EXHIBIT C
THE RIGHTS OF THE HOLDER OF THIS CONVERTIBLE PROMISSORY NOTE,
COMMON STOCK WITH RESPECT TO THE SALE, TRANSFER, ASSIGNMENT, PLEDGE
OR OTHER ENCUMBRANCE OR DISPOSITION OF THIS CONVERTIBLE PROMISSORY
NOTE OR OF THE COMMON STOCK OF THE COMPANY ISSUABLE UPON
CONVERSION HEREOF ARE SUBJECT TO THE RESTRICTIONS SET FORTH IN
SECTION 5 OF THIS CONVERTIBLE PROMISSORY NOTE.
CONVERTIBLE PROMISSORY NOTE-COMMON STOCK
$55,000,00000 St. Louis, Missouri
September 30, 1993
FOR VALUE RECEIVED, subject to the terms and conditions hereinafter set forth, the
undersigned, EVEREST & JENNINGS INTERNATIONAL LTD., a Delaware corporation (the
"Company"), and EVEREST & JENNINGS, INC., a California corporation ("Everest &
Jennings, Inc., " and together with the Company, the "Borrowers"), hereby jointly and severally
promise to pay to the order of BEL (FAR EAST HOLDINGS) LIMITED, a Hong Kong
corporation (the "Holder"), at its office at 2801 Three Exchange Square, Central, Hong Kong, or
such other address as the Holder shall specify in writing to the Borrowers, in lawful money of the
United States and in immediately available funds, the principal amount of Fifty-Five Million
Dollars ($55,000,000.00) or the aggregate unpaid principal balance of all amounts from time to
time outstanding hereunder as set forth in the Schedule to Convertible Promissory Note attached
hereto as Exhibit A and by this reference incorporated herein, whichever is less, in accordance
with the provisions of Sections 2.1 and 3.1 of that certain Debt Conversion Agreement, dated as
of September 30, 1993, among the Holder, the Borrowers and The Jennings Investment Co. (as
at any time amended, supplemented or modified, the "Debt Conversion Agreement"). This
Convertible Promissory Note-Common Stock (this "Convertible Promissory Note") is the
"Convertible Promissory Note-Common Stock" referred to in the Debt Conversion Agreement,
the terms and conditions of which are hereby incorporated herein by reference. Capitalized terms
not otherwise defined in this Convertible Promissory Note shall have the meanings specified in
the Debt Conversion Agreement.
SECTION 1. PAYMENT OBLIGATION. If not sooner converted into "Common Stock" (as
defined in Section 2.1 below) of the Company in accordance with Section below, the principal
amount of this Convertible Promissory Note shall be due and payable on March 31, 1994 (the
"Maturity Date"); provided however , that if the Holder has not paid the outstanding balance due
from the Borrowers, or either of them, to The Hong Kong and Shanghai Banking Corporation
Limited, up to and including $10,000,000.00 ( the "HBSB Obligation"), by March 31, 1994, and
such amount has not been added to the principal balance of this Convertible Promissory Note, all
in accordance with Sections 2.1 and 3.1 of the Debt Conversion Agreement, the Maturity Date
shall be extended to the date on which such payment and addition have occurred. No interest
shall accrue under this Convertible Promissory Note through and including the Maturity Date;
provided, however, that if the principal amount of this Convertible Promissory Note has not been
converted into Common Stock of the Company in accordance with Section 2 below or paid in
full on or before the Maturity Date, the outstanding principal balance hereunder shall begin to
bear interest from and after the Maturity Date until paid in full at the rate of Eight Percent (8%)
per annum.
SECTION 2. CONVERSION.2.1 Automatic Conversion. Subject to and upon compliance with the provisions of this Section 2.
1, and the limitation set forth in Section 2. 11 below, on the date (the "Conversion Date") on
which the Holder receives the "Certificate of Satisfaction" (as defined in Section 2.2 below) this
Convertible Promissory Note shall, without any action required on the part of either the
Borrowers or the Holder, automatically convert into, and the Holder shall be entitled to receive
in lieu of payment of the indebtedness evidenced hereby, a number of shares of "Common
Stock" (as defined below) equal to the quotient of (i) a sum equal to the entire outstanding
principal amount of this Convertible Promissory Note, divided by (ii) the "Conversion Price" (as
defined in Section 2.7 below) in effect at the Conversion Date. As used in this Convertible
Promissory Note, the term "Common Stock" means, as of the applicable time, (i) the Class A
Common Stock of the Company if the Class A Common Stock and the Class B Common Stock
of the Company have not been reclassified into a new single class of Common Stock of the
Company, and (ii) the new single class of Common Stock of the Company if the Class A
Common Stock and the Class B Common Stock of the Company have been reclassified into such
new single class of Common Stock.
2.2 Conversion Conditions. The Board of Directors of the Company has duly adopted resolutions
(i) approving the terms of the Debt Conversion Agreement and certain related documents
(collectively, the "Debt, Conversion Documents") and the terms of the debt conversion and
related transactions described therein (collectively, the "Debt Conversion Transactions"), (ii)
setting forth amendments (the "Proposed Amendments") to the Certificate of Incorporation of the
Company to authorize an increase in the authorized number of shares of Prefer-red Stock of the
Company and in the authorized number of shares of Common Stock of the Company, (iii)
declaring the advisability of the Debt Conversion Documents, the Debt Conversion Transactions
and the Proposed Amendments, and (iv) directing that the Debt Conversion Documents, the Debt
Conversion Transactions and the Proposed Amendments be submitted to the stockholders of the
Company for approval at a special meeting of stockholders of the Company called for such
purpose. The automatic conversion hereof is expressly conditioned upon and shall not occur
unless and until each of the following conditions (the "Conversion Conditions") shall have been
satisfied:
(a) the Company shall have obtained the approval of the stockholders of the
Company with respect to the terms of the Debt Conversion Documents and the Debt
Conversion Transactions, including this Convertible Promissory Note; (b) the stockholders of the Company shall have adopted the Proposed
Amendments;
(c) a certificate amending the Certificate of Incorporation of the Company in
conformity with the Proposed Amendments shall have been prepared, executed,
acknowledged, filed and recorded, and shall have become effective, in accordance with
Sections 242(b)(1) and 103 of the Delaware General Corporation Law;
(d) the Board of Directors of the Company shall have adopted a Certificate of
Designations (the " Certificate of Designations") in substantially the fort-A attached
hereto as Exhibit and by this reference incorporated herein (the "Series C Certificate of
Designations"), designating a new Series C Convertible Preferred Stock (the "Series C
Convertible Preferred Stock"), and the same shall have been duly executed,
acknowledged, filed and recorded and shall have become effective in accordance with the
provisions of Sections 151 and 103 of the Delaware General Corporation Law;
(e) the Board of Directors of the Company shall have reserved a sufficient number
of shares of Common Stock of the Company (the "Reserved Common Stock") for
issuance upon conversion of this Convertible Promissory Note and upon conversion of
the Series C Convertible Preferred Stock; and
(f) the Reserved Common Stock shall have been approved for Listing on the
American Stock Exchange upon official notice of issuance, if the Company's Common
Stock is traded on the American Stock Exchange.
Subject to the fiduciary duties of their respective directors, officers and agents under applicable
law, and the Limitation set forth in Section 2. 11 below, the Company and the Holder shall use
their reasonable best efforts promptly to take or cause to be taken all actions and to do or cause
to be done all things necessary, proper or advisable to satisfy the Conversion Conditions. Upon
fulfillment of the Conversion Conditions the Company shall promptly deliver to the Holder a
certificate (the "Certificate of Satisfaction") to that effect executed by an authorized officer of the
Company.
2.3 Issuance of Certificates. As promptly after the Conversion Date as reasonably practicable, the
Company shall instruct its transfer agent to issue and deliver to the Holder at the address of the
Holder set forth on the Company's records, without any charge to the Holder, a certificate or
certificates (issued in the name of the Holder or, subject to the provisions of Section hereof, in
such name as the Holder may designate) for the number of full shares of Common Stock of the
Company issuable upon the conversion of this Convertible Promissory Note.
2.4 Status on Conversion. Upon conversion of this Convertible Promissory Note, the Holder
shall be deemed to have become the stockholder of record of the shares of Common Stock into
which this Convertible Promissory Note is converted on the Conversion Date (unless the transfer
books of the Company are closed on that date, in which event the Holder shall be deemed to
have become the stockholder of record on the next succeeding day on which the transfer books
are open and the conversion shall be at the rate in effect on such date).
