1
EXHIBIT 10.7(a)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES
LAWS, BUT HAS BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF
INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER
ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS
OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION OF THIS NOTE.
COMPRESSENT CORPORATION
September 12, 1997 New York, New York
No.: N-Grant~ $Amount~
10% CONVERTIBLE SUBORDINATED PROMISSORY NOTE
Compressent Corporation, a Florida corporation (the "Company"),
for value received, hereby promises to pay to Name~ or registered assigns (the
"Holder"), on September 12, 2002 (the "Maturity Date"), at the principal offices
of the Company, the principal sum of Dollars~ ($Amount~ ) Dollars in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest on
the outstanding principal sum hereof at the rate of ten percent (10%) per annum
(the "Note"). Accrued interest shall be payable semi-annually on June 15 and
December 15 of each year, commencing December 15, 1997 in like coin or currency
to the Holder hereof at the registered address of the Holder, provided that any
payment otherwise due on a Saturday, Sunday or legal Bank holiday may be paid on
the following business day. In the event that for any reason whatsoever any
interest or other consideration payable with respect to this Note shall be
deemed to be usurious by a court of competent jurisdiction under the laws of the
State of New York or the laws of any other state governing the repayment hereof,
then so much of such interest or other consideration as shall be deemed to be
usurious shall be held by the holder as security for the repayment of the
principal amount hereof and shall otherwise be waived. This Note is one of a
series of Notes in the aggregate principal amount of up to $3,000,000
(collectively, the "Notes"), sold through Xxxxxx & Associates, Inc. (the
"Placement Agent").
1. TRANSFERS OF NOTE TO COMPLY WITH THE 1933 ACT
2
The Holder agrees that this Note may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except as follows: (1) to a
person whom the Note may legally be transferred without registration and without
delivery of a current prospectus under the 1933 Act with respect thereto and
then only against receipt of an agreement of such person to comply with the
provisions of this Section 1 with respect to any resale or other disposition of
the Note; or (2) in connection with an effective registration statement to any
person upon delivery of a prospectus then meeting the requirements of the 1933
Act relating to such securities and the offering thereof for such sale or
disposition, and thereafter to all successive assignees.
2. CONVERSION This Note, together with accrued but unpaid
interest, is convertible into shares of the Company's common stock, $.001 par
value per share (the "Common Stock"), at the option of the Holder at any time
after the last original issue date of the Notes and prior to the close of
business on the Maturity Date. The Holder shall deliver this Note, together with
the completed Conversion Notice attached hereto, to the Company at its principal
address. The number of shares of Common Stock issuable to the Holder upon
conversion shall be equal to the principal amount of this Note (together with
accrued, but unpaid interest), divided by the lower of (i) $10.00 or (ii) the
closing high bid price of the Common Stock on the day before the conversion date
(the "Conversion Rate"); provided, that in no event shall the Conversion Rate be
less than $7.00 (as such amounts may be adjusted from time to time to take into
account stock splits, stock dividends, consolidations, recapitalization or
similar transactions from time to time). Within three days after receipt by the
Company of the Holder's Conversion Notice, the Company shall deliver a stock
certificate representing the Common Stock to the Holder at the Holder's
registered address.
3. REDEMPTION
A. This Note is redeemable at the option of the Company, in whole
or in part, at any time commencing on or after August 30, 1999, for the face
value hereof plus accrued interest to the redemption date, provided that the
average closing high bid price of the Common Stock for the 30 trading days prior
to the date of the notice equals or exceeds 200% of the Conversion Rate on the
date of the notice. Redemption shall be effected by delivery of a written notice
to the Holder at the Holder's registered address, which notice shall include the
effective date of the redemption which date shall not be less than 15 nor more
than 20 days after the delivery date of the notice (the "Redemption Notice
Period"). The Holder's right to convert the principal amount of this Note as set
forth in section 2 hereof shall continue until 5:00pm on the day prior to the
date of redemption. Upon any redemption of principal, all accrued, but unpaid,
interest shall be paid to the Holder on the date of redemption.
