Exhibit 4.1
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SOY ENVIRONMENTAL PRODUCTS, INC.
NOTE AGREEMENT
For the Issuance of Up to
$900,000 Senior Secured
Convertible Notes
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Exhibit 4.1
TABLE OF CONTENTS
SECTION PAGE
SECTION 1 - DEFINITIONS AND INTERPRETATION................................ 1
1.1 Definitions............................................................................ 1
1.2 Accounting Principles.................................................................. 4
1.3 Directly or Indirectly................................................................. 4
SECTION 2 - THE NOTES.......................................... 4
2.1 Issuance of Definitive Notes........................................................... 4
2.2 Prepayment............................................................................. 4
2.3 No Sinking Fund........................................................................ 4
2.4 Persons Entitled to Note Interest Payments............................................. 5
2.5 Security............................................................................... 5
2.6 Payment of Principal and Interest...................................................... 5
2.7 Extension of Maturity Date............................................................. 5
2.8 Application of Payment................................................................. 5
SECTION 3 - COMPANY COVENANTS...................................... 5
3.1 Corporate Existence.................................................................... 5
3.2 Payment of Taxes and Claims............................................................ 5
3.3 Maintenance of Properties; Business Insurance.......................................... 6
3.4 Limitations on Senior Debt............................................................. 6
3.5 Dividends.............................................................................. 6
3.6 Transactions with Affiliates........................................................... 6
3.7 Representation on the Board of Directors............................................... 7
SECTION 4 - EVENTS OF DEFAULT & REMEDIES THEREFOR............................ 7
4.1 Events of Default...................................................................... 7
4.2 Notice to Placement Agent.............................................................. 8
4.3 Acceleration; Rescission and Annulment................................................. 8
4.4 Collection of Indebtedness and Suits for Enforcement by Note Agent..................... 9
4.5 Note Agent May File Proofs of Claim.................................................... 10
4.6 Note Agent May Enforce Claims Without Possession of Note
Certificates........................................................................... 11
4.7 Application of Money Collected......................................................... 11
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Exhibit 4.1
4.8 Limitation on Suits.................................................................... 11
4.9 Unconditional Right of Holders to Receive Principal, Premium and
Interest............................................................................... 12
4.10 Restoration of Rights and Remedies..................................................... 12
4.11 Rights and Remedies Cumulative......................................................... 12
4.12 Delay or Omission Not Waiver........................................................... 12
4.13 Control by Holders..................................................................... 13
4.14 Waiver of Past Defaults................................................................ 13
4.15 Undertaking for Costs.................................................................. 13
4.16 Waiver of Stay or Extension Laws....................................................... 13
SECTION 5 - AMENDMENTS, WAIVERS & CONSENTS................................ 14
5.1 Consent Required....................................................................... 14
5.2 Effect of Amendment or Waiver.......................................................... 14
5.3 Solicitation of Holders................................................................ 14
SECTION 6 - CONVERSION OF NOTES..................................... 15
6.1 Conversion Rights and Manner of Exercise............................................... 15
6.2 Issuance of Common Stock Certificates.................................................. 15
6.3 Cash Adjustments on Conversion......................................................... 15
6.4 Antidilution Adjustments............................................................... 16
6.5 Mergers, Consolidations, Sales......................................................... 16
6.6 Dissolution or Liquidation............................................................. 17
6.7 Notice of Extraordinary Dividends...................................................... 17
6.8 Reservation of Common Stock............................................................ 17
6.9 Fully Paid Stock; Taxes................................................................ 18
SECTION 7 - RESTRICTIONS ON TRANSFERABILITY............................... 18
7.1 Restrictions on Transferability........................................................ 18
7.2 Restrictive Legends.................................................................... 18
7.3 Notice of Proposed Transfer; Registration Not Required................................. 19
7.4 Transfer of Notes...................................................................... 19
SECTION 8 - REGISTRATION OF CONVERSION SHARES.............................. 20
8.1 Shelf Registration......................................................................20
8.2 Conditions Relating to Shelf Registration.............................................. 20
8.3 Registration Procedures................................................................ 22
8.4 Registration Expenses.................................................................. 25
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Exhibit 4.1
8.5 Indemnification; Contribution.......................................................... 25
8.6 Commission Filings..................................................................... 28
8.7 Lock-up Agreement...................................................................... 28
SECTION 9 - NOTE AGENT...........................................28
9.1 Duties and Liabilities of Note Agent................................................... 28
9.2 Reliance on Documents, Opinions, Etc................................................... 30
9.3 No Responsibility for Recitals, etc.................................................... 31
9.4 Moneys to be Held in Trust............................................................. 31
9.5 Expenses of Note Agent................................................................. 31
9.6 Resignation or Removal of Note Agent................................................... 31
SECTION 10 - MISCELLANEOUS........................................ 32
10.1 Registered Notes....................................................................... 32
10.2 Exchange of Notes...................................................................... 33
10.3 Loss, Theft, etc. of Notes............................................................. 33
10.4 Cancellation of Notes; Acquisition of Notes by Company................................. 34
10.5 Transfer of Note....................................................................... 34
10.6 Expenses; Stamp Tax Indemnity.......................................................... 34
10.7 Acts of Holders; Evidence of Ownership of Notes........................................ 35
10.8 Holders' List.......................................................................... 35
10.9 Powers and Rights Not Waived, Remedies Cumulative...................................... 36
10.10 Notices................................................................................ 36
10.11 Successors and Assigns................................................................. 36
10.12 Discharge and Termination.............................................................. 36
10.13 Survival of Covenants and Representations.............................................. 36
10.14 Severability........................................................................... 37
10.15 Governing Law.......................................................................... 37
10.16 Captions............................................................................... 37
10.17 Benefits of Provisions of This Agreement............................................... 37
10.18 Counterparts........................................................................... 37
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Exhibit 4.1
NOTE AGREEMENT
THIS NOTE AGREEMENT (the "Agreement") is made effective as of
the 3rd day of July, 1997, among SOY ENVIRONMENTAL PRODUCTS, INC., a Delaware
corporation (the "Company"), and FOX & COMPANY INVESTMENTS, INC. (the "Placement
Agent").
RECITALS:
A. The Company has entered into an agreement (the "Placement
Agreement") with the Placement Agent pursuant to which the Placement Agent has
agreed to assist the Company in the placement of up to 15 Units, each Unit
consisting of one $60,000 Senior Secured Convertible Note ("Note") and 60,000
Class A Warrants ("Warrants"), subject to the terms of the Placement Agreement
(the "Offering").
B. The Company desires to provide for the form and provisions of the
Notes, the terms upon which the Notes shall be issued and exercised, and the
respective rights, limitation of rights and immunities of the Company, the
Placement Agent, and the registered holders of the Notes.
C. All acts and things necessary to make the Notes, when executed on
behalf of the Company, the valid, binding and legal obligations of the Company,
and to authorize the execution and delivery of this Agreement, have been done
and performed.
AGREEMENT:
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In addition to the terms otherwise defined herein, the
following terms shall mean:
Affiliate: any Person (other than a Subsidiary) (i) that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, the Company, (ii) which beneficially owns or holds
10% or more of any class of the Voting Stock of the Company or (iii) 10% or more
of the Voting Stock (or in the case of a Person which is not a corporation, five
percent or more of the equity interest) of which is beneficially owned or held
by the Company or a Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
Exhibit 4.1
Business Day: any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in Arizona are authorized or obligated by law
or executive order to be closed.
Closing Date: any Business Day proceeds are distributed to the Company
under terms of the Escrow Agreement pursuant to the Offering.
Commission: the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Trust
Indenture Act of 1939, as amended, as the case may be.
Common Stock: any class of capital stock of the Company now or
hereafter authorized, the right of which to share in distributions either of
earnings or assets of the Company is without limit as to any amount or
percentage; provided, however, that the shares of Common Stock deliverable upon
conversion of the Notes shall include only the Common Stock of the Company
authorized at the date hereof and any class of Common Stock issued in
substitution therefor.
Company: Soy Environmental Products, Inc., a Delaware corporation.
Conversion Notice: the notice set forth on the reverse side of the Note
Certificate given by Holders to convert the Notes to shares of Common Stock as
provided in Section 6.1 hereof.
Conversion Price: $1.00 or such other amount as adjusted pursuant to
Section 6.4 hereof.
Conversion Shares: the shares of Common Stock of the Company issued
upon the conversion of any of the Notes.
Default: any event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, constitute an Event of Default
as defined in Section 4.1.
Escrow Agreement: the Agreement between the Company and Biltmore
Investors Bank, N.A., as escrow agent, providing for the collection and
disbursement of funds under the Offering.
Exchange Act: the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as they may be in effect at the time.
GAAP: generally accepted accounting principles at the time in the
United States.
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Exhibit 4.1
Holder: any Person that is, at the time of reference, the registered
Holder of any Note or any Conversion Shares.
Interest Payment Date: February 1, 1998 and the first of each month
thereafter during the term of the Notes; provided, however, if such date is not
a Business Day, the Interest Payment Date shall be the immediately preceding
Business Day.
Maturity Date: January 31, 1998 unless extended as provided in Section
2.7 to July 31, 1998.
Note: any Senior Secured Convertible Note issued pursuant to the terms
of this Agreement.
Note Agent: any Person appointed by the Placement Agent to act as Note
Agent upon the occurrence of an event of Default as defined in Section 4.1.
Note Certificate: any certificate in the form attached hereto as
Exhibit A issued pursuant to the terms of this Agreement evidencing the rights
of a Holder with respect to a Note.
Note Register: the register of the Holders of Notes issued pursuant to
this Agreement.
Offering: the offering for private placement by the Placement Agent on
behalf of the Company of up to 15 Units, each Unit consisting of one Note and
60,000 Warrants.
Person: an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
Placement Agent: Fox & Company Investments, Inc., the placement agent
on behalf of the Company in connection with the Offering.
Record Date: January 16, 1998 and the 16th of each month thereafter
during the term of the Notes preceding each Interest Payment Date.
