Exhibit 4.3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, EXCHANGED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN ANY
MANNER IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
PROMISSORY NOTE
---------------
$2,000,000.00 August 13, 1998
FOR VALUE RECEIVED, the undersigned, ALLIN COMMUNICATIONS CORPORATION,
a Delaware corporation, its successors and assigns ("Maker"), hereby promises to
pay to the order of Xxxxx X. Xxxxx, Xx., his heirs and assigns ("Lender"), on
the Maturity Date (as such term is defined below), if not sooner paid, the
principal sum of Two Million and 00/100 Dollars ($2,000,000.00) owed to Lender
by the Maker pursuant to that certain Stock Purchase Agreement dated as of the
date of this Note by and among Xxxxxx, Maker, KCS Computer Services, Inc.,
Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx (the "Agreement"),
together with interest xxxxxxx as provided hereinafter.
Capitalized terms used herein and not otherwise defined herein shall
have the meaning given to such terms in the Agreement. The unpaid principal
balance hereof shall bear interest for each day until due at the rate of six
percent (6%) per annum and shall accrue and compound quarterly commencing on the
date hereof. Subject to approval required by a Senior Lender (as hereunder
defined), Maker shall pay such accrued interest to Lender quarterly commencing
on October 1, 1998 and on the first day of each quarter thereafter until such
time as all unpaid principal, accrued interest and all other sums and costs have
been paid in full. If not sooner paid, all unpaid principal, accrued interest
and all other sums and costs incurred by the Lender (the "Unpaid Amount") shall
be due and payable on the second anniversary of the Closing Date (the "Maturity
Date") without notice, presentment or demand; provided, however, that in the
event that all approvals necessary to convert the Unpaid Amount to Purchaser
Common Stock (as more particularly described in Section 2.1.1(iii) of the
Agreement) have been received by the Maturity Date, the Unpaid Amount
automatically shall convert to Purchaser Common Stock on the Maturity Date on
the terms and conditions set forth in Section 2.1.1(iii) of the Agreement. In
such event, Maker shall cause the number of shares of Purchaser Common Stock as
required under Section 2.1.1(iii) of the Agreement to be issued to Lender on the
Maturity Date.
Notwithstanding anything contained herein to the contrary, the payment
of interest and principal hereunder shall be subordinated to, and subject to the
permission of any Lender (the "Senior Lender") which provides (or refinances)
senior financing all or part of which is used initially to pay off (by itself or
combined with funds of Maker) $3,200,000 of indebtedness to Lender evidenced by
that certain Promissory Note in the principal amount of $6,200,000 dated of even
date herewith from Maker to Lender. Maker shall request, but does not guarantee
that it will be able to obtain, a
provision in the documents evidencing such senior financing (the "Senior Loan
Documents") that permits Maker to pay interest hereunder as long as Maker is not
in default under the Senior Loan Documents.
Principal and interest shall be made payable to Lender and forwarded
to Lender at 000 Xxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx 00000, or such other
place as the holder hereof shall designate.
All payments to be made in respect of principal, interest or other
amounts due from Maker under this Note shall be payable on the day when due
without presentation, demand, protest or notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue.
In connection with this Note, Maker has delivered, or has caused to be
delivered, to Lender the Agreement, that certain Security Agreement of Maker in
favor of Lender dated as of the date of this Note (the "Security Agreement"),
that certain Promissory Note from Maker to Lender dated as of the date of this
Note in the principal sum of $6,200,000 (the "$6,200,000 Note") and that certain
Guaranty and Suretyship Agreement of each of the Guarantors (as defined in the
Security Agreement) in favor of Xxxxxx dated the date of this Note (the
"Guaranty", and together with this Note, the Security Agreement, the $6,200,000
Note and all other agreements, documents and instruments in connection
therewith, as each of the foregoing may be amended, modified or supplemented
from time to time, the "Loan Documents"). This Note is secured by, and is
entitled to the benefits of, the Loan Documents.