B. Upon a Change of Control (as hereinafter defined), the Holder
may require the Company to redeem all or part of this Note at the face value of
3
the portion requested to be redeemed, plus accrued interest to the redemption
date. The Holder shall give written notice to the Company at its principal
address stating the request for redemption. The Company shall pay the redemption
price by delivery of a check to the Holder at its registered address within ten
days of the date of the Holder's redemption notice. A "Change of Control" shall
occur if at any time (x) there occurs any consolidation or merger of the Company
with or into any other corporation or other entity or person (whether or not the
Company is the surviving corporation) or any other corporate reorganization or
transaction or series of related transactions, in which in each such case in
excess of 50% of the Company's voting power is transferred (y) in excess of 50%
of the Company's Board of Directors consists of directors not nominated by the
prior Board of Directors of the Company, or (z) any person (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), together with its affiliates and associates (as such terms are defined
in Rule 405 under the 1933 Act, beneficially owns or is deemed to beneficially
own (as described in Rule 13d-3 under the Exchange Act without regard to the
60-day exercise period) in excess of 50% of the Company's voting power. The
Company shall notify the Holder of any Change of Control by written notice
within five days after the occurrence of any such event.
4. COVENANTS OF COMPANY
The Company covenants and agrees that, so long as any
principal of, or interest on, this Note shall remain unpaid, unless the holders
of a majority of the outstanding principal amount of the Notes shall otherwise
consent in writing, it will comply with the following terms:
(a) REPORTING REQUIREMENTS. The Company will furnish to the
Holder:
(i) as soon as possible, and in any event within five (5) days
after obtaining knowledge of the occurrence of (A) an "Event of Default," as
hereinafter defined, (B) an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, or (C) a material adverse
change in the business, earnings, liquidity, financial condition or operations
of the Company, taken as whole (a "Material Adverse Effect"), the written
statement of the Chief Executive Officer or the Chief Financial Officer of the
Company, setting forth the details of such Event of Default, event or Material
Adverse Effect and the action which the Company proposes to take with respect
thereto;
(ii) promptly after the sending or filing thereof, copies of all
financial statements, reports, certificates of its Chief Executive Officer,
Chief Financial Officer or accountants and other information which the Company
or any subsidiary sends to any holders (other than the Note) of its securities;
4
(iii) promptly after the commencement thereof, notice of each
action, suit or proceeding before any court or other governmental authority or
other regulatory body or any arbitrator as to which there is a reasonable
possibility of a determination that would (A) materially impact the ability of
the Company or any subsidiary to conduct its business, (B) have a Material
Adverse Effect on the Company, or (C) impair the validity or enforceability of
the Note or the ability of the Company to perform its obligations under the
Note;
(b) COMPLIANCE WITH LAWS. The Company will comply, in all
material respects with all applicable laws, rules, regulations and orders,
except to the extent that noncompliance would not have a Material Adverse Effect
on the Company.
(c) PRESERVATION OF EXISTENCE. The Company will maintain and
preserve, and cause each subsidiary, if any, to maintain and preserve, its
existence, and become or remain duly qualified and in good standing in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on the Company.
(d) MAINTENANCE OF PROPERTIES. The Company will maintain and
preserve, all of its properties which are necessary in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply, at all times with the provisions of all leases to which it is a
party as lessee or under which it occupies property, so as to prevent any
forfeiture or material loss thereof or thereunder except to the extent the
failure to do so could not reasonably be expected to have a material adverse
effect on the business, properties and operations of the Company. The Company
will not dispose of any assets, rights, properties, claims, contracts and
business as a going concern, including inventory, goodwill, customer lists,
trademarks and trade names, franchises, customer purchase orders, telephone
numbers, fixed assets, furniture or fixtures, except in the ordinary course of
its business at prices and terms consistent with the Company's past practices.
(e) MAINTENANCE OF INSURANCE. The Company will maintain, with
responsible and reputable insurers, insurance with respect to its properties and
business, in such amounts and covering such risks, as is carried generally in
accordance with sound business practice by companies in similar businesses in
the same localities in which the Company is situated.
(f) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company will
keep adequate records and books of account, with complete entries made in
accordance with generally accepted accounting principles, reflecting all of its
financial and other business transactions.
(g) REGISTRATION OF COMMON STOCK. The Common Stock issuable upon
conversion of this Note shall be registered for resale in accordance with the
terms and conditions of the registration rights agreement between the Company
and the
5
Holder, dated as of the date hereof (the "Registration Rights Agreement"). In
the event a registration statement is not filed under the 1933 Act by February
28, 1998, interest shall accrue on this Note at the rate of 18% per annum until
such time as an appropriate registration statement is filed and declared
effective by the Securities and Exchange Commission.