2.5 Taxes Upon Conversion. The Company shall pay any and all taxes (other than taxes in
respect of income or gross receipts) that may be payable in respect of the issuance or delivery of
any shares of Common Stock on conversion of this Convertible Promissory Note. The Company
shall not, however, be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name other than that of the
Holder, and the Company shall not be required to issue or deliver such shares of Common Stock
unless or until the person or persons requesting the issuance thereof shall have paid to the
Company the amount of any such tax or shall have established to the satisfaction of the Company
that such taxes have been paid.2.6 Elimination of Fractional Interests. No fractional shares of Common Stock shall be issued
upon conversion of this Convertible Promissory Note, nor shall the Company be required to pay
cash in lieu of fractional interests, it being the intent of the parties that all fractional intere sts
shall be eliminated and that all issuances of Common Stock shall be rounded up to the nearest
whole share.
2.7 Conversion Price. The initial Conversion Price of this Convertible Promissory Note shall be
One Dollar ($1.00) per share. The Conversion Price shall be adjusted from time to time as
follows:
(a) if the Company shall at any time after the date hereof (i) issue any shares of
Common Stock (or "Common Stock Equivalents", as defined in Section 9. 1 below) by
way of a dividend or other distribution on any stock of the Company and without
consideration, or (ii) subdivide or combine its outstanding shares of Common Stock or
Common Stock Equivalents, the Conversion Price shall be adjusted (to the nearest full
cent) by multiplying (x) the Conversion Price in effect immediately prior to the
adjustment by (y) a fraction, the numerator of which is the total number of shares of
Common Stock, or Common Stock Equivalents, as applicable, outstanding immediately
before the issuance of shares, and the denominator of which is the total number of shares
of Common Stock, or Common Stock Equivalents, as applicable, outstanding
immediately after such issuance or sale. For the purposes of any computation to be made
in accordance with this Section 2., shares of Common Stock, or Common Stock
Equivalents, issuable by way of dividend or other distribution on any stock of the
Company shall be deemed to have been issued immediately after the opening of business
on the day following the record date for the determination of stockholders entitled to
receive such dividend or other distribution.
(b) if the Company shall sell or issue Common Stock or Common Stock
Equivalents (other than pursuant to transactions described in Section 2.7(a) above), or
rights, options, warrants or convertible securities (or options to purchase convertible
securities) containing the right to subscribe for or purchase shares of Common Stock or
Common Stock Equivalents, without consideration or for a consideration per share less
than the "Market Value" (as defined in Section 9.1 below) per share of the Common
Stock immediately prior to the date of such sale or issuance (which date, in the event of
distribution to stockholders, shall be deemed to be the record date set by the Company to
determine stockholders entitled to participate in such distribution), the Conversion Price
shall be adjusted (to the nearest full cent) so that the Conversion Price shall equal the
price determined by multiplying the Conversion Price in effect immediately prior to the
date of such sale or issuance (which date, in the event of distribution to stockholders,
shall be deemed to be the record date set by the Company to determine stockholders
entitled to participate in such distribution) by a fraction, the numerator of which shall be
(x) the number of shares of Common Stock and Common Stock Equivalents outstanding
on the date of such sale or issuance, plus (y) the number of additional shares of Common
Stock and Common Stock Equivalents which the aggregate consideration received by the
Company upon such issuance or sale (plus the aggregate of any additional amount to be
received by the Company upon the exercise or conversion of such rights, options,
warrants, convertible securities or options to purchase convertible securities) would
purchase at the Market Value per share of the Common Stock; and the denominator of
which shall be (x) the number of shares of Common Stock and Common Stock
Equivalents outstanding on the date of such issuance or sale, plus (y) the number of
additional shares of Common Stock and Common Stock Equivalents offered for
subscription or purchase (or into which the Common Stock Equivalents so offered are
convertible). For purposes of the foregoing adjustment, the consideration per share in the
case of rights, options, warrants and convertible securities (or options to purchase
convertible securities), shall be determined by dividing (i) the total amount received or
receivable by the Company in consideration of the sale or issuance of the rights, options,
warrants and convertible securities (or options to purchase convertible securities) plus the
total consideration payable to the Company upon conversion or exercise thereof, by (ii)
the total number of shares of Common Stock covered by (or issuable on conversion of the
Common Stock Equivalents covered by) such rights, options, warrants and convertible
securities. Such adjustments shall be made successively whenever such warrants or rights
are issued. To the extent that shares of Common Stock or Common Stock Equivalents are
not delivered after the expiration of such rights, options, warrants or conversion features
of convertible securities, the Conversion Price shall be readjusted (to the nearest full cent)
to the Conversion Price which would then be in effect had the adjustments made upon the
issuance of such rights, options or warrants been made upon the basis of delivery of only
the number of shares of Common Stock (or Common Stock Equivalents) actually
delivered. The provisions of this Section 2.7(b) shall not apply, and no adjustment to the
Conversion Price shall be made, in the case of the issuance of Common Stock or
Common Stock Equivalents under the following circumstances: (i) the issuance of up to
20,000,000 shares of Series C Convertible Preferred Stock to the Holder or the
conversion of such Series C Convertible Preferred Stock into Common Stock pursuant to
the Debt Conversion Agreement, (ii) the issuance of up to 1,400,000 shares of Common
Stock or Common Stock Equivalents issuable under the 1990 Omnibus Stock Incentive
Plan of the Company, (iii) the issuance of up to 5,600,000 shares of Common Stock or
Common Stock Equivalents to officers, directors, employees, agents or representatives of
the Company or its subsidiaries as incentive or other compensation in connection with
services rendered or to be rendered, (iv) the issuance of shares of Common Stock or
Common Stock Equivalents representing reasonable directors' fees due directors of the
Company, (v) subject to Section 2.8 hereof, the issuance of shares of Common Stock,
Common Stock Equivalents or Preferred Stock in connection with a business
combination or acquisition by way of merger, consolidation, stock or asset acquisition or
otherwise, provided that such business combination or acquisition shall be at fair value as
reasonably determined by the Company's Board of Directors, or (vi) as a result of the
conversion of Series A Convertible Preferred Stock or Series B Convertible Preferred
Stock of the Company into Common Stock.(c) in case the Company hereafter shall fix a record date for making a distribution
to the holders of Common Stock of assets or evidences of its indebtedness (excluding
cash dividends or distributions out of earnings and dividends or distributions referred to
in Section 2.7(a) above) or subscription rights, options or warrants for Common Stock or
Common Stock Equivalents (excluding those referred to in Section 2.7(b) above), then in
each such case the Conversion Price in effect after such record date shall be adjusted to
the price determined by multiplying the Conversion Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the "Market Value" (as defined in
Section 9.1 below) per share of Common Stock, less the fair market value (as reasonably
determined by the Company's Board of Directors) of said assets or evidences of
indebtedness so distributed or of such Common Stock subscription rights, options and
warrants or of such Common Stock Equivalents applicable to one share of Common
Stock, and the denominator of which shall be such Market Value per share of Common
Stock. Such adjustment shall be made successively whenever the record date for such
distribution is fixed and shall become effective immediately after such record date.
2.8 Effect of Reclassification. Consolidation, Merger, etc, In case of the reclassification or
change of outstanding shares of Common Stock (other than a change in par value, or from no par
value to par value or vice versa, or as a result of a subdivision or combination), or in the case of
any consolidation or merger of the Company with or into a corporation (other than a
consolidation or merger into which the Company is the surviving corporation and which does not
result in any reclassification or change of outstanding shares of Common Stock except a change
as a result of a subdivision or combination of such shares or a change in par value as described
above), or in the case of a sale or conveyance to another corporation of all or substantially all of
the assets of the Company, this Convertible Promissory Note shall be converted on the
Conversion Date into the kind and number of shares of stock and/or other securities or property
receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which this Convertible Promissory Note
might have been converted immediately before the time of determination of the stockholders of
the Company entitled to- receive such shares of stock and/or other securities or property. The
Company shall be obligated to retain and set aside, or otherwise make fair provision for exercise
of the right of the Holder to receive, the shares of stock and/or other securities or property
provided for in this Section 2.8.
