificates for the number of full shares of
Common Stock to which such holder shall be entitled as aforesaid,
together with any unpaid interest on the principal amount converted
accrued through the Conversion Date, as hereinafter defined. The Company
shall not issue fractional shares of Common Stock upon conversion or
script in lieu thereof, but the number of shares of Common Stock to be
received by any holder upon conversion shall be rounded down to the next
whole number and the holder shall be entitled to payment for the
fractional share in cash at the then applicable Conversion Price. Such
conversion shall be deemed to have been made as of the close of business
on the date the notice of conversion is sent by or delivered to the
Company, as applicable, in accordance with the notice provisions
hereinafter set forth (the close of business on such date being herein
sometimes called the "Conversion Date"), so that the persons entitled to
receive the shares of Common Stock upon conversion of the principal
amount hereof shall be treated for all purposes as having been the
record holder or holders of such shares of Common Stock at such time.
(d) SUBDIVISIONS, COMBINATIONS, DIVIDENDS OR DISTRIBUTIONS OF
STOCK. In the event that, while this Note shall remain outstanding, the
Company shall at any time subdivide or combine the outstanding shares of
Common Stock, or issue additional shares of Common Stock as a dividend
or other distribution on the Common Stock, the Conversion Price shall be
proportionately adjusted so that, with respect to each such subdivision
of shares or stock dividend or stock distribution, the number of shares
of Common Stock deliverable upon conversion of this Note shall be
increased in proportion to the increase in the number of then
outstanding shares of Common Stock resulting from such subdivision of
shares or stock dividend or stock distribution, and, with respect to
each such combination of shares, the number of shares of Common Stock
deliverable upon conversion of this
9
Note shall be decreased in proportion to the decrease in the number of
then outstanding shares of Common Stock resulting from such combination
of shares. Any such adjustment in the Conversion Price shall become
effective, in the case of any subdivision or combination of shares, at
the close of business on the effective date thereof, and, in the case of
any such stock dividend or stock distribution, at the close of business
on the record date fixed for the determination of stockholders entitled
thereto, or on the first business day during which the stock transfer
books of the Company shall be closed for the purpose of such
determination, as the case may be. No adjustment shall be made by reason
of the issuance of shares of Common Stock or of any securities
convertible into shares of Common Stock in exchange for cash, property
or services, or in any event other than those specifically set forth in
this Section 6.
(e) OTHER NONCASH DIVIDENDS. In the event that, while this Note
shall be outstanding, the Company shall distribute to the holders of its
Common Stock as a class any assets (other than stock dividends or
distributions) or evidences of indebtedness, the Company shall,
concurrently therewith reduce the Conversion Price by the amount of the
value per share of such distribution, but in no event shall the
Conversion Price be or become less than the par value per share of
Common Stock. The provisions of this paragraph (e) shall similarly apply
to successive distributions to holders of Common Stock.
(f) LIQUIDATION, DISSOLUTION, CONSOLIDATION, MERGER, SALE,
RECLASSIFICATION. In the event that, while this Note shall remain
outstanding, there shall be any liquidation or dissolution of the
Company, consolidation or merger of the Company with another
corporation, sale to another corporation of all or substantially all of
the assets of the Company, or reclassification of the Common Stock of
the Company into securities including other than Common Stock, then the
holder of this Note shall thereafter have the right to convert the
outstanding principal amount of this Note (or such other stock or
securities) into the kind and amount of shares of stock and other
securities and property receivable upon such liquidation, dissolution,
consolidation, merger, sale of assets or reclassification by a holder of
the number of shares of Common Stock into which the outstanding
principal amount of this Note could have been converted immediately
prior to such liquidation, dissolution, consolidation, merger, sale or
reclassification. The instruments effecting such liquidation,
dissolution, consolidation, merger, sale or reclassification, and, where
appropriate, the certificate of incorporation of the surviving or
resulting or purchasing corporation shall provide for such conversion
rights, and the provisions of this paragraph (f) shall similarly apply
to successive liquidations, dissolutions, consolidations, mergers, sales
or reclassifications. In case securities or property other than Common
Stock shall be issuable or deliverable upon conversion as aforesaid,
then all references to Common Stock in
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this Section 6 shall be deemed to apply, so far as appropriate and as
nearly as may be, to such other securities or property.
(g) RESERVATION OF ADEQUATE SHARES. The Company shall at all
times reserve and keep available out of its authorized Common Stock, for
issuance upon conversion of this Note as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of
all of the Notes. All shares of Common Stock which shall be so issuable
shall, when so issued upon any such conversion, be duly and validly
issued and fully paid and nonassessable.
(h) DELIVERY OF CERTIFICATES. If the outstanding principal amount
of this Note shall be converted within any period during which the
transfer books for the Company's Common Stock are closed for any
purpose, the Company shall not be required to make delivery of
certificates for Common Stock until the date of the reopening of such
transfer books.