5. EVENTS OF DEFAULT AND REMEDIES
(a) Any one or more of the following events which shall have
occurred and be continuing shall constitute an event of default ("Event of
Default"):
(i) Default in the due and punctual payment of any
installment of interest upon this Note or upon any of the Notes, as and when the
same shall become due, and such default shall have continued for a period of
five (5) business days; or
(ii) Default in the due and punctual payment of the
principal of this Note or any of the Notes, as and when the same shall become
due; or
(iii) Any representation or warranty made by the Company
or any officer of the Company in the placement agent agreement executed between
the Company and the Placement Agent of even date (the "Placement Agent
Agreement"), the Notes, or in any agreement, report, certificate or other
document delivered to the Holder pursuant to or in connection with the Placement
Agent Agreement or the Notes shall have been incorrect in any material respect
when made; or
(iv) The Company shall fail to perform or observe any
covenant contained in this Note or in the Registration Rights Agreement and such
Default, if capable of being remedied, shall not have been remedied thirty (30)
days after written notice thereof shall have been given by the Holder or the
Placement Agent to the Company; or
(v) The Company or any subsidiary (A) shall institute any
proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment of a receiver,
trustee, custodian or other similar official for such the Company or any
subsidiary or for any substantial part of its property, or shall consent to the
commencement against it of such a proceeding or case, or shall file an answer in
any such case or proceeding commenced against it consenting to or acquiescing in
the commencement of such case or proceeding, or shall consent to or acquiesce in
the appointment of such a receiver, trustee, custodian or similar official; (B)
shall be generally not paying its debts as such debts become due, or shall admit
in writing its inability to apply its debts generally; (C) shall make a general
assignment
6
for the benefit of creditors; or (D) shall take any action to authorize or
effect any of the actions set forth above in this subsection 5 (vi); or
(vi) Any proceeding shall be instituted against the
Company seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
the Company or for any substantial part of its property, and either such
proceeding shall not have been dismissed or shall not have been stayed for a
period of sixty (60) days or any of the actions sought in such proceeding
(including, without limitation, the entry of any order for relief against it or
the appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property) shall occur; or
(vii) One or more final judgments or orders for the
payment of money in excess of $200,000 in the aggregate shall be rendered
against the Company, and either (A) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order, or (B) there shall be
any period of thirty (30) days during which enforcement of any such judgment or
order shall not be discharged, stayed or fully satisfied; or
(viii) Any indebtedness for money borrowed by the Company
in an outstanding principal amount of $200,000 is not paid at final maturity or
upon acceleration thereof and such default in payment or acceleration is not
cured or rescinded within 30 days after written notice.
(ix) The failure of the Company to file by February 28,
1998, a registration statement with the Securities and Exchange Commission
covering the resale of Common Stock issuable upon conversion of this Note.
(b) If an Event of Default described above has occurred, then the
Holder may, upon notice to the Company, declare the principal amount of this
Note at the time outstanding, together with accrued unpaid interest thereon, and
all other amounts payable under this Note to be forthwith due and payable,
whereupon such principal, interest and all such amounts shall become and be
forthwith due and payable.
(c) The Company covenants that in case the principal of, and
accrued interest on, the Note becomes due and payable by declaration or
otherwise, then the Company will pay in cash to the Holder of this Note, the
whole amount that then shall have become due and payable on this Note for
principal or interest, as the case may be, and in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable fees and disbursements of the Holder's legal counsel. In
case the Company shall fail forthwith to pay such amount, the Holder may
commence an action or proceeding at law or in equity for the collection of the
sums so due and unpaid, and may prosecute any such action or proceeding to
judgment
7
or final decree against Company or other obligor upon this Note, wherever
situated, the monies adjudicated or decreed to be payable.
(d) In case any one or more of the Events of Default specified
above shall happen and be continuing, the Holder may proceed to protect and
enforce his or her right by suit in the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note or may proceed to enforce the payment of this Note or to enforce
any other legal or equitable rights as such Holder may possess.
6. SUBORDINATION
The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's "Senior
Indebtedness" (as hereafter defined).
(a) SENIOR INDEBTEDNESS. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent that such
claim for post-petition interest is allowed in such proceeding), on, and all
fees and other amounts payable in connection with, the following, whether
absolute or contingent, secured or unsecured, due or to become due, outstanding
on the date hereof or thereafter created, incurred or assumed; (a) indebtedness
of the Company evidenced by credit or loan agreement, note, bond, debenture or
other written obligation in favor of a bank, finance company, insurance company
or other institutional lender, and (b) renewals, extensions, modifications,
replacements, restatements and refundings of, or any indebtedness or obligation
issued in exchange for, any such indebtedness or obligation described in clause
(a) of this paragraph; provided, however, that Senior Indebtedness shall not
include the Notes or any such indebtedness or obligation if the terms of such
indebtedness or obligation (or the terms of the instrument under which, or
pursuant to which it is issued) expressly provide that such indebtedness or
obligation is not superior in right of payment to the Notes.