2.9 Certificate Concerning Adjusted Conversion Price. Whenever the Conversion Price is
adjusted pursuant to this Section 2, the Company promptly shall: (i) place on file at its principal
executive office an officer's certificate signed by the chief financial officer or controller of the
Company showing in appropriate detail the facts requiring such adjustment, the computation
thereof, and the adjusted Conversion Price, and shall exhibit the certificate from time to time to
the Holder of this Convertible Promissory Note if the Holder desires to inspect the same; and (ii)
mail or cause to be mailed to the Holder, in the manner provided for giving notice pursuant to
this Convertible Promissory Note, a notice stating that such adjustment has been made and
setting forth the adjusted Conversion Price.
2.10 Reservation and Listing of Shares for Issuance. The Company shall at all times from and
after the first date on which the Conversion Conditions are satisfied, reserve and keep available
out of its authorized and unissued shares of Common Stock, for the purpose of effecting the
conversion of this Convertible Promissory Note, such number of its duly authorized shares as
shall from time to time be sufficient to effect the conversion of this Convertible Promissory
Note. The Company covenants that all shares of Common Stock issued upon conversion of this
Convertible Promissory Note in compliance with the terms hereof will be duly and validly issued
and fully paid and non-assessable. From and after the first date on which the Conversion
Conditions are satisfied, and as long as this Convertible Promissory Note shall be outstanding,
the Company shall use its reasonable best efforts to cause all shares of Common Stock issuable
upon conversion of this Convertible Promissory note to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock is then listed.
2.11 Limitation. Notwithstanding any other provision of this Convertible Promissory Note to the
contrary, at the option of the Borrowers in their sole and absolute discretion, the Company shall
not be required to deliver the Certificate of Satisfaction to the Holder, and the conversion
provided by Section 2.1 above shall not occur, until the Holder has paid the HESB Obligation
and the amount thereof has been added to the principal balance of this Convertible Promissory
Note, all. in accordance with Sections 2.1 and 3.l of the Debt Conversion Agreement.
SECTION 3. SECURITY.
This Convertible Promissory Note is secured by a Security Agreement of even date herewith (the
"Security Agreement") among the Borrowers and the Holder. Reference hereby is made to the
Security Agreement for a description of the collateral pledged pursuant thereto, and any holder
of this Convertible Promissory Note is entitled to the benefit of the security interest provided
therein.
SECTION 4. TRANSFER, EXCHANGE AND REPLACEMENT OF NOTE.
This Convertible Promissory Note shall be transferable only on the note register of the Company
maintained at the office of the Company's transfer agent or at the principal executive office of the
Company, upon delivery thereof duly endorsed by, or accompanied (if required by the Company)
by proper evidence of succession, assignment or authority to transfer executed by the Holder, in
each case accompanied by any necessary transfer tax imposed upon transfer or evidence thereof.
In addition, prior to such transfer the Holder (and, if applicable, the proposed transferee) shall
comply with the terms of Section 6. Upon any registration of transfer, the Borrowers shall
execute a new Convertible Promissory Note to the person entitled thereto. The Borrowers may
deem and treat the person in whose name this Convertible Promissory Note is registered as the
absolute, true and lawful owner of this Convertible Promissory Note for all purposes. Upon
receipt by the Borrowers of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of this Convertible Promissory Note, the Borrowers shall make and
deliver a new Convertible Promissory Note of like tenor, in lieu of this Convertible Promissory
Note, if (i) in case of loss, theft or destruction, the Borrowers receive indemnity or security
reasonably satisfactory to them, (ii) the Borrowers are reimbursed for all reasonable expenses
incidental to such replacement, and (iii) this Convertible Promissory Note is surrendered and
cancelled, if mutilated.
SECTION 5. PREPAYMENT.The principal amount of this Convertible Promissory Note may not be prepaid, in whole or in
part, without the written consent of the Holder.
SECTION 6. ACQUISITION FOR INVESTMENT AND RESTRICTIONS. ON TRANSFER.
6.1 Investment Intent. (a) The Holder, by acceptance of this Convertible Promissory Note, represents
that this Convertible Promissory Note and any shares of Common Stock issuable. upon
conversion of this Convertible Promissory Note are being and will be acquired for the
Holder's own account for investment and not with a view to, or for resale in connection
with, the distribution thereof in violation of applicable securities laws, and that the
Holder has no present intention of distributing or reselling this Convertible Promissory
Note or any such shares of Common Stock.
