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Exhibit 4.3
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER
JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED
UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN
COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER
JURISDICTION OR (II) THERE IS AN OPINION OF COUNSEL OR OTHER EVIDENCE,
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION THEREFROM IS AVAILABLE
AND THAT SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.
SUBORDINATED TERM PROMISSORY NOTE
$500,000.00 August 15, 2000
FOR VALUE RECEIVED, the undersigned E-Sync Networks, Inc., a Delaware
corporation (the "Maker"), having an address at 35 Nutmeg Drive, Trumbull,
Connecticut 06611, hereby unconditionally promises to pay to the order of
Michael P. Schulhof, an individual ("Payee"), at the office of Payee located at
c/o Commercial Electronics, L.L.C., 375 Park Avenue, Suite 1604, New York, New
York 10152, or such other location as the holder hereof may designate, in lawful
money of the United States, the principal sum of FIVE HUNDRED THOUSAND DOLLARS
AND NO CENTS ($500,000.00), together with interest thereon as provided for
below.
1. INTEREST RATE. Maker shall pay interest, in arrears, on the unpaid principal
balance hereof outstanding from time to time at a rate equal to twelve percent
(12%) per annum. Interest shall commence to accrue on the date hereof and shall
continue to accrue until the principal hereof is paid in full (whether before or
after maturity or judgment).
Anything contained in this Note to the contrary notwithstanding, Payee
does not intend to charge and Maker shall not be required to pay interest or
other charges in excess of the maximum rate permitted by applicable law. Any
payments in excess of such maximum rate shall be refunded to Maker or credited
against principal.
2. PAYMENT OF INTEREST AND PRINCIPAL. Interest only on the outstanding principal
amount hereof shall be due and payable monthly in arrears, commencing on
September 15, 2000 and continuing on the fifteenth (15th) day of each month
thereafter preceding the payment in full of the principal amount hereof.
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The entire unpaid principal amount hereof, together with all accrued and unpaid
interest thereon shall be due and payable on August 15, 2001. All payments shall
first be applied to interest and then to principal.
3. PREPAYMENT.
(a) Payee shall have the right, but not the obligation, to demand
prepayment hereof out of all (or any portion) of the net proceeds of any sales
of debt and/or equity securities by Maker while amounts are due hereunder, but
only to the extent that the aggregate net proceeds from such sales of securities
after the date hereof exceeds three million dollars ($3,000,000.00). Maker shall
give prompt (but in any event within three (3) business days) written notice to
Payee of any such sales of securities (including a statement as to the amount of
net proceeds) in order to allow Payee to determine whether, based on the
aggregate amount of such sales to date, its right to demand prepayment has
become available, and, to the extent so, in order to allow Payee to exercise its
right to require a mandatory prepayment hereunder. All mandatory prepayments due
by virtue of this Section 3 shall be made by Maker within three (3) business
days of its receipt of notice from Payee as to the amount of the prepayment that
Payee is requiring.
(b) Maker may prepay this Note as a whole at any time or in part from
time to time at the principal amount hereof plus accrued interest thereon, but
without premium or penalty.
4. EXPENSES. Maker shall pay Payee, on demand, for all reasonable costs and
expenses (including, but not limited to, reasonable attorneys' fees), if any,
which may be incurred by Payee in connection with the collection of this Note.
5. REPRESENTATIONS AND WARRANTIES. Maker hereby represents and warrants to Payee
that:
(a) Maker has all requisite legal and corporate power and authority to
sell and issue this Note and to carry out and perform its obligations hereunder.
(b) All corporate action on the part of Maker necessary for the sale,
issuance and delivery of this Note and the performance of all of Maker's
obligations hereunder have been taken. This Note, when executed and delivered by
Maker, will constitute a valid and legally binding obligation of Maker,
enforceable against Maker in accordance with its terms. This Note is free of any
liens, claims, encumbrances or restrictions on transfer. This Note is not
subject to any preemptive rights or rights of first refusal not previously
waived.
(c) The execution, delivery, performance and issuance of this Note have
not and will not: (i) violate, conflict with or result in a breach of any
provision of or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a creation of any
lien upon any of the assets, properties or business of Maker under, any of the
terms, conditions or provisions of (x) the Certificate of Incorporation or
By-laws of Maker, or (y) any contract, commitment, lease, agreement or proposed
transaction, written or oral, absolute or contingent, material to the assets,
properties or business of Maker; or (ii) violate any judgment, ruling, order,
writ, injunction, award, decree, or law of any court or federal, state, county
or local government or any other governmental, regulatory or administrative
agency or authority which is applicable to Maker or any of its assets,
properties or businesses; or (iii) to Maker's knowledge, result in the
suspension, revocation, impairment, forfeiture, or non-renewal of any franchise,
permit, license, authorization, or approval material to Maker.
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(d) The offer, sale, and issuance of this Note constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended.
6. DEFAULT; ACCELERATION. The occurrence of any of the following shall
constitute an "Event of Default":
(a) Maker shall fail to make any payment of any principal,
interest or other amount when due under this Note.