(b) Insolvency Proceedings. If there shall occur any
receivership, insolvency assignment for the benefit of creditors (whether or not
pursuant to bankruptcy or other insolvency laws), sale of all or substantially
all of the assets, dissolution, liquidation, or any other marshaling of the
assets and liabilities of Company, (i) the holder(s) of Senior Indebtedness
shall be entitled to receive payment in full in cash of all Senior Indebtedness
(including any interest thereon accruing at the contract rate after the
commencement of any such proceedings, whether or not allowed as a claim in such
proceedings) then outstanding before Holder shall be entitled to receive any
payment or distribution, whether in cash, securities or other property, in
8
respect of the principal of, interest on or other amounts due with respect to
this Note at the time outstanding, and (ii) any payment or distribution, whether
in cash, securities or other property, (other than securities of Company or any
other corporation provided for by a plan or reorganization or readjustment, the
payment of which is subordinated, at least to the extent provided in this
Section 6, to the payment of all Senior Indebtedness at the tie outstanding and
to any securities issued in respect thereof under any such plan of
reorganization or readjustment), which would otherwise (but for this Section 6)
be payable or deliverable in respect of the amounts due under this Note shall be
paid or delivered directly to the holder(s) of the Senior Indebtedness (ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness held by each) or to a trustee or other representative for holder(s)
of Senior Indebtedness.
(c) Permitted Payments Default on Senior Indebtedness.
Notwithstanding any provision to the contrary contained in this Note, so long as
there shall not have occurred and be continuing an event of default which has
been declared in writing, or is automatically effective in the case of
bankruptcy or insolvency events, with respect to any Senior Indebtedness (as
such event of default is defined therein or in the instrument under which it is
outstanding), which event of default permits the holder to accelerate the
maturity thereof (a "Senior Default"), Company shall be permitted to make, and
Holder to accept and receive, regularly scheduled payments of principal and
accrued interest under this Note. Notwithstanding anything to the contrary
contained in this Section 6, if there shall occur a Senior Default which has
been declared in writing with respect to any Senior Indebtedness and Holder
shall have received written notice thereof from the holder of such Senior
Indebtedness, then, unless and until such event of default shall have been cured
or waived or shall have ceased to exist, or all Senior Indebtedness shall have
been paid in full in cash, no payment shall be made in respect of the principal
or interest on or other amounts due with respect to this Note, unless within one
hundred eighty (180) days after the declaration of such Senior Default, the
maturity of such Senior Indebtedness shall not have been accelerated. Not more
than one notice may be given to Holder pursuant to the terms of this Section
7(b) during any 365 day period.
(d) Acceleration; Enforcement Rights. Holder, prior to the
payment in full of the Senior Indebtedness and while a Senior Default exists,
shall have no rights to accelerate the maturity of the amounts due under this
Note or otherwise demand payment thereof, enforce any claim with respect to the
amounts due under this Note, institute or attempt to institute any bankruptcy or
insolvency proceedings against Company or otherwise to take any action against
Company or Company's property without the prior written consent of each holder
of Senior Indebtedness.
(e) Turnover of Payments. Except for payments permitted under
Section 6(c), should any payment or distribution whether in cash, securities or
other property, be received by Holder upon or with respect to the amounts
payable under this Note by any means, including, without limitation, setoff,
prior to the payment in full in
9
cash of the Senior Indebtedness, Xxxxxx shall receive and hold the same in
trust, as trustee, for the benefit of the Holder(s) of the Senior Indebtedness,
and shall forthwith deliver the same to the Holder(s) of the Senior Indebtedness
(ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held by each) or to a trustee or other representative for
holder(s) of Senior Indebtedness in precisely the form received for application
of the Senior Indebtedness (whether or not it is then due).
(f) Further Assurances. By acceptance of this Note, Xxxxxx agrees
to execute and deliver customary forms of subordination agreement requested from
time to time by holder(s) of Senior Indebtedness, and as a condition to Xxxxxx's
rights hereunder, Company may require that Xxxxxx execute such forms of
subordination agreement; provided that such forms shall not impose on Holder
terms less favorable than those provided herein.