Registration Expenses: All registration and filing fees, all fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of one firm of counsel for the holders and any
underwriters in connection with blue sky qualifications of the Conversion
Shares), printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of the officers and
employees of the Company performing legal or accounting duties), and reasonable
fees and disbursement of counsel for the Company and its independent certified
public accountants (including the reasonable expenses of any special audit or
comfort letters required by or incident to such performance), securities acts
liability insurance (if the Company elects to obtain such insurance),
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Exhibit 4.1
the reasonable fees and expenses of any special experts retained by the Company
in connection with such registration, reasonable fees and expenses of any other
persons retained by the Company and the fees and expenses associated with any
required filing with the National Association of Securities Dealers, Inc.
Securities Act: the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Senior Debt: all indebtedness of the Company that is secured by liens
or encumbrances on assets of the Company, which liens or encumbrances have
priority over the security interests that secure the repayment of the Notes.
Subsidiary: any corporation of which more than fifty percent (by number
of votes) of the voting stock is owned, directly or indirectly, by the Company
at any time during the term of this Agreement.
Warrants: any Class A Purchase Warrants allowing the holder thereof to
purchase a share of Common Stock issued under the terms of the Offering.
1.2 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
1.3 Directly or Indirectly. Where any provision of this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person or any Subsidiary or agent of
such Person or otherwise at the request, direction or for the benefit of such
Person.
SECTION 2
THE NOTES
2.1 Issuance of Definitive Notes. On any Closing Date, the Company will
issue Note Certificates to all qualified Persons whose subscriptions are
accepted by the Company in the Offering. Notes shall be issued in minimum
principal amounts of $60,000 (per $50,000 Offering subscription) and integral
multiples of $6,000 (per $5,000 Offering subscription) in excess thereof. The
Company shall have the option in its sole discretion to issue Notes in principal
amounts less than $60,000. The Notes shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plan as the Company may
determine.
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Exhibit 4.1
The Notes shall be dated as of the date of their issue, except that any Note
issued upon the transfer, exchange or substitution of another Note shall be
dated the date of its original authentication.
2.2 Prepayment. The Notes are subject to prepayment at the option of
the Company at any time on or prior to November 15, 1997. If less than all
outstanding Notes are prepaid by the Company, the selection of Notes for
prepayment may be made on a pro rata or random lot basis as determined by the
Company.
2.3 No Sinking Fund. The Company shall not be required to set aside or
earmark funds to make required payments with respect to the Notes.
2.4 Persons Entitled to Note Interest Payments. The person in whose
name a Note is registered at the close of business on any Record Date shall be
entitled to receive any interest payable with respect to such Note on the
Interest Payment Date next following such Record Date, notwithstanding the
cancellation of such Note upon any registration of transfer or exchange thereof
subsequent to such Record Date and prior to such Interest Payment Date. The
Holder of any Note issued upon the transfer, exchange or substitution of another
Note shall only be entitled to receive interest payable with respect to that
Note from and after the Interest Payment Date next following the first Record
Date occurring after the issuance of such Note.
2.5 Security. The Notes shall be secured by a security interest in all
of the assets, tangible and intangible, of the Company and its Subsidiaries,
which assets include assets currently owned on or acquired after any Closing
Date.
2.6 Payment of Principal and Interest. Interest shall be payable on the
Interest Payment Dates; and principal shall be payable on the Maturity Date. The
Company shall pay the interest on the unpaid principal balance of the Notes as
provided herein. The entire remaining principal amount of the Notes shall become
due and payable on the Maturity Date.
2.7 Extension of Maturity Date. The Maturity Date of the Notes may be
extended from January 31, 1998 to July 31, 1998 by the Company upon payment to
the holders of an extension fee equal to five percent of the face amount of the
Notes on or before January 15, 1998.
2.8 Application of Payment. All payments received shall be applied to
the payment of the Notes in the following order of priority: (a) first, to the
payment of accrued interest, (b) second, to the payment of principal then due,
and (c) third, to the payment of premium, if any.
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Exhibit 4.1
SECTION 3
COMPANY COVENANTS
3.1 Corporate Existence. Except as otherwise permitted herein, the
Company will, and will cause each Subsidiary to, at all times preserve and keep
in full force and effect its corporate existence, rights and franchises.
3.2 Payment of Taxes and Claims. The Company will, and will cause each
Subsidiary to, pay (a) all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or profits, (b) all trade accounts payable in
accordance with usual and customary business terms, and (c) all claims
(including, without limitation, claims for labor, services, inventory, materials
and supplies) for sums which have become due and payable and which by law have
or might become a lien or charge upon any of its properties or assets; provided,
that no such tax, assessment, charge, account payable or claim need be paid if
being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserve or other appropriate provisions, if
any, as shall be required by GAAP shall have been made therefor.
3.3 Maintenance of Properties; Business Insurance. The Company will,
and will cause each Subsidiary to, maintain or cause to be maintained in good
repair, working order and condition all properties (whether owned in fee or a
leasehold interest) used or useful in the business of the Company and its
Subsidiaries and, from time to time, will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Company will
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by corporations of established
reputation engaged in the same or similar business and similarly situated, of
such types and in such amounts as are customarily carried under similar
circumstances by such other corporations.
3.4 Limitations on Senior Debt. The Company will not, and will not
permit any Subsidiary to, create, assume or incur or in any manner be or become
liable in respect of any Senior Debt, except Senior Debt that (a) arises by
operation of law, (b) arises pursuant to the Uniform Commercial Code, as
applicable, in connection with purchase money security interests, or (c) was
outstanding prior to the effective date of this Agreement.
3.5 Dividends. The Company will not:
(a) Declare or pay any dividends, either in cash or property,
on any shares of its Common Stock (except dividends or other
distributions payable solely in shares of Common Stock of the Company);
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Exhibit 4.1
(b) Purchase, redeem or retire any shares of its capital stock
of any class or any warrants, rights or options to purchase or acquire
any shares of its capital stock (except in connection with a repurchase
or redemption of shares, rights or options held by any former employee
of the Company in connection with the termination or severance of such
employee); or
(c) Make any other payment or distribution in respect of its
Common Stock.
The foregoing notwithstanding, nothing in this Section 3.5 or other provision of
this Agreement shall limit the right of the Company to issue capital stock,
subject to Section 6.4 hereof, and to pay dividends as specified on any such
capital stock other than Common Stock.
3.6 Transactions with Affiliates. After the effective date of this
Agreement, the Company will not, and will not permit any Subsidiary to, enter
into or be a party to any transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate),
except:
(a) in the ordinary course of and pursuant to the reasonable
requirements of the Company's or any such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Company or its
Subsidiary than would obtain in a comparable arm's-length transaction
with a Person other than an Affiliate; and
(b) employment agreements with executive officers of the
Company or any Subsidiary.
3.7 Representation on the Board of Directors. Until the Notes are paid
in full or otherwise not outstanding, Placement Agent shall be entitled to
appoint two persons to the Board of Directors of the Company, and the Company
shall cause such persons to be elected to the Board of Directors of the Company.
On or before the Closing Date, the Company shall cause its number of Directors
to be five and shall maintain that number so long as this Agreement is in
effect. The foregoing notwithstanding, the Company may increase the number of
members of the Board of Directors by two upon the issuance of an additional
series of capital stock of the Company other than Common Stock provided solely
the holders of such series of capital stock are entitled to elect the members of
the Board of Directors, as a class, so added.
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Exhibit 4.1
SECTION 4
EVENTS OF DEFAULT & REMEDIES THEREFOR
4.1 Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) Default in the payment of the principal of any Note or
premium thereon, if any, at the expressed or any accelerated maturity
date;
(b) Default in the payment of interest on any Note when due
and such default shall continue for more than 15 days;
(c) Default in the observance or performance of any other
covenant or provision of this Agreement or the Note that is not
remedied within 30 days after written notice to the Company from the
Placement Agent or the holders of at least 25% in aggregate principal
amount of the Notes then outstanding;
(d) A judgement or order is obtained for the payment of money
in an aggregate amount in excess of $1,000,000 (net of applicable
insurance coverage that is acknowledged in writing by the insurer)
having been rendered against the Company or any of its Subsidiaries and
such judgements or orders shall continue unsatisfied and unstayed for a
period of 60 days;
(e) The Company or any Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes
an assignment for the benefit of creditors, or the Company or any
Subsidiary causes or suffers an order for relief to be entered with
respect to it under applicable federal bankruptcy law or applies for or
consents to the appointment of a custodian, trustee or receiver for the
Company or any Subsidiary or for the major part of the property of the
Company or any Subsidiary;
(f) A custodian, liquidator, trustee or receiver is appointed
for the Company or any Subsidiary or for the major part of the property
of the Company or any Subsidiary and is not discharged within 30 days
after such appointment;
(g) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Subsidiary and, if instituted against the
Company or any Subsidiary, are consented to or are not dismissed within
60 days after such institution; or
(h) Any representation or warranty made by the Company herein,
or made by the Company in any written statement or certificate
furnished by the Company in
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Exhibit 4.1
connection with the consummation of the issuance and delivery of the
Notes on the Offering or furnished by the Company pursuant hereto, is
untrue in any material respect as of the date of the issuance or making
thereof.
4.2 Notice to Placement Agent. When any Event of Default described in
Section 4.1 has occurred, the Company shall give notice thereof within three
business days thereafter of such event to the Placement Agent. Upon receipt of
such notice of the occurrence of an Event of Default, Placement Agent shall
appoint a Note Agent which shall act on behalf of the Holders as provided herein
and shall, within 20 days after the receipt of such notice, mail to all Holders,
as the names and addresses of such Holders appear upon the registration books of
the Company, notice of all Defaults known to the Placement Agent, unless such
Defaults shall have been cured before the giving of such notice; provided,
however, that, except in the case of Default in the payment of the principal of
or interest on any of the Notes, the Placement Agent shall be protected in
withholding such notice if Placement Agent determines in good faith that the
withholding of such notice is in the interests of the Holders.