(b) The Holder, by acceptance of this Convertible Promissory Note, further
represents that it has not offered or sold this Convertible Promissory Note, or any shares
of Common Stock into which this Convertible Promissory Note is convertible, directly or
indirectly to any other "Person," as defined in Section 9.1 below, and that the Holder is
not acquiring this Convertible Promissory Note or any such Common Stock for the
account of any other Person.
6.2 Restrictions on Transfer. The Holder, by the acceptance of this Convertible Promissory Note,
agrees that the Holder will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of
this Convertible Promissory Note or any of the shares of Common Stock issuable upon
conversion of this Convertible Promissory Note, or any interest in the same unless: (i) a
registration statement under the Securities Act of 1933, as amended (the "Act"), covering the sale
or transfer of this Convertible Promissory Note or the shares of Common Stock issuable upon
conversion of this Convertible Promissory Note as the case may be, is in effect; (ii) the Holder
first provides the Company with an opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company to the effect that such sale, transfer, assignment, pledge,
hypothecation or other disposition will be exempt from the registration and the prospectus
delivery requirements of the Act; or (iii) such sale, transfer, assignment, pledge, hypothecation or
other disposal shall be made to a corporation or other entity which is wholly-owned by the
Holder or by which the Holder is wholly-owned. Any such sale, transfer, assignment, pledge,
hypothecation or other disposition shall also comply with applicable state securities or "Blue
Sky" laws.
6.3 Legends. Certificates evidencing shares of Common Stock issuable upon conversion of
this Convertible Promissory Note shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION
THEREOF IN VIOLATION OF APPLICABLE SECURITIES LAWS, AND SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY
BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
The certificates representing such shares of Common Stock, and each certificate issued upon
transfer thereof, also shall bear any legend required under any applicable state securities or "Blue
Sky" laws. The Holder consents to the Company's making a notation on its records or giving
instructions to any transfer agent of the Common Stock in order to implement the restrictions on
transfer of this Convertible Promissory Note and shares of Common Stock issuable upon
conversion hereof set forth herein. The Company shall remove any legend endorsed on this
Convertible Promissory Note or on such a certificate, and any stock transfer instructions and
record notations with respect to this Convertible Promissory Note and shams of Common Stock
issuable upon conversion hereof, and shall issue a Convertible Promissory Note or such a
certificate without such legend to the Holder if. (i) this Convertible Promissory Note or any
Common Stock issuable upon conversion hereof is registered under the Act and under any
applicable state securities laws, as the case may be; or (ii) the Holder provides the Company with
an opinion of counsel (which may be counsel for the Company) reasonably acceptable to the
Company to the effect that a public sale or transfer of this Convertible Promissory Note or such
shares of Common Stock may be made without registration under the Act or under any
applicable state securities laws, as the case may be.
SECTION 7. DEFAULTS AND REMEDIES.
7.1 Events of Default. The occurrence and continuance of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) the Borrowers fail to pay any amount due under this Convertible
Promissory Note within two days of the date when due; (b) the Borrowers fail to observe, perform or comply with any covenant,
agreement or term contained in this Convertible Promissory Note and, if subject to
remedy, the same is not remedied within 30 days after written notice from the Holder;
provided, however, that such 30-day period shall be extended for an additional 30 days so
long as within such initial 30-day period the Borrowers have commenced to cure and are
proceeding with due diligence to cure such failure; or
(c) either Borrower makes a general assignment for the benefit of creditors; any
proceeding is instituted by or against either Borrower seeking to adjudicate it a bankrupt
or insolvent, seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debts, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or for any
substantial part of its property, provided that, in any such case, if the same is dismissed or
vacated within 60 days of being instituted, then any such default shall be deemed cured;
or either Borrower takes any corporate action to authorize any of the actions set forth
above.
7.2 Remedies. Upon any "Event of Default" as defined in Section 7.1 above, the Holder may, at
its sole option, declare the entire amount of principal and accrued, unpaid interest on this
Convertible Promissory Note (if any) immediately due and payable, by written notice to the
Borrowers, in which event the Borrowers immediately shall pay to the Holder the entire unpaid
principal balance of this Convertible Promissory Note together with accrued, unpaid interest
thereon to the date of such payment. No delay or omission of the Holder to exercise any right or
power occurring upon any Event of Default hereunder shall impair any such right or power or
shall be construed as a waiver of any such Event of Default or an acquiescence therein. To the
fullest extent permitted by law, the Holder's rights and remedies under this Convertible
Promissory Note shall be cumulative, and the Holder shall have all other rights and remedies not
inconsistent herewith as are provided under the Uniform Commercial Code as in effect in the
relevant jurisdictions, by law or in equity. No exercise by the Holder of one right or remedy shall
be deemed an election, no waiver by the Holder of any default on the part of the Borrowers shall
be deemed a continuing waiver, and no delay by the Holder shall constitute a waiver, election or
acquiescence by it.