(g) Other Indebtedness. No indebtedness which does not constitute
Senior Indebtedness shall be senior in any respect to the indebtedness
represented by this Note.
(h) Subrogation. Subject to the payment in full in cash of all
Senior Indebtedness and the termination of any commitments to lend under the
agreements or instruments governing such Senior Indebtedness, Holder shall be
subrogated to the rights of the holder(s) of such Senior Indebtedness (to the
extent of the payments or distributions made to the holder(s) of such Senior
Indebtedness pursuant to the provisions of this Section 6) to receive payments
and distributions of assets of Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between Company and its creditors, other than the holder(s) of Senior
Indebtedness and Holder, be deemed to be a payment by Company to or on account
of this Note; and for purposes of such subrogation, no payments or distributions
to the holder(s) of Senior Indebtedness to which Xxxxxx would be entitled except
for the provisions of this Section 6 shall, as between Company and its
creditors, other than the holder(s) of Senior Indebtedness and Holder, be deemed
to be a payment by Company to or on account of the Senior Indebtedness.
(i) No Impairment. Subject to the rights, if any, of the
holder(s) of Senior Indebtedness under this Section 6 to receive cash,
securities or other properties otherwise payable or deliverable to Holder and
the other restrictions set forth in this Section 6, nothing contained in this
Section 6 shall impair, as between Company and Holder, the obligation of
Company, subject to the terms and conditions hereof, to pay to Holder the
principal hereof and interest hereon as and when the same become due and payable
or shall prevent Holder, upon the occurrence of an Event of Default hereunder
from exercising all rights, powers and remedies provided herein or by applicable
law.
10
(j) Continuing Subordination. The subordination effected by these
provisions is a continuing subordination and may not be modified or terminated
by Holder until payment in full in cash of the Senior Indebtedness. At any time
and from time to time, without consent of or notice to Holder or any other
holder of Notes, and without impairing or affecting the obligations of Holder
hereunder; (i) the time for Company's performance of, or compliance with any
agreement relating to Senior Indebtedness may be modified or extended or such
performance may be waived; (ii) a holder of Senior Indebtedness may exercise or
refrain from exercising any rights under any agreement relating to the Senior
Indebtedness; (iii) any agreement relating to the Senior Indebtedness bay be
revised, amended or otherwise modified for the purpose of adding or changing any
provision thereof or changing in any manner the rights of Company, any holder of
Senior Indebtedness or any guarantor thereunder; (iv) payment of Senior
Indebtedness or any portion thereof may be accelerated or extended or refunded
or any instruments evidencing the Senior Indebtedness may be renewed in whole or
in part; (v) any Person liable in any manner for payment of the Senior
Indebtedness may be released by a holder of Senior Indebtedness; (vi) a holder
of Senior Indebtedness may make loans or otherwise extend credit to Company
whether or not any default or event of default exists with respect to such
Senior Indebtedness; and (vii) a holder of Senior Indebtedness may take an/or
release any Lien at any time on any collateral now or hereafter securing the
Senior Indebtedness and take or fail to take any action to perfect any Lien at
any time granted therefor, and take or fail to take any action to enforce such
Liens. Notwithstanding the occurrence of any of the foregoing, these
subordination provisions shall remain in full force and effect with respect to
the Senior Indebtedness, as the same may have been modified, extended, renewed
or refunded. Holder has established adequate, independent means of obtaining
from Company on a continuing basis financial and other information pertaining to
Company's financial condition.
(k) Holder's Waivers. Holder hereby expressly waives for the
benefit of the holder(s) of Senior Indebtedness (i) all notices not specifically
required pursuant to the terms of this Note whatsoever, including without
limitation any notice of the incurrence of Senior Indebtedness; (ii) any claim
which Holder may now or hereafter have against a holder of Senior Indebtedness
arising out of any and all actions which a holder of Senior Indebtedness in good
faith, takes or omits to take with respect to the Senior Indebtedness
(including, without limitation, (A) actions with respect to the creation,
perfection or continuation of Liens in or on any collateral security for the
Senior Indebtedness, (B) actions with respect tot eh occurrence of an event of
default under any Senior Indebtedness, (C) actions with respect to the
foreclosure upon, sale, release, or depreciation of, or failure to realize upon,
any of the collateral security for the Senior Indebtedness and (D) actions with
respect to the collection of any claim for all or any part of the Senior
Indebtedness or the valuation, use, protection or release of any collateral
security for the Senior Indebtedness); and (iii) any right to require holders of
Senior Indebtedness to exhaust any collateral or xxxxxxxx any assets.