(b) Maker shall be dissolved or shall make an assignment for the
benefit of creditors; or shall have a receiver, custodian,
trustee or conservator appointed for all or substantially all
its assets.
(c) Any case or proceeding under any bankruptcy, insolvency,
receivership or similar law affecting Maker shall be commenced
(provided that if such case or proceeding is not commenced by
Maker, same remains undismissed for a period of sixty (60)
days).
(d) Any representation or warranty of Maker contained herein or in
any related document shall prove to be untrue or misleading in
any material respect.
Upon the occurrence, and at any time during the continuance, of an Event of
Default, Payee, at Payee's option and without the need for presentment, demand,
protest, or other notice of any kind, may declare all unpaid principal hereof
and interest hereunder to be immediately due and payable and same shall become
immediately due and payable upon such declaration.
7. CERTAIN WAIVERS. Maker and any endorser or guarantor hereof (collectively,
the "Obligors") and each of them: (i) waive(s) presentment, diligence, protest,
demand, notice of demand, notice of acceptance or reliance, notice of
non-payment, notice of dishonor, notice of protest and all other notices to
parties in connection with the delivery, acceptance, performance, default or
enforcement of this Note, any endorsement or guaranty of this Note, or any
collateral or other security; (ii) consent(s) to any and all delays, extensions,
renewals or other modifications with respect to this Note, any related document
or the debt(s) or collateral evidenced hereby or thereby or any waivers of any
term hereof or thereof, any release, surrender, taking of additional,
substitution, exchange, failure to perfect, record, preserve, realize upon, or
lawfully dispose of, or any other impairment of, any collateral or other
security, or any other failure to act by Payee or any other forbearance or
indulgence shown by Payee, from time to time and in one or more instances
(without notice to or assent from any of the Obligors) and agree(s) that none of
the foregoing shall release, discharge or otherwise impair any of their
liabilities; (iii) agree(s) that the full or partial release or discharge of any
Obligor(s) shall not release, discharge or otherwise impair the liabilities of
any other Obligor(s); and (iv) otherwise waive(s) any other defenses based on
suretyship or impairment of collateral.
8. SUBORDINATION. Notwithstanding anything to the contrary herein, Payee and
each holder from time to time of this Note by its acceptance hereof agrees that
all payments on this Note shall be subordinate and subject in right of payment
to the prior payment in full of all Senior Debt (as defined below), and further
agrees that it shall enter into such agreements with Maker and the holders of
any such Senior Debt to acknowledge and evidence the terms of such subordination
as Maker shall from time to time reasonably request, provided, however, that the
provisions of this Section 8 and the terms of any such agreements do not prevent
or limit the exercise by Payee of its right to demand prepayment of this
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Note pursuant to Section 3(a) hereof. For purposes of this Note, "Senior Debt"
means (a) all obligations of Maker in respect of any indebtedness of Maker to
banks, financial institutions or institutional lenders or investors, including,
without limitation, obligations in respect of principal, premium, interest,
reimbursement obligations and fees and expenses, and (b) any and all renewals,
extensions, increases or rearrangements of any of the foregoing, in each case,
whether existing on the date of this Note or hereafter created, incurred or
acquired. Without limiting or expanding the foregoing provisions of this
definition, this Note is not intended to be either superior or subordinate in
right of payment to any obligation of Maker, whether existing on the date of
this Note or hereafter created, other than Senior Debt.
9. COMMERCIAL TRANSACTION; JURY WAIVER. EACH OF PAYEE AND MAKER ACKNOWLEDGES
THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION.
EACH OF PAYEE AND MAKER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY
AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND, ARISING UNDER OR
OUT OF, OR OTHERWISE RELATED TO OR OTHERWISE CONNECTED WITH, THIS NOTE AND/OR
ANY RELATED DOCUMENT.
10. BINDING NATURE. This Note shall bind Maker and Maker's heirs,
representatives, successors and assigns and shall inure to the benefit of Payee
and its successors and assigns. The term "Payee" as used herein shall include,
in addition to the initial Payee, any successors, endorsees, or other assignees
of such Payee and shall also include any other holder of this Note.
11. GOVERNING LAW. This Note shall be governed by and construed and interpreted
in accordance with the laws of the State of Connecticut, without regard to its
rules pertaining to conflicts of laws thereunder.
12. MISCELLANEOUS. No delay or omission by Payee in exercising any right or
remedy hereunder or under any guaranty hereof shall operate as a waiver of such
right or remedy or any other right or remedy, and a waiver on one occasion shall
not be a bar to or waiver of any right or remedy on any other occasion. All
rights and remedies of Payee hereunder, any other applicable document and under
applicable law shall be cumulative and not in the alternative. No provision of
this Note or any guaranty hereof may be waived or modified orally but only by a
writing signed by the party against whom enforcement of such amendment, waiver
or other modification is sought.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the day and year first written above.
Maker:
E-SYNC NETWORKS, INC.
By:_________________________________
Name:
Title:
