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Exhibit 4(d)
PURINA MILLS, INC.
CONVERTIBLE NOTE
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Principal Amount: $1,163,908.05 __________, 2000 St. Louis, Missouri
SECTION 1. PURINA MILLS, INC., as debtor and debtor-in-possession (the
"Corporation"), for value received, hereby promises to pay to Houlihan Lokey
Howard & Zukin Capital, or its assigns or other transferees ("Payee"), the
principal amount of one million, one hundred sixty-three thousand, nine hundred
and eight dollars and 05/100 ($1,163,908.05), and to pay interest (computed on
the basis of a 360-day year) on the unpaid principal amount hereof outstanding
from time to time from and including the date hereof until and including the
date the principal amount hereof is paid in full at the rate of eight percent
(8%) per annum (or at such other rate provided for herein). Interest shall be
payable quarterly on June 30, September 30, December 31 and March 31 of each
year (commencing on the first such date following the effective date of the
Corporation's plan of reorganization) and on the date this Note is payable in
full, until the principal amount hereof and all interest accruing from the date
hereof is paid in full.
SECTION 2. The principal amount hereof and all accrued interest shall
be payable in full in immediately available funds on December 31, 2001.
SECTION 3. This Note is issued in partial payment of the Restructuring
Transaction Fee pursuant to that certain engagement agreement dated July 26,
1999, as modified pursuant to that certain letter dated December 14, 1999 (as so
modified, the "Engagement Letter"). Partial payment in cash of the Restructuring
Transaction Fee with the balance being paid by issuance of this Note have been
approved by the United States Bankruptcy Court for the District of Delaware
pursuant to an order dated _________________.
SECTION 4. All payments on or in respect of this Note, including
principal and interest thereon, shall be made in such coin and currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts in immediately available funds to such
account as Payee specifies, or, at the option of Payee, in such manner and at
such other place in the United States of America as Payee shall have indicated
to the Corporation. Whenever a payment to be made hereunder shall be due and
payable on a day which is not a business day in New York, New York, such payment
shall be made on the next succeeding business day and such extension of time
shall be included in the computation of the payment of interest hereunder. All
payments hereunder shall be made (without counterclaim, setoff or withholding of
any kind) to the Payee's account as designated in writing from time to time by
Payee.
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SECTION 5. (a) If any one or more of the following events ("Events of
Default") shall have occurred:
(i) the Corporation shall (x) default in the payment when due of
any principal of this Note, (y) default, and such default
shall continue for five or more days, in the payment when due
of any interest on this Note, or (z) fail to pay any other
amounts owing under this Note for ten days after receiving
written notice thereof; or
(ii) default shall occur in the observance or performance of any of
the other covenants or agreements of the Corporation contained
in this Note which is not remedied within 30 days after
written notice thereof to the Corporation; or
(iii) any default shall occur in the terms governing any
Indebtedness (as hereinafter defined) of the Corporation in
the aggregate amount of $10 million or more and the holder or
holders of such Indebtedness has declared the unpaid balance
thereof to be due and payable; or
(iv) except for or in connection with the Bankruptcy Case, the
Corporation or any of its Subsidiaries shall commence a
voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or
an involuntary case is commenced against the Corporation or
any of its Subsidiaries and the petition is not dismissed
within 60 days, after commencement of the case; or a custodian
(as defined in the Bankruptcy Code) or the like is appointed
for, or takes charge of, all or substantially all of the
property of the Corporation or any of its Subsidiaries; or the
Corporation or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Corporation or any of its
Subsidiaries, or there is commenced against the Corporation or
any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 days; or the Corporation or any
of its Subsidiaries is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or
proceeding is entered; or the Corporation or any of its
Subsidiaries suffers any appointment of any custodian or the
like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or
the Corporation or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate
action is taken by the Corporation or any of its Subsidiaries
for the purpose of effecting any of the foregoing; or
(v) any representation or warranty made by the Corporation in this
Note shall prove to have been false or incorrect in any
material respect on the date made;
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then, when any Event of Default described in clauses (i),
(ii), (iii), or (vi) above has occurred and shall be
continuing, the principal of this Note and the interest
accrued thereon and all other amounts due hereunder (the
"other payments") shall, upon written notice from Payee
forthwith become and be due and payable, if not already due
and payable, without presentment, further demand or notice of
any kind. When any Event of Default described in clause (iv)
above has occurred, then the principal of this Note, the
interest accrued thereon and the other payments shall
immediately become due and payable, upon the occurrence
thereof, without presentment, demand, or notice of any kind.