4.3 Acceleration; Rescission and Annulment.
(a) If an Event of Default occurs and is continuing, then and
in every such case the Note Agent or the Holders of Notes representing not less
than 25% of the aggregate principal amount of the outstanding Notes may declare
the unpaid principal, premium, if any, and accrued and unpaid interest of all
the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Note Agent if given by Holders), and upon any such
declaration such principal, premium, if any, and accrued and unpaid interest
shall become immediately due and payable, notwithstanding anything contained in
this Agreement or the Notes to the contrary. If an Event of Default specified in
Section 4.1(e), (f) or (g) above occurs, all unpaid principal of, and accrued
interest on, the Notes then outstanding will become due and payable, without any
declaration or other act on the part of the Note Agent or any Holder.
(b) At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Note Agent as hereinafter provided, the Holders of Notes
representing a majority of the aggregate in principal amount of the outstanding
Notes, by written notice to the Company and the Note Agent, may rescind and
annul such declaration and its consequences if
(i) the Company has paid or deposited with the Note
Agent a sum sufficient to pay;
(A) all overdue installments of interest on
all Notes,
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Exhibit 4.1
(B) the principal of (and premium, if any,
on) any Notes which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the Notes,
and
(C) all sums paid or advanced by the Note
Agent hereunder and the reasonable compensation, expenses,
disbursements and advances of the Note Agent, its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment
of the principal of Notes which have become due solely by such acceleration,
have been cured or waived as provided herein.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
4.4 Collection of Indebtedness and Suits for Enforcement by Note Agent.
(a) The Company covenants that if:
(i) Default is made in the payment of any installment
of interest on any Notes when such interest becomes due and payable and such
Default continues for a period of 15 days, or
(ii) Default is made on the payment of the principal
of (or premium, if any, on) any Notes at the Maturity Date thereof,
the Company will, upon demand of the Note Agent, pay to it, for the benefit of
the Holders of such Notes, the whole amount then due and payable on such Notes
for principal (and premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Note Agent,
its agents and counsel.
(b) If the Company fails to pay such amounts forthwith upon
such demand, the Note Agent, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.
(c) If an Event of Default occurs and is continuing, the Note
Agent may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such
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Exhibit 4.1
appropriate judicial proceedings as the Note Agent shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Agreement or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
4.5 Note Agent May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Note or the property of the Company or of such other obligor or their creditors,
the Note Agent (irrespective of whether the principal of the Notes shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Note Agent shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise;
(i) to file and prove a claim for the amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Note Agent
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Note Agent, its agents and counsel)
and of the Holders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Note Agent, and in the event that the Note Agent shall
consent to the making of such payments directly to the Holders, to pay to the
Note Agent any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Note Agent, its agents and counsel, and any
other amounts due the Note Agent under this Agreement.
(b) The Note Agent shall not be required to join the Holders
as necessary parties to any such judicial proceeding, provided, however, that
nothing herein contained shall be deemed to authorize the Note Agent to
authorize and consent to or accept, or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Note Agent to vote in
respect of the claim of any Holder in any such proceeding.
4.6 Note Agent May Enforce Claims Without Possession of Note
Certificates. All rights of action and claims under this Agreement or the Notes
may be prosecuted and enforced
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Exhibit 4.1
by the Note Agent without the possession of any of the Note Certificates or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Note Agent shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Note Agent, its agents and counsel, be for the ratable benefit of the
Holders of the Notes in respect of which such judgment has been recovered.
4.7 Application of Money Collected. Any money collected by the Note
Agent pursuant to this Section 4 shall be applied in the following order, at the
date or dates filed by the Note Agent and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Note Certificates and the notation thereon of the payment if
partially paid and upon surrender thereof if fully paid;
FIRST: To the payment of all amounts due the Note Agent under
this Agreement;
SECOND: To the payment of the amounts then due and unpaid upon
the Notes for principal (and premium, if any) and interest, in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Notes, for principal (and premium, if any) and interest; and
THIRD: To the Company.
4.8 Limitation on Suits. Except as provided in Section 4.9, no Holder
of any Note shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Note Agent of a continuing Event of Default;
(b) the Holders of not less than 25% of the aggregate
principal amount of the outstanding Note shall have made written request to the
Note Agent to institute proceedings in respect of such Event of Default in its
own name as Note Agent hereunder;
(c) such Holder or Holders have offered to the Note Agent
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(d) the Note Agent for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
12
Exhibit 4.1
(e) no direction inconsistent with such written request has
been given to the Note Agent during such 60-day period by the Holders of a
majority of the aggregate principal amount of the outstanding Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Agreement to affect, disturb or prejudice the rights of any Holders of
Notes, or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Agreement, except in the manner
herein provided and for the equal and ratable benefit of all the Holders of
Notes.
4.9 Unconditional Right of Holders to Receive Principal, Premium and
Interest. Notwithstanding any other provision in this Agreement, the Holder of
any Note shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and interest on such Note on
the Maturity Date and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
4.10 Restoration of Rights and Remedies. If the Note Agent or any
Holder has instituted any proceeding to enforce any right or remedy under this
Agreement and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Note Agent or to such Holder, then and
in every such case the Company, the Note Agent and the Holders shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Note Agent and the Holders shall continue as though no such proceeding had been
instituted.
4.11 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Note Agent or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder or
otherwise shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
4.12 Delay or Omission Not Waiver. No delay or omission of the Note
Agent or of any Holder to exercise any right or remedy occurring upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Agreement or by law to the Note Agent or to Holders may be exercised
from time to time and as often as may be deemed expedient by the Note Agent or
by the Holders, as the case may be.
4.13 Control by Holders. The Holders of a majority of the aggregate
principal amount of the outstanding Notes shall have the right to direct the
time, method and place of
13
Exhibit 4.1
conducting any proceeding for any remedy available to the Note Agent or
exercising any trust or power conferred on the Note Agent, provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Agreement; and
(b) the Note Agent may take any other action deemed proper by
the Note Agent which is not inconsistent with such direction.
4.14 Waiver of Past Defaults. The Holders of a majority of the
aggregate principal amount of the outstanding Notes may on behalf of the Holders
of all the Notes waive any past Default hereunder and its consequences, except a
default:
(a) in the payment of the principal of (or premium, if any) or
interest on any Note, or
(b) in respect of a covenant or provision hereof which under
this Agreement cannot be modified or amended without the consent of the Holder
of each outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Agreement; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
4.15 Undertaking for Costs. All parties to this Agreement agree, and
each Holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Note Agent for any action taken or omitted by it as Note Agent, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant.
4.16 Waiver of Stay or Extension Laws. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Agreement; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it or they will not
hinder, delay or impede the execution of any power herein granted to the Note
Agent, but will suffer and permit the execution of every such power as though no
such law had been enacted.
14
Exhibit 4.1
SECTION 5
AMENDMENTS, WAIVERS & CONSENTS
5.1 Consent Required.
(a) Except as otherwise provided in this Section 5.1, any
term, covenant, agreement or condition of this Agreement may, with the consent
of the Company, be amended or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in writing of the
Placement Agent, which rights to amend include, but are not limited to, the
rights to: (i) cure any ambiguity, omission, defect or inconsistency of this
Agreement, (ii) provide for the assumption of the obligations of the Company
under this Agreement upon the merger, consolidation or sale or other disposition
of all or substantially all of the assets of the Company, (iii) provide for
uncertificated Notes in addition to or in place of certificated Notes, or (iv)
make any change that would provide additional rights or benefits to the holders
of Notes or that does not adversely affect the rights of any holder of Notes in
any material respect.
(b) Notwithstanding anything herein to the contrary, the
written consent of all of the Holders of Notes shall be required to (i) extend
the time of payment of the principal of or the interest, including default
interest, or premium, if any, on any Note or reduce the principal amount thereof
or change the rate of interest thereon, (ii) change any of the provisions of
Section 6 or Section 8 hereof, (iii) change the percentage of Holders required
to consent to any such waiver, amendment, alteration or modification of any of
the provisions of Section 3 or Section 4 hereof, (iv) make any Note payable in
money other than that stated herein, (v) impair the right to institute suit for
the enforcement of any payment of principal of, or premium, if any, or interest
on, any Note, (vi) make any change in the percentage of principal amount of
Notes necessary to waive compliance with any provision of this Agreement, or
(vii) waive a continuing Default or Event of Default in the payment of principal
of, premium, if any, or interest on the Notes.
5.2 Effect of Amendment or Waiver. Any such amendment or waiver shall
apply equally to all of the Holders and shall be binding upon them, upon each
future Holder and upon the Company, whether or not any Note shall have been
marked to indicate such amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or impair any
right consequent thereon.
5.3 Solicitation of Holders. The Company will not solicit, request or
negotiate for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or the Notes unless each Holder (irrespective of
the amount of Notes then owned by it) shall be concurrently informed thereof by
the Company and shall be afforded the opportunity of considering the same and
shall be supplied by the Company with sufficient information to enable it to
make an informed decision with respect thereto. Executed or true and correct
copies of any
15
Exhibit 4.1
waiver or consent effected pursuant to the provisions of this Section 5 shall be
delivered by the Company to each Holder forthwith following the date on which
the same shall have been executed and delivered by the Holder or Holders of the
requisite percentage of outstanding Notes. The Company will not, directly or
indirectly, pay or cause to be paid any fee (whether denominated as servicing
fee or otherwise) or other remuneration, including supplemental or additional
interest, expenses or other amount, to any Holder as consideration for or as an
inducement to the consideration or review of or entering into by such Holder of
any waiver or amendment of any of the terms and provisions of this Agreement (or
any proposed waiver or amendment hereof) unless such remuneration is
concurrently paid, on the same terms, ratably to all Holders.
SECTION 6
CONVERSION OF NOTES
6.1 Conversion Rights and Manner of Exercise. Upon compliance with the
provisions hereof, any Holder shall have the right, at any time and from time to
time, to convert not less than $5,000 portions of the principal amount of such
Note into one share of Common Stock of the Company for each $1.00 (subject to
Section 6.4) of unpaid principal amount of the Note or, in case an adjustment of
such price has taken place pursuant to the following provisions hereof, then at
the price as last adjusted and in effect at the date such Note or portion
thereof is surrendered for conversion. The Company shall have the option to
allow Notes to be converted into Common Stock in minimum denominations less than
$5,000. To exercise such conversion privilege, the Holder thereof shall
surrender such Note to the Company at its principal office accompanied by a
completed Conversion Notice designating the unpaid principal amount of such Note
to be converted and stating the name and address of the Person in whose name
certificates for shares of Common Stock are to be registered.
6.2 Issuance of Common Stock Certificates. As promptly as practicable
(but in any event within 10 business days) after the receipt of a Conversion
Notice and surrender of the Note as provided in Section 6.1, the Company shall
issue and deliver to such Holder, issued in the name of such Holder or such
other Person or Persons as such Holder may reasonably request, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such Note (or specified portion thereof). Such conversion shall be
deemed to have been effected and the Conversion Price shall be determined as of
the close of business on the date on which such Conversion Notice shall have
been received by the Company and at such time the rights of the Holder (or
specified portion thereof) as such Holder shall cease, and the Person or Persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented thereby.
6.3 Cash Adjustments on Conversion. No payment or adjustment shall be
made upon any conversion on account of any cash dividends declared for payment
as of a record date
16
Exhibit 4.1
prior to the date of conversion on the shares of Common Stock issued upon
conversion of a Note. In the case of any Note that is converted in part only,
the Company shall, upon such conversion, execute and deliver to the Holder
thereof, at the expense of the Company, a new Note in principal amount equal to
the unconverted portion of the Note surrendered and otherwise of like tenor
therewith. No fractional share of Common Stock shall be issued upon conversion
of any Note, but if the conversion results in a fraction, an amount equal to
such fraction multiplied by the applicable Conversion Price shall be paid in
cash to the Holder of the Note being converted.
6.4 Antidilution Adjustments.
(a) In the event the Company at any time or from time to time
after the issuance of any Notes shall declare or pay any dividend on its capital
stock payable in Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then and in any such event, the
Conversion Price shall be adjusted by multiplying the Conversion Price prior to
the adjustment by the number of shares of Common Stock outstanding immediately
prior to the effective time of such event and dividing the result by the number
of shares of Common Stock outstanding immediately after the effective time of
such event, effective in the case of such dividend, immediately after the close
of business on the record date for the determination of holders of capital stock
entitled to receive such dividend, or in the case of a subdivision or
combination, at the close of business immediately prior to the date upon which
such corporate action becomes effective.
(b) In the event the Company at any time or from time to time
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in capital stock of
the Company other than shares of Common Stock, then and in each such event
provision shall be made so that the Holders receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities which such Holders would have received had the Notes been
converted prior to such effective record date.
(c) Whenever the Conversion Price shall be adjusted pursuant
to this Section 6.4, the Company shall promptly deliver a certificate signed by
the President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Company, setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the Company made any
determination hereunder), by first class mail postage prepaid to each Holder.
6.5 Mergers, Consolidations, Sales. In the case of any consolidation or
merger of the Company with another entity, or the sale of all or substantially
all of its assets to another
17
Exhibit 4.1
entity, or any reorganization or reclassification of the Common Stock or other
equity securities of the Company (except a subdivision or combination provision
for which is made in Section 6.4(a) hereof), then, as a condition of such
consolidation, merger, sale, reorganization or reclassification, lawful and
adequate provision shall be made whereby the Holders shall thereafter have the
right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
receivable upon conversion of their Notes, such shares of stock, securities,
assets or cash as may (by virtue of such consolidation, merger, sale,
reorganization or reclassification) be issued or payable with respect to or in
exchange for a number of outstanding shares of Common Stock equal to the number
of shares of Common Stock immediately theretofore so receivable hereunder had
such consolidation, merger, sale, reorganization or reclassification not taken
place, and in any such case appropriate provisions shall be made with respect to
the rights and interests of the Holders to the end that the provisions of this
Section 6 (including, without limitation, provisions for adjustment of the per
share Conversion Price) shall thereafter be applicable as nearly as may be, in
relation to any shares of stock, securities, assets or cash thereafter
deliverable upon conversion of such Notes. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor entity (if other than the Company) resulting
from such consolidation or merger or the entity purchasing such assets shall
assume by written instrument executed and mailed or delivered to each Holder,
the obligation to deliver to such Holder such shares of stock, securities,
assets or cash as, in accordance with the foregoing provisions, such Holder may
be entitled to receive.
6.6 Dissolution or Liquidation. In the event of any proposed
distribution of the assets of the Company in dissolution or liquidation (except
under circumstances when Section 6.4 shall be applicable), the Company shall
mail notice thereof to the Holders and shall make no distribution to
shareholders until the expiration of 30 days from the date of mailing such
notice and, in any such case, the Holders may exercise the conversion rights
with respect to their Notes within 30 days from the date of mailing such notice
and all rights herein granted not so exercised within such 30 day period shall
thereafter become null and void.
6.7 Notice of Extraordinary Dividends. If the Board of Directors of the
Company shall declare any dividend or other distribution on its Common Stock
except out of retained earnings or by way of a stock dividend payable in shares
of its Common Stock on its Common Stock, the Company shall mail notice thereof
to the registered Holders not less than 15 days prior to the record date fixed
for determining shareholders entitled to participate in such dividend or other
distribution and the Holders shall not participate in such dividend or other
distribution or be entitled to any rights on account or as a result thereof
(except adjustments as provided in Section 6.4(b)) unless and to the extent that
such conversion rights are exercised prior to such record date. The provisions
of this Section 6.7 shall not apply to distributions covered by Section 6.4(a)
or made in connection with transactions covered by Section 6.5 hereof.
18
Exhibit 4.1
6.8 Reservation of Common Stock. The Company will at all times reserve
and keep available such number of authorized shares of its Common Stock, solely
for the purpose of issue upon the conversion of Notes as herein provided for, as
shall then be issuable upon the conversion of all outstanding Notes.
6.9 Fully Paid Stock; Taxes. The Company covenants and agrees that the
shares of stock represented by each and every certificate for its Common Stock
to be delivered on the exercise of the conversion rights herein provided for
shall, at the time of such delivery, be validly issued and outstanding and be
fully paid and nonassessable. The Company further covenants and agrees that it
will pay when due and payable any and all federal and state taxes (other than
income taxes) that may be payable in respect of the Notes or any Common Stock or
certificates therefor upon the exercise of the conversion rights herein provided
for pursuant to the provisions hereof. The Company shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the transfer and delivery of stock certificates in the name other than that
of the Holder of the Note converted, and any such tax shall be paid by such
Holder at the time of presentation.
SECTION 7
RESTRICTIONS ON TRANSFERABILITY
7.1 Restrictions on Transferability. The Notes and the Conversion
Shares shall not be transferable except upon the conditions hereinafter
specified, which conditions are intended to ensure compliance with the
provisions of the Securities Act and any applicable state securities laws, in
respect of the transfer of any Notes or any such Conversion Shares.
7.2 Restrictive Legends.
(a) Each Note initially issued under this Agreement and each
Note issued in exchange therefor shall bear on the face thereof a legend
substantially as follows:
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER
APPLICABLE SECURITIES LAWS OR IF AN EXEMPTION THEREFROM IS AVAILABLE.
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF ARE TRANSFERABLE ONLY UPON THE CONDITIONS SPECIFIED IN THE NOTE
AGREEMENT REFERRED TO HEREIN. A COPY OF THE NOTE AGREEMENT WILL BE
PROVIDED TO THE REGISTERED HOLDER THEREOF UPON REQUEST TO THE COMPANY.
19
Exhibit 4.1
(b) Each certificate for shares of Common Stock initially
issued upon the conversion of any Note and each certificate for shares of Common
Stock issued to a subsequent transferee of such certificate shall, unless
otherwise permitted by the provisions of this Section 7 bear on the face thereof
a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
OR SOLD ONLY IF REGISTERED UNDER APPLICABLE SECURITIES LAW OR PURSUANT
TO AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH
REGISTRATION IS NOT REQUIRED. THE TRANSFER OF SUCH SHARES IS SUBJECT TO
CERTAIN CONDITIONS, THE PROVISIONS OF WHICH WILL BE PROVIDED TO THE
REGISTERED HOLDER HEREOF UPON REQUEST BY THE COMPANY, AND NO TRANSFER
OF SUCH SHARES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS SHALL
HAVE BEEN FULFILLED.
In the event that a registration statement covering any Conversion Shares shall
become effective under the Securities Act and under any applicable state
securities laws or in the event that the Company shall receive an opinion of its
counsel that, in the opinion of such counsel, such legend is not, or is no
longer, necessary or required with respect to such shares (including, without
limitation, because of the availability of the exemption afforded by Rule 144 of
the general rules and regulations of the Commission), the Company shall or shall
instruct its transfer agents and registrars to, remove such legend from the
certificates evidencing such Conversion Shares or issue new certificates without
such legend in lieu thereof. Upon the written request of any Holder or the
holder of any Conversion Shares, the Company covenants and agrees forthwith to
request its counsel to render an opinion with respect to the matters covered by
this paragraph and to bear all expenses in connection with such opinion of its
counsel.
7.3 Notice of Proposed Transfer; Registration Not Required. The Holder
of each Note or any Conversion Shares, by acceptance thereof, agrees to give
prior written notice to the Company of such Holder's intention to transfer such
Note or such Conversion Shares (or any portion thereof), describing briefly the
manner and circumstances of the proposed transfer, together with an opinion of
counsel to the effect that the proposed transfer may be effected without
registration or qualification under any federal or state law. Unless the Company
shall have received an opinion from counsel to the Company (which opinion shall
be obtained by the Company not more than ten days after notice of a proposed
transfer) that the proposed transfer may not be effected without registration or
qualification under federal or state law, such Holder shall be entitled to
transfer such Note or such Conversion Shares, all in accordance with the terms
of the notice delivered by such holder to the Company. All fees and expenses of
counsel for the Company in connection with the rendition of the opinion provided
for in this Section 7.3 shall be paid by the Company.