Maker shall be in default under this Note upon the occurrence of any
of the following (the "Events of Default"):
(a) Maker fails to pay any principal or interest due on this Note or
any other amount due and payable under this Note as and when due;
(b) Maker or Guarantor fails to perform or observe in any material
respect any other material covenant, agreement or duty contained or referred to
herein or in any Loan Document or in Section 2.1.1 (iii) of the Agreement and
such failure continues for a period of thirty (30) consecutive days;
(c) any material warranty, representation or statement made or
furnished to Lender by or on behalf of Maker in the Stock Purchase Agreement or
any Loan Document proves to have been false or misleading in any material
respect when made or furnished;
(d) there occurs an Event of Default under the $6,200,000 Note;
2.
(e) there occurs dissolution, termination of existence, charter
revocation or forfeiture, insolvency, liquidation, reorganization, arrangement,
adjustment, compensation or other similar relief, business failure, assignment
for the benefit of creditors, or the commencement of proceedings under any law
relating to bankruptcy, insolvency, relief of debtors or protection of
creditors, termination of legal entities or any other similar law now or in the
future in effect, or a proceeding shall be instituted in respect of Maker
seeking appointment of a receiver, trustee, custodian, liquidator, assignee,
sequestrator or other similar official for the Maker or for all or any
substantial part of its property by or against Maker or any surety of any of the
obligations of Maker; or
(f) the Maker shall become insolvent, shall become generally unable to
pay its debts as they become due, shall voluntarily suspend transaction of its
business, shall make a general assignment for the benefit of creditors, shall
institute a proceeding described above or shall consent to any order for relief,
declaration, finding or relief described in (e) above, shall institute a
proceeding described in (e) above or shall consent to the appointment or to the
taking of possession by any such official of all or any substantial part of its
property whether or not any proceeding is instituted, dissolves, winds-up or
liquidates itself or any substantial part of its property, or shall take any
action in furtherance of any of the foregoing.
Upon the occurrence of any of the Events of Default described in
clauses (a) through (d) above, Lender may declare all liabilities and
obligations of Maker to Lender under the Loan Documents, including those
evidenced by the Note, immediately due and payable and the same shall thereupon
become immediately due and payable without any further action on part of Lender;
provided, however, that if such Event of Default occurs after the Approval Date,
then Lender's sole recourse hereunder shall be (1) to accelerate and immediately
convert the unpaid principal to Purchaser Common Stock, whereupon Maker shall
immediately cause to be issued to Lender such Purchaser Common Stock; (2) to
exercise one of the following options:
(i) to accelerate and immediately convert all accrued but unpaid
interest hereunder as of the conversion date to Purchaser Common
Stock; or
(ii) subject to any required consent of a Senior Lender, to receive
in cash the amount of the accrued but unpaid interest hereunder
as of the conversion date; or
(iii) only in the case of an Event of Default described in clause (a)
and subject to any required consent of a Senior Lender, to
receive an amount equal to the amount of interest which would
have been payable to Lender hereunder if no Event of Default had
occurred prior to the Maturity Date; such amount to be payable
quarterly in the same fashion as interest otherwise would have
been payable hereunder, less all interest actually paid through
the date of the Event of Default.
Lender shall notify Maker in writing as to which option Lender elects. Upon the
occurrence of any event of default described in clauses (e) and (f) hereof, all
liabilities and obligations of
3.
Maker to Lender under the Loan Documents, including those evidenced by the Note,
shall immediately become due and payable without any action upon the part of
Lender; provided, however, that if such Event of Default occurs after the
Approval Date, Xxxxxx's sole recourse hereunder shall be to (3) accelerate and
immediately convert the unpaid principal to Purchaser Common Stock, whereupon
Maker shall immediately cause to be issued to Lender such Purchaser Common
Stock; and (4) to exercise one of the following options:
(i) to accelerate and immediately convert all accrued but unpaid
interest hereunder as of the conversion date to Purchaser Common
Stock; or
(ii) subject to any required consent of a Senior Lender, to receive
in cash the amount of the accrued but unpaid interest hereunder
as of the conversion date; or
(iii) only in case of an Event of Default described in clause (a) and
subject to any required consent of a Senior Lender, to receive
an amount equal to the amount of interest which would have been
payable to Lender hereunder if no Event of Default had occurred
prior to the Maturity Date; such amount to be payable quarterly
in the same fashion as interest otherwise would have been
payable hereunder, less all interest actually paid through the
date of the Event of Default.
Lender shall notify Maker in writing as to which option Lender elects.
Subject to any required consent of any Senior Lender, Maker hereby
consents and agrees that Lender may do any of the following, upon the occurrence
of an Event of Default prior to the Approval Date, as many times as Lender may
agree, desire or permit, without in any way impairing, reducing, limiting,
terminating, or releasing, in whole or in part, the unlimited and continuing
liability of Maker hereunder, without any notice to Maker (all of which notices
are hereby waived by Maker), without incurring any responsibility to Maker, and
without the endorsement or execution by Maker of any additional consent or
waiver.
(a) settle, compound, collect, liquidate, purchase, postpone,
compromise, accept partial payment on, or release any Collateral (as
defined in the Security Agreement) in any manner or subordinate the payment
of all or any part thereof to the payment of any liability (whether due or
not) of Maker to its creditors;
(b) exercise or refrain from exercising any rights, claims or
demands against, and release or discharge, any maker, endorser, surety,
guarantor or any other person or entity directly, indirectly, or otherwise
obligated, including any persons or entities against whom the undersigned
may have a right of recourse, regardless of whether rights are
specifically reserved against any person or entity not released or
discharged; and
4.
(c) generally act and deal with Maker and the Collateral in any
manner that Lender may see fit, without notice to any of the undersigned.
Time is of the essence with respect to the payment of this Note.
After the principal amount of any part of the loan evidenced by this
Note (the "Loan") shall have become due (at maturity, by acceleration or
otherwise) and before and after judgment, or upon the occurrence of one or more
of the Events of Default, as compensation to the Lender for the increased cost
of administering the Loan, the Loan will bear interest for each day until paid
(before and after judgment) at a rate which will be equal to 10% per annum.
Interest on the unpaid principal amount hereof shall be computed on
the basis of a 360 day year and the actual number of days elapsed in the period
during which it accrues.
In the event the rates of interest provided for herein or any of them
are finally determined by any governmental authority to exceed the maximum rate
of interest permitted by applicable usury or similar laws, their or its
application will be suspended and there will be charged instead the maximum rate
of interest permitted by such laws.
Interest on the Loan will be due and payable on the first day of each
quarter in arrears. After maturity of any part of the Loan (at maturity, by
acceleration or otherwise), interest on such part of the Loan will be due and
payable on demand.
All payments to be made in respect of principal, interest, fees or
other amounts due under this Note are payable at 12:00 noon, Pittsburgh time, on
the day when due, without presentment, demand, protest or notice of any kind,
all of which are expressly waived, and an action for the payments will accrue
immediately. All such payments must be made to the Lender in U.S. dollars and
in funds immediately available, without setoff, counterclaim or other deduction
of any nature. All such payments shall be applied at the option of the Lender
to late charges, accrued and unpaid interest, outstanding principal and other
sums due under this Note in such order as the Lender, in its sole discretion,
shall elect.
Maker may prepay any amounts due under this Note, at any time without
premium or penalty. Payments made hereunder shall be credited first to late
charges, then to lawful charges then accrued and the remainder to principal.
If this Note is not paid when due and is placed with an attorney for
collection, and whether or not suit is entered hereon or judgment confessed
against the undersigned, the Maker further agrees to pay the holder hereof, in
addition to the principal and accrued interest, the costs of suit and reasonable
attorney's fees.
5.