(i) NO SHAREHOLDER RIGHTS. This Note shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the
Company, or to any other rights whatsoever except the rights herein
expressed and such as are set forth, and no dividends shall be payable
or accrue in respect of this Note or the interest represented hereby or
the Common Stock purchasable hereunder until or unless, and except to
the extent that, the outstanding principal amount hereof shall be
converted.
7. IMMUNITY. This Note and the indebtedness and obligations
evidenced hereby are solely corporate indebtedness and obligations, and no
personal liability whatsoever shall attach to or be incurred by any past,
present or future officer, director, shareholder, agent, attorney or employee of
the Company, under or by reason of any of the obligations, covenants or
agreements contained in or implied by this Note or the Agreement. No provision
of this Section 7 shall limit, or be construed to limit, Allwaste's obligation
under the Guaranty.
8. NOTICES. All notices, requests, consents, and other
communications required or permitted under this Note shall be in writing and
shall be deemed, unless otherwise provided, to have been delivered on the date
mailed, postage prepaid, by certified mail, return receipt requested, or on the
date personally delivered:
(i) If to the Payee, to the address of the Payee set forth
above, with a copy of such notice to Xx. Xxxxxx X. Xxxxxxxxx, Xxxxxx
Xxxxxxxxx Xxxxxx & Xxxxxxxx, PLLC 0000 Xxx Xxxxx Xxxxxx, 000 Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000;
(ii) If to the Company, to the address of the Company set forth
above, Attention: President, with a copy of such notice to Xx. Xxxxx X.
Xxxxx, Xx.,
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Xxxxx, Xxxxx & Xxxxxx Incorporated, Nine Greenway Plaza, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000;
(iii) If to any holder other than the Payee, to such address as
may have been designated by notice given the Company by such holder,
with a copy of such notice to Xx. Xxxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxxxxx
Sperry & Xxxxxxxx PLLC, 0000 Xxx Xxxxx Xxxxxx, 000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000;
(iv) If to any holder of Senior Indebtedness, to such address as
may have been designated by notice given the Company by such holder,
which the Company will provide to the holder of this Note upon request.
The Company, the Payee or any other holder hereof may designate a different
address by notice given in accordance with the foregoing.
9. USURY. It is expressly provided and stipulated that
notwithstanding any provision of this Note or any other instrument evidencing or
securing the indebtedness evidenced hereby, in no event shall the aggregate of
all interest paid by the Company to the Payee hereunder ever exceed the Maximum
Nonusurious Rate of interest which may lawfully be charged the Company under the
laws of the State of Texas or the United States Federal Government, as
applicable, on the principal balance of this Note remaining unpaid. If under any
circumstances the aggregate amounts paid on the indebtedness evidenced by this
Note prior to and incident to the final payment hereof include amounts which by
law are deemed interest and which would exceed the Maximum Nonusurious Rate of
interest which could lawfully have been charged or collected on this Note, the
Company stipulates that (a) any non-principal payment shall be characterized as
an expense, fee, or premium rather than as interest, and any excess shall be
credited hereon by the holder hereof (or, if this Note shall have been paid in
full, refunded to the Company); (b) determination of the rate of interest for
determining whether the indebtedness evidenced hereby is usurious shall be made
by amortizing, prorating, allocating, and spreading, in equal parts during the
full stated term of such indebtedness, all interest at any time contracted for,
charged, or received from the Company in connection with such indebtedness, and
any excess shall be canceled, credited or refunded as set forth in (a) herein.
In connection with Article 5069-1.04, Xxxxxx's Annotated Civil
Statutes, as amended, the Company hereby agrees that the "Maximum Nonusurious
Rate of interest" which may be charged as herein contemplated shall be the
indicated rate ceiling from time to time in effect as defined by said article,
as amended, provided that Xxxxx may also rely on any alternative Maximum
Nonusurious Rate of interest provided by other applicable laws if such other
rates are higher than that allowed by said Article, as amended.
THIS NOTE, THE AGREEMENT, THE SUBORDINATION AGREEMENT AND ALL
DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR
THEREWITH, REPRESENT THE FINAL AGREEMENT
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BETWEEN THE COMPANY AND PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE COMPANY AND THE PAYEE.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE COMPANY AND PAYEE.
THIS NOTE IS SUBJECT TO FINAL ACCEPTANCE IN, AND ALL TERMS,
OBLIGATIONS, AND PROVISIONS OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF TEXAS.
IN WITNESS WHEREOF, the Company has authorized this Note to be
executed in its corporate name by its duly authorized officer as of the date
first above written.
INNOVATIVE VALVE TECHNOLOGIES, INC.
By:________________________________
XXXXXXX X. XXXXXXXX
Senior Vice President
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