20
Exhibit 4.1
7.4 Transfer of Notes. If in the opinion of either counsel referred to
in Section 7.3 a proposed transfer of a Note or Conversion Shares requested by
the Holder thereof may not be effected without registration or qualification
under applicable federal or state law, the Company shall promptly give written
notice to the Holder who proposes to transfer the Note or such Conversion Shares
(or any portion thereof) that the Holder shall not consummate the proposed
transfer and the reasons therefor. No Note or Conversion Shares (or any portion
thereof) for which a transfer has been proposed pursuant to Section 7.3 may be
transferred in the manner proposed if registration thereof under the Securities
Act would be required in the opinion of either counsel mentioned above.
SECTION 8
REGISTRATION OF CONVERSION SHARES
8.1 Shelf Registration. The Company shall use its reasonable best
efforts to cause to be filed with the Commission no later than three months
after the final closing of the Offering a shelf registration statement on an
appropriate form under Rule 415 under the Securities Act or any similar rule
that may be adopted by the Commission, providing for the sale by the Holders of
the Conversion Shares. The Company shall use its reasonable best efforts to have
such shelf registration statement declared effective by the Commission as soon
as practicable after such filing. The Company agrees to use its best efforts to
keep the shelf registration statement continuously effective (and to take any
and all other actions reasonably necessary in order to permit public resale of
the Conversion Shares covered by such shelf registration statement in accordance
with this Agreement) for a period of two years after the registration statement
is declared effective. The Company further agrees, if necessary, to supplement
or amend the shelf registration statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
shelf registration statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration, and the Company agrees to furnish
notice thereof to the Holders of the Conversion Shares.
8.2 Conditions Relating to Shelf Registration.
(a) Subject to paragraph (b) of this Section 8.2, the
registration rights of the Holders pursuant to this Agreement and the ability to
offer and sell Conversion Shares pursuant to the shelf registration statement
are subject to the following conditions and limitations, and each Holder agrees
with the Company that:
(i) If the Company determines in its good faith
judgment that the filing of the shelf registration statement under
Section 8.1 hereof or the use of any prospectus would require the
disclosure of important information which the Company has a bona fide
business purpose for preserving as confidential or the disclosure of
which would impede the Company's ability to consummate a significant
transaction, upon written notice of such determination by the Company,
the rights of the Holders to offer,
21
Exhibit 4.1
sell or distribute any securities pursuant to the shelf registration
statement or to require the Company to take action with respect to the
registration or sale of any securities pursuant to the shelf
registration statement (including any action contemplated by Section
8.4 hereof) will for up to 60 days in any 12 month period be suspended
until the date upon which the Company notifies the Holders in writing
that suspension of such rights for the grounds set forth in this
Section 8.2(a)(i) is no longer necessary.
(ii) If all reports required to be filed by the
Company pursuant to the Exchange Act have not been filed by the
required date without regard to any extension, or if consummation of
any business combination by the Company has occurred or is probable for
purposes of Rule 3-05 or Article 11 of Regulation S-X under the
Securities Act, upon written notice thereof by the Company to the
Holders, the rights of the Holders to offer, sell or distribute any
securities pursuant to the shelf registration statement or to require
the Company to take action with respect to the registration or sale of
any securities pursuant to the shelf registration statement (including
any action contemplated by Section 8.4 hereof) will for up to 60 days
in any 12 month period be suspended until the date upon which the
Company has filed such reports or obtained the financial information
required by Rule 3-05 or Article 11 of Regulation S-X to be included in
the shelf registration statement.
(iii) In the case of the registration of any
underwritten primary equity offering initiated by the Company (other
than any registration by the Company on Form S-8, or a successor or
substantially similar form, of (A) an employee stock option, stock
purchase or compensation plan or of securities issued or issuable
pursuant to any such plan, or (B) a dividend reinvestment plan), each
Holder agrees, if requested in writing by the managing underwriter or
underwriters administering such offering, not to effect any offer, sale
or distribution of securities (or any option or right to acquire
securities) during the period commencing on the 10th day prior to the
effective date of the registration statement covering such underwritten
primary equity offering and ending on the date specified by such
managing underwriter in such written request to such Holder, which
period may be of a duration of 90 days or more.
(iv) In the event that the Company plans to
repurchase or bid for securities of the Company in the open market, on
a private solicited basis or otherwise, and the Company determines, in
its reasonable good faith judgment and based upon the advice of counsel
to the Company (which counsel shall be experienced in securities laws
matters), that any such repurchase or bid may not, under Rule 10b-6
under the Exchange Act, or any successor or similar rule, be commenced
or consummated due to the existence or the possible commencement of a
"distribution" (within the meaning of Rule 10b-6) as a result of any
offers or sales by Holders of any Conversion Shares, as the case may
be, under any registration statement filed pursuant to this Agreement,
the Company shall be entitled, for a period of 90 days or more, to
22
Exhibit 4.1
request that Holders of Conversion Shares, to suspend or postpone such
distribution pursuant to such registration statement. The Company
shall, as promptly as practicable, give such Holder or Holders written
notice of such election, stating the basis for the Company's
determination. As promptly as practicable following the determination
by the Company that the Holders may commence or recommence their
distribution pursuant to the registration statement without causing the
Company to be in violation of Rule 10b-6, the Company shall give such
Holder or Holders written notice of such determination.
(b) Notwithstanding the provisions of Section 8.2(a) above,
the aggregate number of days (whether or not consecutive) during which the
Company may delay the effectiveness of the shelf registration statement or
prevent offerings, sales or distribution by the Holders thereunder pursuant to
Section 8.2(a) shall in no event exceed 180 days during any 12- month period.
(c) The Company may require each selling Holder of Conversion
Shares, as a condition to the inclusion of the Conversion Shares of such selling
Holder in the shelf registration statement or in any offering thereunder, as the
case may be, to furnish to the Company such information regarding the Holder and
the distribution of such securities as the Company may from time to time
reasonably request (which request shall be confirmed in writing if requested by
the Company) in order to comply with applicable law and such other information
as may be legally required in connection with such registration or offering, and
the Holder shall promptly provide such information and a written consent to the
inclusion of such information in the registration statement or any prospectus or
supplement thereto; provided that the failure of any Holder to provide such
information to the Company shall not in any way affect the obligations of the
Company hereunder with respect to any other Holder.
8.3 Registration Procedures. In connection with the obligations of the
Company with respect to a registration statement pursuant to Section 8.1 hereof
and subject to Section 8.2 hereof, the Company shall:
(a) (i) prepare and file with the Commission a registration
statement on the appropriate form under the Securities Act, (A) which form shall
be selected by the Company and shall be available for the sale of the Conversion
Shares in accordance with the intended method or methods of distribution by the
selling Holders thereof (provided that the Company shall not be required to use
any form other than Form ▇-▇, ▇-▇, ▇-▇, ▇▇-▇ or SB-2 or any successor form and
shall not be required to file more than one registration statement with the
Commission) and (B) which registration statement shall comply as to form in all
material respects with the requirements of the applicable form and include or
incorporate by reference all financial statements required by the Commission to
be so included or incorporated by reference, further provided that subject to
the registration statement and prospectus being in compliance with the
requirements of the Securities Act and the Exchange Act (including all rules and
regulations of the Commission thereunder), the Company has the sole discretion
to determine the form,
23
Exhibit 4.1
substance and presentation of any financial or other information included in any
registration statement or prospectus, and whether such information should be
included in such registration statement or prospectus; and (ii) use its
reasonable best efforts to cause such registration statement to become effective
and remain effective in accordance with Section 8.1 hereof;
(b) prepare and file with the Commission such amendments and
post- effective amendments to the registration statement as may be necessary to
keep such registration statement effective for the applicable period; and cause
each prospectus to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act;
(c) in the event that any federal law or regulation binding on
the Company and adopted after the date hereof so requires (and would also so
require if the Conversion Shares were being offered in a primary offering by the
Company rather than by the Holders), use its reasonable best efforts to cause
such Conversion Shares to be registered with or approved by such other federal
governmental agencies or authorities in the United States, if any, as may be
required by virtue of the business and operations of the Company to enable the
selling Holders to consummate the disposition of such Conversion Shares;
(d) furnish to each Holder of Conversion Shares and to each
managing underwriter of an underwritten offering of Conversion Shares pursuant
to Section 4(1) of the Securities Act, if any, without charge, as many copies of
each prospectus, including each preliminary prospectus, and any amendment or
supplement thereto as such Holder or underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the Conversion
Shares;
(e) use its reasonable best efforts to register or qualify the
Conversion Shares under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Conversion Shares of such class covered by
the registration statement shall, on 20 days prior written notice, reasonably
request in writing. Such notice to be sent at any time prior to the applicable
registration statement being declared effective by the Commission. The Company
shall maintain such registration or qualification in effect during the
applicable period provided in Section 8.1 hereof; provided, however, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 8.3; (ii) subject itself to taxation in any such jurisdiction; (iii)
make any change to its Articles or Incorporation or Bylaws; or (iv) become
subject to general service of process in any jurisdiction where it is not then
so subject;
(f) notify each Holder of Conversion Shares as promptly as
practicable after becoming aware thereof and (if requested by any such Holder)
confirm such notice in writing (i) when the registration statement has become
effective and when any post-effective amendments and supplements thereto become
effective; (ii) of any request by the Commission or any state
24
Exhibit 4.1
securities authority for amendments and supplements to the registration
statement and any prospectus or for additional information relating to the
Conversion Shares or the registration or qualification thereof after the
registration statement has become effective; (iii) of the issuance by the
Commission or any state securities authority of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceedings
for that purpose; (iv) if the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the Conversion Shares cease to be true
and correct in any material respect prior to the closing date specified in such
agreement (provided such notice shall be given only to Holders which are parties
to the agreements pursuant to which such representations and warranties are
made), or if the Company receives any notification with respect to the
suspension of the qualification of the Conversion Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose; and (v) of
the happening of any event during the period (other than any suspension period
referred to in Section 8.2) during which the registration statement is required
hereunder to be effective as a result of which the registration statement or any
prospectus would contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(g) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement or the
qualification of the Conversion Shares for sale in any jurisdiction as promptly
as practicable;
(h) furnish to each Holder of Conversion Shares, without
charge, at least one conformed copy of the registration statement and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested in writing);
(i) cooperate with the Holders of Conversion Shares to
facilitate the timely preparation and delivery of certificates representing
Conversion Shares to be sold pursuant to the registration statement and not
bearing any restrictive legends; and enable such Conversion Shares to be in such
denominations and registered in such names as the selling Holders may reasonably
request (in each case, provided such certificates are requested in writing at
least three business days prior to any delivery thereof);
(j) upon the occurrence of any event contemplated by Section
8.3(f)(v) hereof, use its reasonable best efforts as promptly as practicable to
prepare and file with the Commission a supplement or post-effective amendment to
the registration statement or the related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Conversion Shares, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
25
Exhibit 4.1
(k) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security Holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act;
(l) use its reasonable best efforts to (i) cause all
Conversion Shares to be listed or quoted on any securities exchange or quotation
system on which the Company's outstanding Common Stock is then listed or quoted;
and
(m) obtain a CUSIP number for all Conversion Shares not later
than the effective date of the registration statement.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 8.3 hereof, such Holder
will forthwith discontinue disposition of Conversion Shares pursuant to the
registration statement covering such Conversion Shares until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 8.3(j) hereof, or until it is advised in writing by the Company that the
use of such prospectus may be resumed and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Conversion Shares current at the time of receipt of such notice;
provided, however, that the Company shall use its reasonable best efforts to
promptly prepare and provide to the Holders a supplemented or amended prospectus
contemplated by such Section 8.4(j) hereof. In the event the Company shall give
any such notice, the period during which such registration statement shall be
maintained effective shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
8.4(f)(v) hereof to including the date when each Holder of Conversion Shares
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 8.4(j) hereof.