7.3 Waivers. The Borrowers waive presentment, demand, notice of dishonor, notice of default or
delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses
or losses and interest thereon, notice of interest on interest and delinquence in taking any action
to collect any sums owing under this Convertible Promissory Note or in a proceeding against any
of the rights or interests in or to properties securing payment of this Convertible Promissory
Note.
SECTION 8. REGISTRATION RIGHTS.
The Company and the Holder (for itself and all subsequent holders of this Convertible
Promissory Note and of the Common Stock into which it is convertible), by acceptance of this
Convertible Promissory Note, agree that the registration rights and limitations provided in that
certain Registration Rights Agreement dated as of September _, 1993, between the Company and
the Holder with respect to certain of the Preferred Stock and Common Stock of the Company
held by the Holder, as at any time amended, supplemented or modified, shall apply to such
Common Stock.
SECTION 9. MISCELLANEOUS.
9.1 Definitions. As used herein the following terms shall have the following meanings:"Closing Price" on a given day shall mean the last sale price regular way or, in
case no such reported sales take place on such day, the average of the last reported bid
and ask price, regular way, in either case on the principal national securities exchange or
the NASDAQ/National Market System on which the shares of Common Stock are
admitted to trading or listed, or if not so admitted or listed, the representative closing bid
price as reported by NASDAQ or other similar organization if NASDAQ is no longer
reporting such information or, if not so available, the fair market price as reasonably
determined by the Board of Directors of the Company.
"Common Stock Equivalents" shall mean securities that are convertible into or exchangeable or
exercisable for shares of Common Stock.
"Market Value" per share of Common Stock at any date shall mean the average of the daily
Closing Price for the Common Stock for the 30 Trading Days before such date.
"Person" shall mean any individual or entity, including without Limitation any corporation,
partnership, joint venture or trust.
"Subsidiary" shall mean any corporation or association -of which the Company or one or more of
its Subsidiaries owns at least a majority of the outstanding voting stock or other equity interest
having by its terms ordinary voting power to elect a majority of the board of directors of such
corporation or association.
"Trading Day" shall mean a day on which the principal national securities exchange on which
shares of Common Stock of the Company are listed or admitted to trading is open for the
transaction of business or, if the shares of such Common Stock are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the Borough of Manhattan, City and State of New York,
are not authorized or obligated by law or executive order to close.
9.2 Merger, Consolidation and Sale. Nothing contained in this Convertible Promissory Note shall
prevent any consolidation or merger of a Borrower with or into any other corporation or
corporations (whether or not affiliated with the Borrowers) or successive consolidations or
mergers in which a Borrower or its successor or successors shall be a party or parties, or shall
prevent any sale or conveyance of all or any substantial portion of the assets of a Borrower to
any other corporation (whether or not affiliated with the Borrowers) authorized to acquire and
operate the same.
9.3 Notices. Any and all notices, requests, demands, designations, consents, offers, acceptances
or any other communications to be given by any party to any other party under the terms and
conditions of this Convertible Promissory Note shall be in writing and personally delivered, or
sent by first class mail, registered or certified, postage pre-paid, or sent by reputable overnight
courier service, facsimile, telecopy or telex, addressed as follows, or to such other address as
may be designated in writing by the party to which notice is to be sent:
If to the Borrowers, to:
Everest & Jennings International Ltd.
1100 Corporate Square Drive
St. Louis, MO 63132
Attention: Chief Financial Officer
With a copy to:
Heller, Ehrman, White & McAuliffe
601 S. Figueroa Street, 39th Floor
Los Angeles, CA 90017-5758
Attention: V. Joseph Stubbs, Esq.
