RSI HOLDINGS, INC.
8.0% Convertible Note due 2005
February 16, 2000 $400,000.00
RSI HOLDINGS, INC., a corporation organized and existing under the laws of
North Carolina (herein called the ACompany@), for value received, hereby
promises to pay to MINOR H. MICKEL or her successors or assigns (hereinafter,
the "Holder") the principal sum of Four Hundred Thousand ($400,000) on February
16, 2005 and to pay interest thereon from the date of issuance written above
annually on February 16 in each year, (each an Interest Payment Date), at the
rate of 8.0% per annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the Holder holding this Note on the
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will be paid to such Holder on the next following Interest Payment Date or
be paid at any time in any other lawful manner. All unpaid interest is
convertible, at the option of the Company or the Holder, on the terms provided
herein.
Payment of the principal of and interest on this Note will be made at the
office or agency of the Company in Greenville, South Carolina or such other
office as the Company may in the future designate (the "Company Office"),
provided written notice of such designation is provided to the Holder of this
Note at the time of such designation. Payment of the principal of and interest
on this Note will be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that, at the option of the Company payment of
principal and interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the security register of the
Company.
The Company may voluntarily prepay any or all of the principal amount
hereof without premium or penalty. Once borrowed and repaid, principal cannot be
re-borrowed.
No provision of this Note shall require the payment or permit the
collection of interest in excess of that permitted by applicable law.
TRANSFER. The transfer of this Note is registrable in the Company's
security register (the "Security Register"), upon surrender of this Note for
registration of transfer at the Company Office, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company duly
executed by the Holder hereof or her attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
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THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY STATE SECURITIES LAW IN RELIANCE UPON EXEMPTIONS THEREFROM. THE HOLDER MUST
HOLD THIS NOTE UNTIL MATURITY OR CONVERSION UNLESS THE SALE OR OTHER TRANSFER
THEREOF IS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE.
CONVERSION. At any time prior to the maturity date of the Note, the Holder
may opt to convert part or all of this Note into fully-paid and non-assessable
shares of the common stock of the Company (the "Common Stock") at a conversion
price of $0.075 (Seven and One-Half Cents) per share of Common Stock, subject to
adjustment as described herein (the "Conversion Price"). At the option of the
Holder (upon notice), unpaid interest shall be added to the principal amount of
this Note and shall be equally subject to the conversion provisions of this
Note.
The number of shares of Common Stock into which this Note is convertible
shall be adjusted from time to time as follows:
(1) If the Company shall, at any time or from time to time (A) declare or
pay any dividend on its Common Stock payable in its Common Stock (a "Stock
Dividend"), (B) effect a subdivision of the outstanding shares of its Common
Stock into a greater number of shares of Common Stock, by reclassification or
otherwise than by payment of a dividend in its Common Stock (a "Stock Split") or
(C) combine or consolidate the outstanding shares of its Common Stock into a
lesser number of shares of Common Stock, by reclassification or otherwise (a
"Reverse Stock Split"); then the number of shares of Common Stock into which
this Note is convertible shall be adjusted so that the Holder shall receive,
upon conversion, the same number of shares of Common Stock such Holder would
have received had the Holder converted immediately prior to the Stock Dividend,
Stock Split or Reverse Stock Split and then received the benefits of the Stock
Dividend, Stock Split or Reverse Stock Split. An adjustment made pursuant to
this paragraph (1) shall become effective (A) in the case of any Stock Dividend,
immediately after the close of business on the record date for the determination
of holders of Common Stock entitled to receive such Stock Dividend, (B) in the
case of any such Stock Split, at the close of business on the day immediately
prior to the day upon which such corporate action becomes effective or (C) in
the case of any Reverse Stock Split, at the close of business on the day
immediately prior to the day upon which such corporate action becomes effective.
(2) If the Company shall, at any time or from time to time, declare, order,
pay or make a dividend or other distribution on its Common Stock, (including,
without limitation, any distribution of other or additional securities or
property or rights or warrants to subscribe for, at less than fair market value
as determined in good faith by the Board of Directors, other securities of the
Company or any subsidiary of the Company now existing or hereinafter formed by
way of dividend or spin-off, reclassification, recapitalization or similar
corporate rearrangement) other than a dividend payable in cash or shares of the
Company's Common Stock or rights or warrants to subscribe for shares of the
Company's Common Stock, then, and in each such case (unless the Holder shall
receive any such dividend or other distribution on the same basis as though this
Note had been converted into shares of Common Stock immediately prior to the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or other distribution), the number of
shares of Common Stock into which this Note is convertible shall be adjusted so
that the Holder of this Note
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shall be entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (A) the number of shares of Common
Stock into which this Note was convertible immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive such dividend or distribution by (B) a fraction, the
numerator of which shall be the Fair Market Value per share of Common Stock on
the record date fixed for the determination of holders of Common Stock entitled
to receive such dividend or distribution, and the denominator of which shall be
such Fair Market Value per share of Common Stock less the fair value of such
dividend or distribution (as determined in good faith by the Board of Directors
of the Company) payable in respect of one share of Common Stock. An adjustment
made pursuant to this paragraph (3) shall be made upon the opening of business
on the next business day following the date on which any such dividend or
distribution is made and shall be effective retroactively immediately after the
close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive such dividend or distribution.