11
(l) Reliance of Holder(s) of Senior Indebtedness. Holder, by its
acceptance hereof, shall be deemed to acknowledge and agree that the foregoing
subordination provisions are, and are intended to be, an inducement to and a
consideration of each holder of Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the creation of the
indebtedness evidenced by this Note, and each such holder of Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions
acquiring and holding or continuing to hold, such Senior Indebtedness.
6 MISCELLANEOUS
(a) This Note has been issued by the Company pursuant to
authorization of the Board of Directors of the Company.
(b) The Company may consider and treat the entity in whose
name this Note shall be registered as the absolute owner thereof for all
purposes whatsoever (whether or not this Note shall be overdue) and the Company
shall not be affected by any notice to the contrary. Subject to the limitations
herein stated, the registered owner of this Note shall have the right to
transfer this Note by assignment, and the transferee thereof shall, upon his
registration as owner of this Note, become vested with all the powers and rights
of the transferor. Registration of any new owners shall take place upon
presentation of this Note to the Company at its principal offices, together with
a duly authenticated assignment. In case of transfer by operation of law, the
transferee agrees to notify the Company of such transfer and of his address, and
to submit appropriate evidence regarding the transfer so that this Note may be
registered in the name of the transferee. This Note is transferable only on the
books of the Company by the holder hereof, in person or by attorney, on the
surrender hereof, duly endorsed. Communications sent to any registered owner
shall be effective as against all holders or transferees of the Note not
registered at the time of sending the communication.
(c) Payments of principal and interest shall be made as
specified above to the registered owner of this Note. No interest shall be due
on this Note for such period of time that may elapse between the maturity of
this Note and its presentation for payment.
(d) The Holder shall not, by virtue, hereof, be entitled
to any rights of a shareholder in the Company, whether at law or in equity, and
the rights of the Holder are limited to those expressed in this Note.
(e) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and (in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Note, if mutilated,
the Company shall execute and deliver a new Note of like tenor and date. Any
such new Note executed and delivered
12
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Note so lost, stolen, destroyed or mutilated shall
be at any time enforceable by anyone.
(f) This Note shall be construed and enforced in
accordance with the laws of the State of New York. The parties hereto consent to
the jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York in connection with any
action or proceeding arising out of or relating to this Agreement. If any one or
more of the provisions contained in this Note shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, then and in that event, to
the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement or any
other such instrument.
(g) The Company shall pay all reasonable costs and
expenses incurred by Xxxxxx to enforce any of the provisions of this Agreement,
including reasonable attorneys' fees and other expenses of collection of the
Note.
(h) No recourse shall be had for the payment of the
principal or interest of this Note against any incorporator or any past, present
or future stockholder, officer, director, agent or attorney of the Company, or
of any successor corporation, either directly or through the Company or any
successor corporation, otherwise, all such liability of the incorporators,
stockholders, officers, directors, attorneys and agents being waived, released
and surrendered by the Holder hereof by the acceptance of this Note.
(i) This Note may be amended by a writing signed by the
Company and the Holder or by the Company and the holders of a majority of the
outstanding principal amount of the Notes; provided that the principal amount,
interest rate, terms of payment and the maturity of this Note may not be amended
except with the written consent of Xxxxxx.
IN WITNESS WHEREOF, COMPRESSENT CORPORATION has caused this Note
to be signed in its name by its President.
COMPRESSENT CORPORATION
By:
Xxx Xxxxxxxxx, Chief Executive Officer
13
CONVERSION FORM
Compressent Corporation:
The undersigned hereby irrevocably elects to exercise the right
of conversion of the principal of an accrued interest on this Note, and to
accept hereunder, shares of Common Stock, $.001 par value per share, of
Compressent Corporation (the "Shares") provided for herein, and requests that
certificates for the Shares be issued in the name of:
(Please print name, address and social security number) and that the
certificate representing the Shares be delivered to the address stated below.
Dated:____________________________ , 1997
Name of Noteholder or Assignee:_______________________
(Please print)
Address:_____________________
Signature:___________________
Note:The above signature
must correspond with the name as it appears
upon the front page of this Warrant in every
particular, without alteration or
enlargement or any change whatever, unless
this Warrant has been assigned.