8.4 Registration Expenses.
(a) The Company will bear all reasonable Registration Expenses
incident to the performance of or compliance with its obligations under this
Agreement. Notwithstanding the foregoing, the Company is not required to pay any
fees or expenses of Holders, underwriters, the Holder's or any underwriter's
counsel (other than blue sky counsel) or accountant or any other advisers,
including any transfer taxes, underwriting, brokerage and other discounts and
commissions and finders' and similar fees payable in the respect of Conversion
Shares.
26
Exhibit 4.1
(b) Each Holder shall pay all costs and expenses incurred by
such Holder, including all transfer taxes, underwriting, brokerage and other
discounts and commissions and finders' and similar fees payable in respect of
Conversion Shares. To the extent that any Registration Expenses are incurred,
assumed or paid by any Holder or any placement or sales agent therefor or
underwriter thereof with the Company's prior written consent, the Company shall
reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid within a reasonable time after receipt of a written
request therefor. Any Registration Expenses submitted by any Holder, placement
or sales agent or underwriter or on behalf of any such person for payment by the
Company shall be itemized in detail and contain clear and accurate receipts of
all expenditures made by such parties.
8.5 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless each
Holder and each "person," if any, that controls such Holder within the meaning
of Section 15 of the Securities Act for, from and against any and all loss,
liability, claim, damage and expense (including attorneys' fees) to the extent
resulting from any untrue statement or alleged untrue statement of a material
fact contained in any registration statement pursuant to which Conversion Shares
were registered under the Securities Act (or any amendment thereto), including
all documents incorporated therein by reference, or from the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statement therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as any such misstatement or omission or alleged misstatement or omission
is made therein in reliance upon and in conformity with information furnished to
the Company by such Holder in writing expressly for use in a registration
statement (or any amendment thereto) or any prospectus (or any amendment or
supplement thereto) relating to the Conversion Shares. As used in this Section
8.5(a), the term "Holder" shall include its officers, directors and agents.
(b) Each Holder agrees to indemnify and hold harmless the
Company, its directors and officers and each "person," if any, who controls the
Company within the meaning of Section 15 of the Securities Act to the same
extent as the foregoing indemnity from the Company to such Holder, but only with
respect to information furnished in writing by such Holder or on such Holder's
behalf expressly for use in any registration statement (or any amendment
thereto) or any prospectus (or any amendment or supplement thereto) relating to
the Conversion Shares, or any amendment or supplement thereto; provided that the
obligations or any Holder to indemnify the Company and the other persons
referred to above shall be limited to the proceeds received by such Holder from
the sale of such Conversion Shares pursuant to such registration statement.
27
Exhibit 4.1
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any person entitled to
indemnification hereunder, the indemnified party shall give prompt written
notice to the indemnifying party, and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the indemnified party, and shall assume the payment of all expenses in
connection with such defense. The indemnified party or any controlling person of
such indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the indemnified party or such
controlling person unless (i) the indemnifying party shall have agreed to pay
such fees and expenses; or (ii) the indemnifying party shall have failed to
assume the defense for such action or proceeding and to employ counsel
reasonably satisfactory to the indemnified party in any such action or
proceeding; or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the indemnified party or such
controlling person and the indemnifying party, and such indemnified party or
such controlling person shall have been advised by counsel that counsel employed
by the indemnifying party would, under applicable professional standards, have a
conflict in representing both the indemnifying party and the indemnified party
or such controlling person, in which case, if such indemnified person or such
controlling person notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding of separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, and shall not be liable for the reasonable fees and expenses
of more than one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified party and such controlling persons,
which firm shall be designated, if the Holders (or their controlling persons)
are the indemnified parties, in writing by the Holders of a majority of the
outstanding Conversion Shares owned by Holders who are then entitled to such
indemnity in connection with such action or proceeding and if the Company is the
indemnified party, by the Company. No party shall be liable for any settlement
of any such action or proceeding effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent, or if there is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party agrees to indemnify and hold harmless such
indemnified party and such controlling person from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
(d) (i) If the indemnification provided for in this Section
8.5 is unavailable to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnified party
28
Exhibit 4.1
and the indemnifying party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8.5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, expenses, liabilities, or
judgements referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8.5(d), no Holder shall be required to contribute any amount in excess
of the amount by which the total price at which the Conversion Shares of such
selling Holder were offered to the public pursuant to such registration
statement exceeds the amount of any damages which such selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person found guilty by a court of
competent jurisdiction of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty by a court of competent jurisdiction of such
fraudulent misrepresentation.
(e) Neither the Company nor the Holders shall have any
obligation under this Agreement (other than as set forth in this Section 8.5) to
provide the other with indemnification or contribution in respect of any losses,
claims, damages, liabilities or expenses referred to in this Section 8.5;
provided, however, that the provisions of this Section 8.5 shall not relieve an
indemnifying party from liability which it may have to an indemnified party
other than with respect to the matters referred to in this Section 8.5.
8.6 Commission Filings. The Company covenants that it will file the
reports required to be filed by it under the Exchange Act and the rules and
regulations adopted by the Commission thereunder in a timely manner as
determined by applicable rules and interpretations under the Exchange Act. Upon
the written request of any Holder of Conversion Shares, the Company will deliver
to such Holder a written statement as to whether it has complied with such
requirements.
8.7 Lock-up Agreement. Prior to the registration statement related to
the Conversion Shares being declared effective, the Holders of Conversion Shares
shall not offer, sell, dispose of, transfer or otherwise reduce market risk with
respect to such Registerable Securities, directly or indirectly, without the
prior consent of the Company and except for
29
Exhibit 4.1
transfers occurring by operation of law. The foregoing notwithstanding, the
percentage of Conversion Shares shall be released from the above restrictions at
the time periods as follows:
Time Cumulative Percentage Transferable
---- ----------------------------------
Effective Date of Registration 25%
Three Months After Effective Date 50%
Six Months After Effective Date 75%
Nine Months After Effective Date 100%
The above percentages apply to all securities of Holder acquired in the
Offering. The Company shall place appropriate legends on the certificates
representing the Conversion Shares and instructions with its transfer agent
specifying that the Conversion Shares are subject to the restriction on transfer
as set forth above.
SECTION 9
NOTE AGENT
9.1 Duties and Liabilities of Note Agent.
(a) The Note Agent upon appointment shall undertake to perform
such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured),
the Note Agent shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in its exercise as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs.
(b) No provision of this Agreement shall be construed to
relieve the Note Agent from liability for its own gross negligence in acting or
omitting to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default
which may have occurred:
(A) the duties and obligations of the Note
Agent shall be determined solely by the express provisions of
this Agreement, and the Note Agent shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Agreement, and no implied
30
Exhibit 4.1
covenants or obligations shall be read into this Agreement
against the Note Agent; and
(B) in the absence of bad faith on the part
of the Note Agent, the Note Agent may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Note Agent and conforming to the requirements
of this Agreement; but in the case of any such certificates or
opinions that by any provision hereof arc specifically
required to bc furnished to the Note Agent, the Note Agent
shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(ii) the Note Agent shall not be liable for any error
of judgment made in good faith, unless it shall be proved that the Note
Agent was grossly negligent in ascertaining the pertinent facts;
(iii) the Note Agent shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in aggregate
principal amount of the Notes then outstanding relating to the time,
method and place of conducting any proceeding for any remedy available
to the Holders, or exercising any power conferred upon the Note Agent,
under this Agreement; and
(iv) none of the provisions of this Agreement shall
require the Note Agent to expend or risk its own funds or otherwise
incur any personal financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(c) Whether or not herein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Note Agent shall be subject to the provisions
of this Section 9.