For purposes hereof, Fair Market Value shall be the fair market value of
the Company's common stock, as determined in good faith by the Board of
Directors of the Company
The Holder may exercise these conversion rights as to a Note or any part
thereof by delivering to the Company during regular business hours at the
Company Office the Note to be converted along with written notice of the amount
to be converted stating that the Holder elects to convert such Note or portion
thereof. Conversion shall be deemed to have been effected on the date when such
delivery is received by the Company at the Company Office, and such date is
referred to herein as the "Conversion Date." As promptly as practicable
thereafter, the Company shall issue and deliver to such Holder, a certificate or
certificates for the number of full shares of Common Stock to which such Holder
is entitled, a check for cash with respect to any fractional interest in a share
of Common Stock, and, in the event of a partial conversion, a replacement Note,
which shall be identical to the original Note except that the replacement shall
be in a different principal amount and shall indicate the date of issuance of
the original Note, the date of issuance of the replacement Note and that the
replacement was issued as a replacement for the original as a result of a
partial conversion. The Holder shall be deemed to have become a shareholder of
record on the applicable Conversion Date unless the transfer books of the
Company are closed on the date, in which event the Holder shall be deemed to
have become a Common Stock shareholder of record on the next succeeding date on
which the transfer books are open, but the Conversion Price shall be that in
effect on the Conversion Date.
No fractional shares of Common Stock or scrip shall be issued upon
conversion of the Note. Instead of any fractional shares of Common Stock which
would otherwise be issuable upon conversion of the Note, the Company shall pay a
cash adjustment in respect of such fractional interest equal to the value of
such fractional interest as based on the Conversion Price.
The Company shall at all times reserve and keep available, out of its
authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of the Note, the full number of shares of Common Stock deliverable
upon the conversion of all Note from time to time outstanding.
All shares of Common Stock which may be issued upon conversion of the Note
will, upon issuance by the Company, be validly issued, fully paid and
nonassessable.
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Upon conversion of the Note, the Holder thereof shall be entitled to
receive any unpaid interest accrued (but not added to the principal of the Note)
through the Conversion Date.
CERTAIN NOTICES. In case at any time the Company shall propose to (1)
declare any cash dividend upon its Common Stock, (2) declare any dividend upon
its Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, (3) offer for subscription to
the holders of any of its Common Stock any additional shares of stock in any
class or other rights, (4) reorganize, or reclassify the capital stock of the
Company or consolidate, merge or otherwise combine with, or sell all or
substantially all of its assets to, another corporation, (5) voluntarily or
involuntarily dissolve, liquidate or wind up of the affairs of the Company, or
(6) redeem or purchase any shares of its capital stock or securities convertible
into its capital stock, then the Company shall give to the Holder of this Note,
by certified or registered mail, (i) at least twenty (20) days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same shall take
place. Any notice required by clause (i) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and any notice required by
clause (ii) shall specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
GOVERNING LAW. This Note shall be governed by and construed in accordance
with the laws of the State of South Carolina without regard to any conflicts of
laws principals or provisions.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed as of the date first above written.
RSI HOLDINGS, INC.
By: /s/ Buck A. Mickel
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Name: Buck A. Mickel
Title: President and CEO
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OPTION OF HOLDER TO ELECT CONVERSION
If you want to elect to have this Note converted in its entirety into
Common Stock of the Company as provided above, check the box: ___________
If you want to elect to have only a part of this Note converted into Common
Stock of the Company as provided above, state the amount you wish to convert:
$ __________
Dated: Your Signature: ____________________
(Sign exactly as name appears on the
other side of this Security)
STATE OF )
)
COUNTY OF )
BEFORE ME, the undersigned, on this day personally appeared
____________________________, known to me to be the person, acknowledged to me
that he executed this Option of Holder to Elect Conversion.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _______ day of
_________________, ________.
Notary Public in and for
My Commission Expires:
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