If any principal, installment of interest or other payment is
not paid in full on the due date thereof (whether by maturity,
prepayment, or acceleration) or any Event of Default has
occurred and is continuing, then the outstanding principal of
this Note, any overdue installment of interest (to the extent
permitted by applicable law), and all other payments will bear
interest from the due date of such payment, or from and after
an Event of Default, at a rate equal to ten percent (10%) per
annum ("Default Rate"). The Corporation shall pay to Payee all
reasonable out-of-pocket costs and expenses incurred by Payee
in any effort to collect the principal of this Note, the
interest accrued thereon and the other payments, including the
reasonable attorneys fees and expenses for services rendered
in connection therewith, and pay interest on such costs and
expenses to the extent not paid when demanded at the Default
Rate.
(b) If any Event of Default specified in Section 5(a) above has
occurred and is continuing, the Payee may proceed to protect and enforce Payee's
rights either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant or agreement contained in this Note, or in
aid of the exercise of any power granted in this Note, or to enforce any other
legal or equitable right or remedy of Payee.
(c) No failure to exercise or delay in the exercise of any right, power
or remedy accruing to Payee upon any breach or default of the Corporation under
this Note shall impair any such right, power or remedy of Payee nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.
(d) All remedies under this Note, by law or otherwise afforded to
Payee, shall be cumulative and not alternative.
SECTION 6. (a) Subject to the requirements of this Section 6, at any
time or from time to time after the date hereof, Payee shall be entitled to
convert, by delivering written notice of such conversion to the Corporation (the
"Conversion Notice"), any or all of the outstanding principal amount of, or
unpaid interest on, this Note into a number of shares of Common Stock of the
Corporation, par value $0.01 per share ("Corporation Common Stock"), determined
by dividing the amount of the principal and interest of this Note being
converted into shares of Parent Common Stock by the Conversion Price. The
"Conversion Price" shall be equal to $18.50 per share, as appropriately and
proportionately adjusted to reflect any subdivision of the Corporation Common
Stock, whether by stock split, stock dividend or otherwise (a "Subdivision"), or
any combination of the Corporation Common Stock, whether by reverse stock split
or otherwise (a "Combination"), with a record date occurring after the
determination of such value.
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(b) The Conversion Notice shall state the amount of principal and
interest to be converted pursuant to this Section 6. The conversion pursuant to
such Conversion Notice shall occur on the date on which such Conversion Notice
is given to the Corporation (the "Conversion Date").
(c) If a Conversion Notice is given with respect to less than the
principal amount outstanding under this Note, at the request of Payee and upon
surrender of this Note, the Corporation shall issue to Payee a new Note in the
principal amount outstanding after such conversion and otherwise in a form
identical to this Note.
(d) In the event of any conversion of this Note pursuant to this
Section 6, such conversion shall be deemed to have been made on the Conversion
Date; and after such Conversion Date, Payee shall be entitled to receive the
shares of Corporation Common Stock issuable upon such conversion and shall be
treated for all purpose as the record holder of such shares. Interest shall
cease to accrue on the Conversion Date for any principal amount with respect to
which a Conversion Notice has been given and, to the extent the accrued interest
on such portion of the principal amount is not converted, such interest shall be
paid within five days of the Conversion Date.
(e) As promptly as practicable after a Conversion Date (but in any
event no later than two trading days after delivery of the applicable Conversion
Notice), the Corporation will issue and deliver to Payee a certificate or
certificates for the number of shares of Corporation Common Stock issuable upon
conversion pursuant to this Section 6. The Corporation will pay all issuance
taxes, if any, applicable upon conversion pursuant to this Section 6. The
Corporation may pay cash in lieu of the issuance of a fractional share, based on
the applicable Conversion Price.
(f) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Corporation Common Stock, solely for
the purpose of effecting the conversion of this Note, such number of shares of
Corporation Common Stock as shall from time to time be sufficient to effect the
conversion of this Note; and if at any time the number of authorized but
unissued shares of Corporation Common Stock shall not be sufficient to effect
the conversion of the entire outstanding principal amount of this Note, in
addition to such other remedies as shall be available to Payee, the Corporation
will take such corporate action as may be necessary to increase its authorized
but unissued shares of Corporation Common Stock to the number of shares which is
sufficient for such purpose.
(g) In the case of any consolidation or merger of the Corporation with
another entity, or the sale of all or substantially all of its assets to another
entity, or any reorganization or reclassification of the Corporation Common
Stock or other equity securities of the Corporation (except a subdivision or
combination), lawful and adequate provision shall be made whereby Payee shall
thereafter have the right to receive upon conversion of this Note in lieu of or
in addition to the shares of Corporation Common Stock, such shares of stock,
securities or assets 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 Corporation Common Stock equal to
the number of shares of Corporation Common Stock immediately theretofore so
issuable upon such conversion 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
Payee to the end that the provisions hereof shall thereafter be applicable as
nearly as may
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be, in relation to any shares of stock, securities or assets thereafter
deliverable upon conversion of this Note.
(h) In the event of any proposed distribution, dissolution or
liquidation of the assets of the Corporation, the Corporation shall mail notice
thereof to Payee and shall not make any such distribution to stockholders or
effectuate any such dissolution or liquidation until the expiration of ninety
(90) days from the date of mailing of such notice and, in any such case, Payee
may exercise the conversion rights with respect to this Note at any time prior
to such distribution.
SECTION 7. (a) It is the intent of the Corporation and the Payee that
the Conversion Shares will be freely tradeable without registration under
Section 5 of the Securities Act or any state or local law requiring registration
for offer or sale of a security pursuant to Section 1145 of the Bankruptcy Code.
If for any reason the sale by Payee of any Registrable Shares (as hereinafter
defined) would require registration under Section 5 of the Securities Act of
1933, as amended (the "Securities Act"), or any applicable state or local
securities laws, the Corporation will, upon a written request by Payee,
undertake commercially reasonable efforts to effect the registration of the
Conversion Shares to allow for such shares to be freely traded by Payee in
compliance with all applicable securities laws. The Corporation shall bear all
of the expenses to effect such registration(s) as is appropriate to accomplish
the intent set forth in this Section.
(b) For purposes of this Agreement, "Registrable Shares" shall mean any
shares of Corporation Common Stock issued or issuable upon conversion of this
Note and any other shares of the Corporation Common Stock issued or issuable
with respect to such shares as a result of stock dividends or reclassifications,
recapitalizations, mergers or similar events.
(c) Payee covenants and agrees with the Corporation that such Payee
will cooperate with the Corporation in connection with the preparation of the
Registration Statement for so long as the Corporation is obligated to keep the
Registration Statement effective, and will provide to the Corporation, in
writing, for use in the Registration Statement, all information reasonably
requested by the Corporation regarding Payee and its plan of distribution and
such other information as may be reasonably necessary to enable the Corporation
to prepare the Registration Statement and Prospectus covering the Registrable
Shares and to maintain the currency and effectiveness thereof.
SECTION 8. The Corporation represents and warrants to Payee, as of the
date of delivery of this Note, that:
(a) The Corporation is a corporation, duly organized, validly existing
and in good standing under the laws of the state of its incorporation, and has
all requisite corporate power and authority necessary to own and operate its
properties and to carry on its businesses as now conducted.