9.2 Reliance on Documents, Opinions, Etc. Except as otherwise provided
in Section 9.1:
(a) the Note Agent may rely and shall be protected in acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, note, bond. note, or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
31
Exhibit 4.1
(b) whenever in the administration of the provisions of this
Agreement the Note Agent shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of gross negligence or bad faith on the part of
the Note Agent, be deemed to be conclusively proved and established by a
certificate signed by the Company and delivered to the Note Agent, and such
certificate, in the absence of gross negligence or bad faith on the part of the
Note Agent, shall be full warrant to Note Agent for any action taken or omitted
by it under the provisions of this Agreement upon the faith thereof;
(c) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a certificate of the Company
(unless other evidence in respect thereof be herein specifically prescribed);
(d) the Note Agent may consult with legal counsel and any
opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and in
accordance with such opinion of Counsel;
(e) the Note Agent shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the request, order
or direction of any of the Holders, pursuant to the provisions of this
Agreement, unless such Holders shall have offered to the Note Agent reasonable
security or indemnify against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing herein contained shall, however, relieve
the Note Agent of the obligations, upon the occurrence of any Event of Default
(which has not been cured), to exercise such of the rights and powers vested in
it by this Agreement and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(f) the Note Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(g) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default, the Note Agent shall not be bound
to make any investigation into the facts or matters stated in the resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, note, bond note, or other paper or document, unless requested in writing
so to do by the Holders of more than one half in aggregate principal amount of
the Notes then outstanding; provided that if the payment within a reasonable
time to the Note Agent of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is not, in the opinion of the
Note Agent, reasonably assured to the Note Agent by the security afforded to it
by the terms of this Agreement, the Note Agent may require reasonable indemnity
against such expense or liability as a condition to so proceeding, the
reasonable expense of every
32
Exhibit 4.1
such examination shall be paid by the Company, or, if paid by the Note Agent,
shall be repaid by the Company upon demand; and
(h) the Note Agent may execute any of the rights or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
9.3 No Responsibility for Recitals, etc. The recitals contained herein
and in the Note shall be taken as the statements of the Company and the Note
Agent assumes no responsibility for the correctness of the same. The Note Agent
makes no representations as to the validity or sufficiency of this Agreement or
of the Notes. The Note Agent shall not be accountable for the use or application
by the Company of any Notes or the proceeds of any Notes authenticated and
delivered by the Note Agent in conformity with the provisions of this Agreement.
9.4 Moneys to be Held in Trust. All moneys received by the Note Agent
shall, until used or applied as herein provided, be held in trust for the
purposes for which they are received.
9.5 Expenses of Note Agent. The Company shall pay or reimburse the Note
Agent upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Note Agent in connection with the performance of Note
Agent's obligations with respect to a Default by Company or by reason of the
occurrence of an Event of Default (including the reasonable compensation and
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its gross negligence, willful misconduct or bad faith. The Company also shall
indemnify the Note Agent for, and hold it harmless against, any loss, liability
or expense incurred without gross negligence or bad faith on the part of the
Note Agent and arising out of or in connection with the acceptance or
administration of this agency, including the reasonable costs and expenses of
defending itself against any claim of liability in the premises.
9.6 Resignation or Removal of Note Agent.
(a) The Note Agent may at any time resign by giving written
notice of such resignation to the Company and by mailing notice thereof to the
Holders at their addresses as they shall appear on the registry books of the
Company. Upon receiving such notice of resignation, the Placement Agent may
appoint a successor agent by written instrument, in duplicate, executed by the
Placement Agent one copy of which instrument shall be delivered to the resigning
Note Agent and one copy to the successor Note Agent. If no successor Note Agent
shall have been so appointed and have accepted appointment within 60 days after
the publication of such notice of resignation, the resigning Note Agent may
petition any court of competent jurisdiction for the appointment of a successor
Note Agent, or any Holder who has been a bona fide holder of a Note or Notes for
at least six months may on behalf of himself and all others
33
Exhibit 4.1
similarly situated, petition any such court for the appointment of a successor
Note Agent. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Note Agent. In the event the Event of
Default causing the appointment of the Note Agent is cured, the Placement Agent
has no duty to appoint a substitute Note Agent until the subsequent occurrence
of an additional Event of Default.
(b) In case at any time the Note Agent shall become incapable
of acting; or in connection with the performance of its obligations hereunder
shall have acted in bad faith, shall have been grossly negligent or shall have
willfully breached this Agreement; or shall be adjudged a bankrupt or insolvent,
or a receiver of the Note Agent or of its property shall be appointed, or any
public officer shall take charge or control of the Note Agent or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, then
in any such case the Placement Agent may remove the Note Agent and appoint a
successor Note Agent by written instrument, in duplicate, executed by order of
the Placement Agent, one copy of which instrument shall be delivered to the Note
Agent so removed and one copy to the successor Note Agent, or any Holder who has
been a bona fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Note Agent and the appointment of
a successor Note Agent. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Note Agent and appoint a successor
Note Agent.
(c) Any resignation or removal of the Note Agent and
appointment of a successor Note Agent pursuant to any of the provisions of this
Section 9.6 shall become effective upon acceptance of appointment by the
successor Note Agent.
SECTION 10
MISCELLANEOUS
10.1 Registered Notes. The Company shall cause to be kept at its
principal office the Note Register and the Company will register or transfer or
cause to be registered or transferred as hereinafter provided any Note issued
pursuant to this Agreement. The Company will serve as its own registrar for the
Notes. Subject to the restrictions on transferability of the Notes pursuant to
Section 7, upon surrender for registration of transfer of any Note at its
principal place of business, the Company shall execute and deliver, in the name
of the transferee or transferees, a new Note or Notes for a like aggregate
principal amount of authorized denominations. Notes to be exchanged shall be
surrendered at the principal place of business of the Company, which shall
execute and shall deliver in exchange therefor the Note or Notes that the Holder
making the exchange shall be entitled to receive, bearing serial numbers not
then outstanding. All Notes presented for registration of transfer, exchange or
payment shall, if so required by the Company, be duly endorsed by or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered Holder or by the
Holder's duly authorized attorney. Any exchange or registration of transfer
34
Exhibit 4.1
shall be without charge, except that the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
10.2 Exchange of Notes. At any time and from time to time, upon not
less than ten days' notice to that effect given by any Holder of any Note
initially delivered or of any Note substituted therefor pursuant to Section
10.1, this Section 10.2 or Section 10.3 and upon surrender of any Note to the
Company at its office, the Company will deliver in exchange therefor, without
expense to such Holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so surrendered,
in a denomination equal to the Note so surrendered or in such other denomination
equal to or in excess of $5,000 as such Holder shall specify, dated as of the
date to which interest has been paid on the Note so surrendered or, if such
surrender is prior to the payment of any interest thereon, then dated as of the
date of issue, registered in the name of such Person or Persons as may be
designated by such Holder, and otherwise of the same form and tenor as the Note
so surrendered for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
10.3 Loss, Theft, etc. of Notes.
(a) If any Note shall become mutilated or be destroyed, lost
or stolen, the Company shall, upon the written request of the Holder thereof,
execute and deliver a new Note, bearing a serial number not then outstanding, in
exchange and substitution for the mutilated Note or in lieu of and substitution
for the Note destroyed, lost or stolen; provided, however, that the Company
shall not be obligated to execute and deliver a new Note unless, (i) in every
case, the applicant requesting a substituted Note shall furnish to the Company
such security or indemnity as may be reasonably required by it to save it
harmless, and (ii) in every case of destruction, loss or theft, such applicant
shall also furnish to the Company evidence reasonably satisfactory to it of the
destruction, loss or theft of such Note and of the ownership thereof.
(b) Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith, including, without limitation, counsel fees of the Company and the
Note Agent. In case any Note that has matured or is about to mature shall have
become mutilated or be destroyed, lost or stolen, the Company may, with the
consent of the applicant, instead of issuing a substitute Note, pay or authorize
the payment of the same (without surrender thereof, except in the case of a
mutilated Note), if the applicant for such payment shall furnish the Company
with such security or indemnity as it may reasonably require to save it harmless
and, in case of destruction, loss or theft, evidence reasonably satisfactory to
the Company of the destruction, loss or theft of such Note and of the ownership
thereof. Every substituted Note issued pursuant to the provisions of this
Section by virtue of the fact that any Note is destroyed, lost or stolen, shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall
35
Exhibit 4.1
be found at any time, and shall be entitled to all of the benefits of this
Agreement equally and proportionately with any and all other Notes duly issued
hereunder. All Notes shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes and shall preclude any and all other
rights and remedies, notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
10.4 Cancellation of Notes; Acquisition of Notes by Company. All Notes
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall be delivered to the Company for cancellation and the Company
shall cancel such Notes and all Notes that have been surrendered directly to the
Company for cancellation, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall indicate clearly on the face and on each and every page of such canceled
Notes the fact that such Notes are canceled. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Notes, unless and until the same are
canceled, and the Company shall not be entitled to vote or participate in
directing the activities of the Note Agent pursuant to this Agreement with
respect to any such acquired Notes.
10.5 Transfer of Note. Any Holder to which this Section 10.5 applies
agrees that in the event it shall sell or transfer any Note it will, prior to
the delivery of such Note (unless it has already done so), make a notation
thereon of all principal, if any, prepaid on such Note and will also note
thereon the date to which interest has been paid on such Note, and it will
promptly notify the Company of the name and address of the transferee of any
Note so transferred. With respect to Notes to which this Section 10.5 applies,
the Company shall be entitled to presume conclusively that the original or such
subsequent Holder as shall have requested the provisions hereof to apply to its
Note remains the Holder of such Notes until the Company shall have received
notice in writing of the transfer of such Notes, and of the name and address of
the transferee, or such Notes shall have been presented to the Company as
evidence of the transfer.
10.6 Expenses; Stamp Tax Indemnity. The Company will pay the following
expenses in connection with this Agreement and the transactions contemplated
hereby: (a) duplicating and printing costs and charges for shipping the Notes,
adequately insured to each original Holder's home or office or at such other
place as such Holder may designate, and (b) all such expenses relating to any
amendment, waivers or consents (whether or not consummated) pursuant to the
provisions hereof, including, without limitation, any amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company will pay, and indemnify each Holder against any liability
for, brokerage fees and commissions payable or claimed to be payable to any
Person in connection with the transactions contemplated by this Agreement and
36
Exhibit 4.1
resulting from an agreement or alleged agreement between the Company and such
Person. As a condition to transferring the ownership of a Note on the Note
Register, the Company may require that the Holder of the Note first pay to the
Company the amount of any tax or governmental charge applicable to the transfer
of the Note.
10.7 Acts of Holders; Evidence of Ownership of Notes.
(a) Any action to be taken by Holders may be evidenced by one
or more concurrent written instruments of similar tenor signed or executed by
such Holders in person or by an agent appointed in writing. The fact and date of
the execution by any person or any such instrument may be proved by
acknowledgement before a Notary Public or other officer empowered to take
acknowledgements, or by an affidavit of a witness to such execution.
(b) Prior to due presentment of any Note for registration of
transfer, the Company may deem the person in whose name the Note shall be
registered upon the books of the Company as the absolute owner of such Note
(whether or not such Notes shall be overdue and notwithstanding any notation of
ownership or writing thereon by anyone other than the Company), for the purpose
of receiving payment of or on account of the principal of, interest on, and
premium, if any, on such Note and for all other purposes, and the Company shall
not be affected by any notice to the contrary. Payment of or on account of the
principal of, interest on, and premium, if any, on such Note shall be made only
to or upon the order in writing of the registered owner thereof. All such
payments shall be valid and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for moneys payable upon any such Note.
(c) Any action taken by the holders of more than one half in
aggregate principal amount of the Notes specified in this Agreement in
connection with such action shall be conclusively binding upon the Company and
the Holders. Any action by any Holder shall bind all future Holders of the same
Note in respect of anything done or suffered by the Company in pursuance
thereof.
10.8 Holders' List. The Company covenants and agrees that it and every
obligor upon the Notes will furnish or cause to be furnished to the Note Agent,
within three days of appointment, a list in such form as the Note Agent may
reasonably require containing all information in the possession or control of
the Company as to the name and addresses of the Holders obtained (in the case of
each list other than the first list) since the date as of which the next
previous list was furnished. Any such list may be dated as of the date not more
than 15 days before the time any information is furnished or caused to be
furnished and need not include information received after such date. The Note
Agent shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the Holders contained in the most
recent list furnished to it as provided in this Section 10.8 and received by it
37
Exhibit 4.1
hereunder. The Note Agent may destroy any list furnished to it as provided in
this Section upon receipt of a new list as provided herein.
10.9 Powers and Rights Not Waived, Remedies Cumulative. No delay or
failure on the part of any Holder in the exercise of any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of the
same preclude any other or further exercise thereof, or the exercise of any
other power or right, and the rights and remedies of each Holder are cumulative
to and are not exclusive of any rights or remedies any such Holder would
otherwise have, and no waiver or consent, given or extended pursuant to the
provisions of this Agreement, shall extend to or affect any obligation or right
not expressly waived or consented to.
10.10 Notices. All communications provided for hereunder shall be in
writing and, if to a Holder or the Note Agent, delivered or mailed prepaid by
registered or certified mail or overnight air courier, or by facsimile
communication, in each case addressed to such Holder at the address of the
Holder on the registration books of the Company, or to the Note Agent at the
address as the Note Agent may designate, and if to the Company, delivered or
mailed by registered or certified mail or overnight courier, or by facsimile
communication, to the Company at the address of its corporate offices; provided,
however, that a notice to a Holder by overnight air courier shall only be
effective if delivered to such Holder at a street address designated for such
purpose in accordance with this Section 10.10, and a notice to such Holder by
facsimile communication shall only be effective if made by confirmed
transmission to such Holder at a telephone number designated for such purpose in
accordance with this Section 10.10 and promptly followed by delivery of such
notice by registered or certified mail or overnight air courier, as set forth
above.
10.11 Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of each
Holder and its successors and assigns, including each successive Holder.
10.12 Discharge and Termination. The Company may, at any time,
terminate its obligations hereunder and the Notes by irrevocably depositing in
trust cash or obligations of the United States government and its agencies for
payment of principal of, premium, if any, and interest on, the Notes to
maturity. In such event, this Note Agreement shall cease to have any effect
except as to (a) rights of registration of transfer, substitution and exchange
of Notes, (b) rights of holders to receive payments of principal or premium, of
any, and interest on the Notes, (c) the right to convert Notes into shares of
Company Common Stock, and (d) the rights, obligations and immunities of the Note
Agreement.
10.13 Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto,
38
Exhibit 4.1
whether or not in connection with any Closing Date, will survive the closing and
the delivery of this Agreement and the Notes.
10.14 Severability. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision will not affect the validity or
unenforceability of any remaining portion, which remaining portion will remain
in force and effect as if this Agreement had been executed with the invalid
portion thereof eliminated and it is hereby declared the intention of the
parties hereto that they would have executed the remaining portion of this
Agreement without including therein any such part or portion which may, for any
reason, be hereafter declared invalid or unenforceable.
10.15 Governing Law. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with the laws of the
State of Arizona.
10.16 Captions. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
10.17 Benefits of Provisions of This Agreement. Nothing in this
Agreement or in the Notes, expressed or implied, shall give or be construed to
give any person, firm or corporation, other than the parties thereto and the
Holders, any legal or equitable right, remedy or claim under or in respect of
this Agreement, or under any covenant, condition or provision herein contained,
all the covenants, conditions and provisions contained in this Agreement or in
the Notes being for the sole benefit of the parties hereto and the Holders.
10.18 Counterparts. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
SOY ENVIRONMENTAL PRODUCTS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇, Chief Executive Officer
FOX & COMPANY INVESTMENTS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President
39
Exhibit 4.1
EXHIBIT A
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED OR SOLD ONLY IF REGISTERED UNDER APPLICABLE SECURITIES LAWS OR IF AN
EXEMPTION THEREFROM IS AVAILABLE. THIS NOTES AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION HEREOF ARE TRANSFERABLE ONLY UPON THE CONDITIONS
SPECIFIED IN THE NOTES AGREEMENT REFERRED TO HEREIN. A COPY OF THE NOTE
AGREEMENT WILL BE PROVIDED TO THE REGISTERED HOLDER HEREOF UPON REQUEST TO THE
COMPANY.
SOY ENVIRONMENTAL PRODUCTS, INC.
Senior Secured Convertible Note
No. R-*[insert Note number] *[insert issue date]
$*[insert principal amount]
Soy Environmental Products, Inc., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to [insert name(s) of
Note holder(s)] or registered assigns on the Maturity Date, the principal amount
of *[insert principal amount of Note written out] DOLLARS ($[insert principal
amount of Note in numbers]) and to pay interest (computed on the basis of a
360-day year of twelve 30-day months) on the principal amount from time to time
remaining unpaid heron in an amount equal to four percent (4%) per month in
advance commencing on February 1, 1998, and on the first day of each month
thereafter through the Maturity Date. The "Maturity Date" shall mean January 31,
1998 unless extended at the discretion of the Company to July 31, 1998 by
payment of an extension fee equal to five percent (5%) of the outstanding face
amount of the Note. Interest payments shall be paid to the person listed as the
registered holder of this Note on the books of the Company as of the close of
business on the 15th day of the month preceding the month in which the interest
payment date occurs. Both the principal hereof and interest hereon are payable
at the principal office of the Company, in coin or currency of the United States
of America, which at the time of payment shall be legal tender for the payment
of public and private debts. The Company shall have the option to pay interest
payments in the form of a check mailed to the registered address of the person
entitled thereto.
This Note is one of the Notes of the Company in the aggregate principal
amount of up to $900,000 issued or to be issued under and pursuant to the terms
and provisions of the Note
A-1
Exhibit 4.1
Agreement, dated as of ____________, 1997, entered into by the Company and the
Placement Agent and this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note Agreement
to all the benefits provided for thereby or referred to therein, to which Note
Agreement reference is hereby made for the statement thereof.
This Note and the other Notes outstanding under the Note Agreement may
be declared due before their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreement.
Subject to and upon compliance with the provisions of the Note
Agreement, the holder hereof shall have the right and option at any time after
November 16, 1997 to convert the principal hereof or any portion hereof into
fully paid and nonassessable shares of Common Stock of the Company at a
conversion price per share of $1.00. Such conversion price is subject to
adjustment in certain events as more fully set forth in the Note Agreement.
The Notes are subject to prepayment at the option of the Company on or
before November 15, 1997.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
SOY ENVIRONMENTAL PRODUCTS, INC.
By_____________________________________
Its____________________________________
A-2
Exhibit 4.1
FORM OF REVERSE SIDE OF CERTIFICATE
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to: (Insert Assignee's Social Security or
Tax Identification No.)
________________________________________________________________________________
________________________________________________________________________________
(Pen or type assignee's name, address and zip code)
and irrevocably appoint _______________________________as agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
Date:__________________ Your Signature:________________________________________
(Sign exactly as your name appears on
the other side of this Note Certificate)
Signature Guarantee:____________________________________________________________
By____________________________________
The signature should be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
A-3
Exhibit 4.1
CONVERSION NOTICE
(To be completed and signed only upon conversion
of the Notes in whole or in part)
TO: SOY ENVIRONMENTAL PRODUCTS, INC.
The undersigned, Holder of the attached Note, hereby irrevocably elects
to convert $_______ principal amount of the Note for shares of Common Stock (as
such terms are defined in the Note Agreement dated _________________, 1997),
from Soy Environmental Products, Inc. (or other securities or property). The
undersigned hereby requests that the Certificate(s) for such securities be
issued in the name(s) and delivered to the address(es) as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
If the foregoing Conversion Notice evidences a conversion of less than
the total principal amount of this Note, please issue a new Note, of like tenor,
for the remaining principal balance (or other securities or property) in the
name(s), and deliver the same to the address(es), as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Dated:_________________________________, 19__.
_____________________________________________
(Name of Holder)
_____________________________________________
(Signature of Holder or Authorized Signatory)
_____________________________________________
(Social Security or Taxpayer Identification
Number of Holder)
A-4
