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EXHIBIT 4.7
____________, 1993 $__________
CRAGAR INDUSTRIES, INC.
1993 TWO-YEAR 6% CONVERTIBLE SUBORDINATED SECURED NOTE
CRAGAR INDUSTRIES, INC., a Delaware corporation, hereinafter called the
Company, for value received, hereby promises to pay to the order of
_________________ or registered assigns, at the then principal office of the
Company in the State of Arizona, the principal sum of _________ Dollars ($____)
lawful money of the United States on ____, 1995 and to pay interest on the
unpaid balance of such principal sum, at the rate of 6% per annum from _______,
1993, at such office, in like manner, on September 30 of each year, commencing,
1994 until payment of such principal sum has been made.
This Note is one of a duly authorized issue of One Million Five Hundred
Thousand Dollars ($1,500,000) aggregate principal amount of Notes of the
Company, hereinafter called the Notes.
1. SECURITY AND SUBORDINATION. In order to secure the principal of, and
interest on this Note, the Company and the undersigned have executed a Security
Agreement pursuant to which the Company has granted to all of the holders of the
Notes a security interest in and to the equipment, inventory, accounts
receivable and all other personal property of the Company, tangible and
intangible, wherever located and proceeds thereof (the "Collateral"), subject
and subordinate to the existing security interests of Foothill Capital
Corporation ("Foothill"), or, with the consent of the holder hereof, which
consent shall not unreasonable be withheld, to the security interests of any
other institutional creditor of the Company now or hereafter having a security
interest in any of the foregoing (hereinafter collectively referred to as the
"Senior Creditors").
2. REDEMPTION. The Note may be redeemed at the option of the Company,
the notice referred to below, for the principal amount of the Note, together
with interest accrued on the principal amount redeemed to the date fixed for
redemption, provided however, that no Note shall be redeemed hereunder in full
if less than all of the Notes are to be redeemed for their full principal
amounts and further provided that no redemption of any portion of the principal
amount of this Note shall be made if, immediately after such redemption and by
reason of such redemption, the credit then available to the Company from the
Senior Creditors would be less than $500,000.
3. NOTICE OF REDEMPTION, ETC. Notice of redemption shall be mailed to
the holders of the Note not less than 14 days prior to the date fixed for
redemption, to their last addresses as they shall appear upon the records of the
Company.
4. CONVERSION. Each holder of the Notes shall have the right, at its
option, to convert the Note into shares of Common Stock of the Company on the
following terms and conditions:
a. Each Note shall be convertible at any time (or, if
the Note is called for redemption, at any time up to
and including, but not after, the close of business
on the fifth full business day prior to the date
fixed for such redemption, unless default shall be
made by the Company in providing moneys for the
payment of the redemption price), into fully paid and
non- assessable shares (calculated to the nearest
1/100th of a share, fractions of less than 1/100th of
a share being disregarded) of Common Stock of the
Company as constituted at the time of such
conversion, at the conversion price in effect at the
time of conversion determined as hereinafter
provided.
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Every reference in this paragraph 4 to the Common
Stock of the Company (unless a different intention is
expressed) shall be to the shares of the Common Stock
of the Company of no par value as such stock exists
immediately after the issuance of the Notes provided
for hereunder, or to stock into which said Common
Stock may be changed from time to time thereafter.
The conversion of this Note for shares of the Common
Stock shall be for that number of shares of Common
Stock equal to one percent (1%) of the total issued
and outstanding shares of Common Stock after
conversion of all the Notes, for each $100,000 of
principal amount of this Note.
b. If at any time, or from time to time, the Company
shall (i) declare and pay, on or in respect of,
shares of Common Stock any dividend payable in shares
of Common Stock or (ii) subdivide the outstanding
shares of Common Stock into a greater number of
shares, of the conversion price in effect at the time
of the taking of a record for such dividend or the
taking of such other action shall be proportionately
decreased as of such time, and conversely (iii) if at
any time, or from time to time, the Company shall
contract the number of outstanding shares of Common
Stock by combining such shares into a smaller number
of shares, the conversion price in effect at the time
of the taking of any such action shall be
proportionately increased as of such time.
c. If the Company shall consolidate with or merge into
any corporation or reclassify its outstanding shares
of Common Stock (other than by way of subdivision or
contraction of such shares), each of the Notes shall
thereafter be convertible into the number of shares
of stock or other securities or property of the
Company, or of the entity resulting from such
consolidation or merger, to which a holder of the
number of shares of Common Stock deliverable upon
conversion of such Note would have been entitled upon
such consolidation or merger or reclassification, had
the holder of such Note exercised his right of
conversion and had such shares been issued and
outstanding and had such holder been the holder of
record of such Common Stock at the time of such
consolidation, merger or reclassification; and the
Company shall make lawful provision therefor as a
part of such consolidation, merger or
reclassification.
d. Anything in this paragraph 4 to the contrary
notwithstanding, the Company shall not be required to
give effect to any adjustment in the conversion price
unless and until the net effect of one or more
adjustments, determined as above provided, shall have
resulted in a change of the conversion price by at
least $.10, but when the cumulative net effect of
more than one adjustment so determined shall be to
change the conversion price by at least $.10 such
change in the conversion price shall thereupon be
given effect.
e. The Company shall not be required to issue any
fraction of a share of Common Stock upon any
conversion, but shall pay in cash therefor at the
conversion price then in effect multiplied by such
fraction.
f. On presentation and surrender to the Company at any
office or agency maintained for the transfer of the
Notes so to be converted, duly endorsed
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for transfer, the holder of such Notes shall be
entitled, subject to the limitations herein shall be
entitled, subject to the limitations herein
contained, to receive in exchange therefor a
certificate or certificates for fully paid and
non-assessable shares, and cash for fractional shares
of Common Stock, on the basis aforesaid. The Note
shall be deemed to have been converted and the person
converting the same to have become the holder of
record of Common Stock, for the purpose of receiving
dividends and for all other purposes whatever as of
the date when the Notes are surrendered to the
Company as aforesaid. The Company shall not be
required to make any such conversion, and no
surrender of any Note shall be effective for such
purpose, while the books for the transfer of the
Common Stock are closed for any purpose, but the
surrender of any such Note for conversion during any
period while such books are closed shall become
effective for all purposes of conversion immediately
upon the reopening of such books, as if the
conversion had been made on the date such Notes were
surrendered.
g. The Company shall, so long as any of the principal
amount of the Notes is outstanding, reserve and keep
available out of its authorized and unissued Common
Stock, solely for the purpose of effecting the
conversion of the Note, such number of shares of
Common Stock as shall from time to time be sufficient
to effect the conversion of all Notes then
outstanding. The Company shall from time to time
increase its authorized Common Stock and take such
other action as may be necessary to permit the
issuance from time to time of the shares of Common
Stock, as fully paid and nonassessable shares, upon
the conversion of the Notes as herein provided.
h. The Company shall pay any and all taxes which may be
imposed upon it with respect to the issuance and
delivery of Common Stock upon the conversion of the
Note as herein provided. The Company shall not be
required in any event to pay any transfer or other
taxes by reason of the issuance of such Common Stock
in names other than those in which the Notes
surrendered for conversion may stand, and no such
conversion or issuance of Common Stock shall be made
unless and until the person requesting such issuance
has paid to the Company the amount of any such tax,
or has established to the satisfaction of the Company
and its transfer agent, if any, that such tax has
been paid. Upon any conversion of the Note as herein
provided, no adjustment or allowance shall be made
for interest on the Notes so converted, and all
rights to interest if any, shall cease and be deemed
satisfied, but nothing in this sentence shall be
deemed to relieve the Company from its obligation to
pay any interest up to the date of such conversion
which shall be payable, prorated on a daily basis, on
the date after such conversion when interest on the
Note would be payable in accordance with the terms
hereof.
5. TRANSFER. This Note may be transferred only at the principal office
of the Company upon surrender of this Note for cancellation, and upon the
payment of any stamp tax or other governmental charge connected therewith, and
upon any such transfer a new Note or Notes will be issued to the transferee in
exchange therefor. The Company may consider and treat the registered owner of
this Note as the absolute owner thereof, whether or not this Note shall be
overdue, for all purposes whatsoever, and the Company shall not be affected by
any notice to the contrary.
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6. DEFAULT. Upon the occurrence of any of the following events of
default:
a. Failure to pay any installment of principal of or any
interest on this Note within 30 days after the same
becomes due; or
b. The Company shall commence any voluntary proceeding
under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, receivership,
dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or
the Company shall be adjudicated insolvent or
bankrupt by a decree of a court of competent
jurisdiction; or the Company shall petition or apply
for, acquiesce in, or consent to, the appointment of
any receiver or trustee of the Company or for all or
a substantial part of the property of the Company; or
the Company shall make an assignment for the benefit
of creditors; or the Company shall admit in writing
its inability to pay its debts as they mature; or
c. There shall be commenced against the Company any
proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, receivership, dissolution, or
liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, and any such
proceeding shall remain undismissed for a period of
60 days or the Company by any act indicates its
consent to, approval of, or acquiescence in, any such
proceeding; or a receiver or trustee shall be
appointed for the Company or for all or a substantial
part of the property of the Company and any such
receivership or trusteeship shall remain undischarged
for a period of 60 days; or a warrant of attachment,
execution, or similar process shall be issued against
any substantial part of the property of the Company
and the same shall not be dismissed or bonded within
60 days after xxxx;
then, and in any such event, the holder of this Note may be written notice to
the Company declare the entire unpaid principal amount of all the Notes together
with accrued interest thereon due and payable, and the same shall, unless such
default shall be cured within ten days after such notice, forthwith become due
and payable upon the expiration of such ten-day period, without presentment,
demand, protest, or other notice of any kind, all of which are expressly waived.
7. DIVIDENDS. Until the preincipal sum, together with all accured
interest, of this Note has been paid in full, or until this Note has been
converted into shares of the Common Stock of the Company pursuant to the terms
contained in this Note, the Company will not make any distribution or declare or
pay any dividends (in cash or in stock) on any of the Company's capital stock,
of any class, whether now or hereafter outstanding.
8. GOVERNING LAW; BINDING EFFECT. This Note, its construction,
interpretation and enforcement, shall be determined under, governed by and
construed in accordance with the laws of the State of Arizona, and shall be
binding upon and inure to the benefit of, the successors, assigns and personal
representatives, as the case may be, of the Company and the holder.
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IN WITNESS WHEREOF, Cragar Industries, Inc. has caused this Note to be
signed and its corporate seal to be affixed by its duly authorized officers.
CRAGAR INDUSTRIES, INC.
By:
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Its President
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