(b) The Corporation has all requisite corporate power and authority to
execute and deliver this Note and to perform its obligations under this Note.
The execution, delivery and
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performance of this Note by the Corporation have been duly authorized and
approved by all necessary corporate action on the part of the Corporation's
board of directors and stockholders and no further corporate authorization on
the part of the Corporation is necessary to authorize the execution, delivery
and performance of the Corporation's obligation under this Note. The execution,
delivery and performance of this Note do not conflict with or result in any
breach of, or constitute a default under, result in a violation of, or, except
for approvals that have been obtained as described in Section 3 hereof, require
any authorization, consent, approval, exemption or other action by or notice to
any court or other governmental body, under the provisions of the Corporation's
Certificate of Incorporation or By-Laws or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which the Corporation is bound, or
any law, statute, rule, regulation, order, judgment or decree to which the
Corporation is subject. This Note constitutes a valid and binding obligation of
the Corporation, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, similar laws of debtor relief
and general principles of equity.
(c) Except for approvals that have been obtained as described in
Section 3 hereof, no permit, consent, approval or authorization of, or
declaration to or filing with, any governmental or regulatory authority is
required in connection with any of the execution, delivery or performance of
this Note by the Corporation.
(d) The Conversion Shares have been duly authorized and, when issued
upon conversion of this Note in accordance with its terms, will be validly
issued, fully paid, nonassessable, free of pre-emptive rights. This Note has
been, and the Conversion Shares will be, issued pursuant to a plan confirmed by
the Bankruptcy Court in the Bankruptcy Case and are exempt from the registration
requirements under federal and state securities laws pursuant to Section 1145 of
the Bankruptcy Code.
SECTION 9. (a) This Note may not be prepaid, in whole or in part,
except as set forth in paragraph (b) and (c) of this Section 9.
(b) This Note shall be prepaid, in whole or in part and without
penalty, upon, and only upon written notice by Payee to the
Corporation (the "Payee Optional Redemption Notice") within
sixty (60) days of the giving of such notice, at the time of
or any time after a Change in Control. The amount to be
prepaid shall be equal to 100% of the aggregate principal
amount requested to be prepaid under the Payee Optional
Redemption Notice, plus accrued and unpaid interest (if any)
thereon to such prepayment date. For purposes of this Note, a
"Change in Control" shall mean Change of Control as that term
is defined under the Credit Agreement dated as of June 28,
2000, among the Corporation, as borrower, the Lenders as party
thereto, and Chase Bank of Texas, N.A., as Administrative
Agent.
(c) This Note shall be repaid, in whole or in part and without penalty,
upon, and only upon, written notice by Payee to the Corporation within sixty
(60) days of the giving of such notice
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at the time of or any time after a refinancing or early retirement of the "Bank
Debt" (as defined). The Payee shall provide the Corporation with the Payee
Optional Redemption Notice, as described in Section 9(a), to indicate the amount
to be prepaid under this paragraph. The amount to be prepaid shall be equal to
100% of the aggregate principal amount requested to be prepaid under the Payee
Optional Redemption Notice, plus accrued and unpaid interest (if any) thereon to
the such prepayment date.
(d) The Corporation shall notify Payee in writing within sixty (60)
days prior to the reasonably anticipated consummation date of a transaction
creating a Change in Control or leading to the refinancing or early retirement
of the Bank Debt.
(e) Notwithstanding the foregoing, Payee may exercise the conversion
rights pursuant to Section 6 of this Note at any time prior to the applicable
prepayment.
SECTION 10. (a) In the event the Corporation shall default in the
payment of the principal of, or interest on, the Bank Debt when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise, then, unless and until such default shall have been
cured or waived or shall have ceased to exist, no payment shall be made on
account of the principal of or interest on this Note without the prior written
consent of the then existing agent of the Bank Group.
(b) Nothing contained in this Section 10 shall prohibit Payee from
exercising its right to convert all or any portion of the principal amount of
this Note at any time and from time to time into shares of Corporation Common
Stock pursuant to Section 6.
SECTION 11. This Note is transferable by the Payee, in whole or in
part. Upon the request of Payee, the Corporation shall issue to Payee one or
more Notes in an aggregate principal amount equal to the aggregate principal
amount outstanding under this Note to facilitate the transfer.
SECTION 12. The Corporation hereby waives diligence, presentment,
demand, protest and notice of every kind whatsoever. The failure of Payee to
exercise any of its rights hereunder in any particular instance shall not
constitute a waiver of the same or of any other right in that or any subsequent
instance.
SECTION 13. This Note shall be binding upon the Corporation, its
successors and assigns, including, but not limited to, any Chapter 7 or Chapter
11 trustee appointed in the Bankruptcy Case and/or the Corporation as
reorganized pursuant to a plan confirmed by the Bankruptcy Court in the
Bankruptcy Case, and shall inure to the benefit of Payee, its successors and
assigns.
SECTION 14. This Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of New York (exclusive of
conflict of law principles and provisions thereof).
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SECTION 15. This Note may be amended, and the Corporation may take any
action herein prohibited, or omit to perform any act herein required to be
performed by them, if the Corporation shall obtain the written consent to such
amendment, action or omission to act, of Payee. No course of dealing between the
Corporation and Payee nor any delay in exercising any rights hereunder or under
any Note shall operate as a waiver of any rights of Payee.
SECTION 16. For purposes of this Note, in addition to capitalized terms
elsewhere defined in this Note, the following capitalized terms have the
following meanings:
"Affiliate" shall mean any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by, or under common
control with, the Person specified. A Person shall be deemed to control a
corporation (or other entity) if such person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such corporation (or other entity), whether through the ownership of voting
securities, by contract or otherwise.
"Bank Debt" means the "New Tranche A Notes" and the "New Tranche B
Notes," as such terms are used and defined in the Corporation's plan of
reorganization in the Bankruptcy Case.
"Bank Group" means the collective group of holders of Bank Debt.
"Bankruptcy Case" means the bankruptcy case pending in the United
States Bankruptcy Court for the District of Delaware (case no. 99-398 (SLR))
under Chapter 11 of the Bankruptcy Code.
"Indebtedness" of any Person means the principal of, premium, if any,
and unpaid interest on (a) indebtedness for borrowed money, (b) indebtedness
guaranteed, directly or indirectly, in any manner by such Person, or in effect
guaranteed, directly or indirectly, in any manner by such Person through an
agreement, contingent or otherwise, to supply funds to, or in any other manner
invest in, the debtor, or to purchase indebtedness, or to purchase and pay for
property if not delivered or pay for services if not performed, primarily for
the purpose of enabling the debtor to make payment of the indebtedness or to
assure the owners of the indebtedness against loss, (c) all indebtedness secured
by any mortgage, lien, pledge, charge or other encumbrance upon property owned
by such Person, even though such Person has not in any manner become liable for
the payment of such indebtedness, (d) all indebtedness of such Person created or
arising under any conditional sale, lease (intended primarily as a financing
device) or other title retention or security agreement with respect to property
acquired by such Person even though the rights and remedies of the seller,
lessor or lender under such agreement or lease in the event of default may be
limited or repossession or sale of such property, and (e) renewals, extensions
and refunding of any such indebtedness
"Note" means this Convertible Note of the Corporation.
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"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Restructuring Transaction Fee" has the meaning ascribed to it in the
Engagement Letter.
"Subsidiary" means any corporation of which the shares of stock having
a majority of the general voting power in electing the board of directors are,
at the time as of which any determination is being made, owned by the
Corporation either directly or indirectly through one or more Subsidiaries.
[Remainder of page intentionally left blank.
Signature page follows.]
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IN WITNESS WHEREOF, the undersigned has executed this Convertible Note
as of the date first above written.
PURINA MILLS, INC.
By:
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Its:
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Address:
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St. Louis, Missouri 63144