MAKER HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF
RECORD WITHIN THE UNITED STATES OR ELSEWHERE AFTER THE OCCURRENCE OF
AN EVENT OF DEFAULT TO APPEAR FOR THE UNDERSIGNED AND, WITH OR INITIAL:
WITHOUT COMPLAINT FILED AND WITH OR WITHOUT JUDGMENT AGAINST IT IN /s/RWT
FAVOR OF XXXXXX OR ANY HOLDER HEREOF FOR THE ABOVE SUM IF NOT PAID ________
WHEN DUE, TOGETHER WITH COSTS OF SUIT AND ATTORNEY'S FEES OF TEN PERCENT (10%)
FOR COLLECTION HEREINAFTER PROVIDED FOR, WITH RELEASE OF ERRORS, WITHOUT ANY
STAY OF EXECUTION OR RIGHT OF APPEAL. NO SINGLE EXERCISE OF THE FOREGOING POWER
TO APPEAR FOR AND ENTER JUDGMENT AGAINST MAKER SHALL BE DEEMED TO EXHAUST THE
POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY THE COURT TO BE
INVALID, VOIDABLE OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY
BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE HOLDER HEREOF SHALL ELECT, UNTIL
SUCH TIME AS THE HOLDER SHALL HAVE RECEIVED PAYMENT IN FULL OF ALL PRINCIPAL,
INTEREST THEREON, AND COSTS. IF A COPY OF THIS NOTE, VERIFIED BY AFFIDAVIT OF
LENDER OR ANY HOLDER HEREOF OR SOMEONE ON XXXXXX'S OR SUCH HOLDER'S BEHALF IS
FILED IN SUCH ACTION, IT WILL NOT BE NECESSARY TO FILE THE ORIGINAL NOTE AS A
WARRANT OF ATTORNEY.
MAKER WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY INITIAL:
IN CONNECTION WITH ANY PROCEEDING INVOLVING OR /s/RWT
UNDERTAKEN IN CONNECTION WITH THIS NOTE. ________
ACKNOWLEDGMENT
--------------
BY SIGNING THIS INSTRUMENT, MAKER XXXXXX ACKNOWLEDGES, REPRESENTS AND
WARRANTS THAT (A) MAKER HAS BEEN REPRESENTED BY COUNSEL IN INITIAL:
CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS NOTE, (B) MAKER /s/RWT
HAS READ, UNDERSTOOD AND AGREES TO THE PROVISIONS CONTAINED HEREIN, ________
INCLUDING THE CONFESSION OF JUDGMENT PROVISION WHICH MAY RESULT IN A COURT
JUDGMENT AGAINST MAKER WITHOUT NOTICE OR A HEARING, (C) MAKER'S COUNSEL HAS
SUFFICIENTLY EXPLAINED THE LEGAL AND ECONOMIC SIGNIFICANCE OF THE CONFESSION OF
JUDGMENT PROVISION OF THIS NOTE, AND (D) MAKER'S EXECUTION AND DELIVERY OF THIS
NOTE IS A VOLUNTARY ACT.
6.
The successors and assigns of Maker shall be bound by the terms
hereof; Maker may not assign or delegate its rights or obligations hereunder
without the prior written consent of Xxxxxx.
So long as this Note is outstanding, Xxxxxx shall have the right to
examine and inspect, and make copies thereof, Maker's books and records,
including, without limitation, books of account.
Demand, presentment, protest and notice of dishonor and notice of
default are hereby waived.
This Note shall be governed by, and construed in accordance with, the
internal laws of the Commonwealth of Pennsylvania.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP CERTAIN CONSTITUTIONAL
------------------------------------------------------------------
RIGHTS TO NOTICE AND COURT TRIAL OR OTHER OPPORTUNITY TO BE HEARD INITIAL
----------------------------------------------------------------- -------
BEFORE A JUDGMENT CAN BE ENTERED AGAINST YOU. IF YOU ARE IN DEFAULT /s/RWT
-------------------------------------------------------------------- -------
OF THE TERMS OF THIS NOTE, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT
----------------------------------------------------------------------------
YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
------------------------------------------------------------------------------
AND YOUR ASSETS REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE HOLDER OF THIS
--------------------------------------------------------------------------------
NOTE FOR FAILURE ON HIS OR ITS PART TO COMPLY WITH THE NOTE, OR ANY OTHER CAUSE.
--------------------------------------------------------------------------------
WITNESS the due execution and sealing hereof, with the intent to be
legally bound hereby.
ATTEST: ALLIN COMMUNICATIONS CORPORATION
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------- -----------------------------
Name: Title:
-------------------- --------------------------
Title:
-------------------
7.