If to the Holder, to:
BIL (Far East Holdings) Limited
2801 Three Exchange Square
Central, Hong Kong
Attention: Secretary
Each such or other communication notice shall be deemed to be given (a) when received if
personally delivered or sent by facsimile, telecopy or telex; (b) three days after deposit in the
United States mail, first class, registered or certified, postage pre-paid and addressed as set forth
herein, or (c) 48 hours after deposit with a reputable overnight courier service, charges pre-paid
and addressed as set forth herein. Notwithstanding the foregoing, the failure of the Holder to
provide Heller, Ehrman, White & McAuliffe with a copy of any notice or other communication
given to the Borrowers hereunder shall not affect the validity of enforceability thereof.9.4 Successors. All the covenants, agreements, representations and warranties contained in this
Convertible Promissory Note shall bind the parties hereto and their respective heirs, executors,
administrators, distributees, successors and assigns.
9.5 Governing Law. This Convertible Promissory Note is delivered in the State of Missouri and
shall be construed and enforced in accordance with, and governed by, the laws of the State of
Missouri without application of the conflict of laws provisions or principles thereof. All persons
and entities in any manner obligated under this Convertible Promissory Note hereby consent to
the jurisdiction of any federal or state court within the State of Missouri having proper venue,
and also consent to service of process by any means authorized by federal or Missouri law.
9.6 Headings. The Section headings in this Convertible Promissory Note are inserted for
purposes of convenience only, and shall not affect in any way the meaning or interpretation
hereof.
9.7 Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms
of this Convertible Promissory Note or the rights and duties of the parties in relation hereto, the
prevailing party will be entitled, in addition to any other relief granted, to all costs and expenses
incurred by such prevailing party, including, without limitation, all reasonable attorneys' fees.
9.8 Time of the Essence. Time is of the essence with respect to every provision hereof.
9.9 Usury. Notwithstanding any other provision of this Convertible Promissory Note to the
contrary, all agreements among the Borrowers and the Holder are expressly limited, so that in no
event or contingency whatsoever, whether by reason of the advancement of the proceeds of this
Convertible Promissory Note, acceleration of maturity of the unpaid principal balance, the
addition of accrued interest to principal or otherwise, shall the amount paid or agreed to be paid
to the Holder for the use, forbearance or detention of the money to be advanced under this
Convertible Promissory Note exceed the highest lawful rate permissible under applicable usury
laws. If, under any circumstances whatsoever, fulfillment of any provision of this Convertible
Promissory Note or any other agreement pertaining to this Convertible Promissory Note, after
timely performance of such provision is due, shall involve transcending the Limit of validity
prescribed by law which a court of competent jurisdiction deems applicable, then the obligations
to be fulfilled shall be reduced to the limit of such validity, and if, under any circumstances
whatsoever, the Holder shall ever receive as interest an amount that exceeds the highest lawful
rate, the amount that would be excessive interest shall not be required to be paid by the
Borrowers, and the Holder shall hold in trust and return to the Borrowers any interest paid
hereunder in excess of the highest lawful rate.
9.10 Endorsement of Schedule. The Borrowers hereby authorize the Holder to endorse on the
Schedule all loans made to the Borrowers evidenced hereby in accordance with the Debt
Conversion Agreement, which endorsements shall, in the absence of manifest error, be
conclusive as to the outstanding principal balance under this Convertible Promissory Note;
provided, however, that the failure to make an endorsement or the inaccuracy of any
endorsement shall not limit or otherwise affect the obligations of the Borrowers under the Debt
Conversion Agreement or this Convertible Promissory Note.
IN WITNESS WHEREOF, the parties have executed this Convertible Promissory Note as of the
date first above written.
EVEREST & JENNINGS INTERNATIONAL
LTD., a Delaware corporation
By:
Its:
EVEREST & JENNINGS, INC., a California corporation
By:
its:
"Borrowers"
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
BEL (FAR EAST HOLDINGS) LIMITED,
a Hong Kong corporation
By:
Its:
"Holder"
EXHIBIT A
EVEREST & JENNINGS INTERNATIONAL LTD.EVEREST & JENNINGS, INC.
SCHEDULE TO CONVERTIBLE PROMISSORY NOTE
Date Amount of Loan
Unpaid Principal
Balance of
Convertible
Promissory Note Borrowing
Availability Under
Convertible
Promissory Note
Name of Person
Making Notation
9/30/93 $45,000,000 $45,000,000 $10,000,000
