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EXHIBIT 4.3
THIS NOTE
AND ANY CAPITAL STOCK INTO WHICH THIS NOTE MAY BE CONVERTED
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF
ANY OTHER
JURISDICTION. NO SALE, OFFER OR TRANSFER OF THIS NOTE SHALL BE
MADE, AND
NO ATTEMPTED SALE, OFFER OR TRANSFER SHALL BE EFFECTIVE, UNTIL
THE HOLDER
DESIRING TO EFFECT SUCH SALE, OFFER OR TRANSFER HAS OBTAINED AN
OPINION OF
COUNSEL ACCEPTABLE TO THE BORROWER TO THE EFFECT THAT THE
REQUESTED
SALE, OFFER OR TRANSFER DOES NOT VIOLATE THE TERMS OF THE ACT
OR
ANY
APPLICABLE STATE SECURITIES LAW OF WHICH SUCH COUNSEL IS AWARE.
9% CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$10,000,000
October 4, 2004
Unless
converted to capital stock pursuant to Section 3 hereof,
Continental Global Group, Inc., a Delaware
corporation (the "Borrower"), hereby
unconditionally promises to pay to the
order of N.E.S. Investment Co., a
Delaware corporation ("Holder"), in lawful
money of the United States of America
and in immediately available funds, the
principal amount of Ten Million Dollars
($10,000,000) (the "Loan"), together with
accrued and unpaid interest as
provided herein, on the later of (the
"Maturity Date") (a) October 2, 2008, and
(b) one business day after all of the
Senior Debt (as defined below) is paid in
full, in cash. This Convertible
Subordinated Promissory Note (this "Note")
evidences the unpaid principal amount of
the Loan together with all accrued and
unpaid interest thereon. The principal of
(and, upon the Maturity Date, accrued
interest on) this Note shall be payable in
lawful money of the United States of
America by check mailed to the address of
the Holder of such Note or by wire
transfer of immediately available funds to
such account as the Holder may
designate in writing.
The Holder
agrees to make the Loan on the date hereof subject to and in
accordance with the terms and conditions
hereof. This Note is issued in
accordance with and subject to the
following terms and conditions:
1.
INTEREST.
(a) The outstanding principal amount of the Loan and Additional
Principal Amounts (as defined below) shall
accrue interest from the date hereof
until all payments hereunder have been
irrevocably paid or provided for in full
or this Note has been converted as provided
in Section 3 hereof at a per annum
rate equal at all times to the lesser of
(i) the maximum lawful rate of interest
in effect at such time under applicable
law, and (ii) nine percent (9.0%),
compounded annually. Interest shall be
calculated on the basis of a year of 365
days, shall accrue on the outstanding
principal amount of this Note until all
payments hereunder have been paid or
provided for in full or the Note has been
converted as provided in Section 3 and
shall be paid on each April 1 and each
October 1 (each an "Interest Payment Date")
hereafter until the Maturity Date as
provided in Section 1(b) below.
(b) All interest due on any Interest Payment Date will, in lieu
of
being paid in cash, be added to the
outstanding principal amount of the Note
(such additional principal amount, the
"Additional Principal Amount") and shall
be deemed to have been paid in the form of
such Additional Principal Amounts.
Additional Principal Amounts shall accrue
interest from the Interest Payment
Date on which such Additional Principal
Amount was created.
2. EVENTS
OF DEFAULT.
Each and
any of the following events shall constitute an "Event of
Default":
(i) the Borrower fails to repay the principal amount of this
Note,
or any interest thereon, when due; or
Promissory Note
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(ii) the Borrower shall be liquidated, dissolved, adjudicated
insolvent, or shall fail to pay, or shall
admit in writing its inability to pay
its debts as they mature, or shall make a
general assignment for the benefit of
creditors; or the Borrower shall apply for
or consent to the appointment of any
receiver, custodian, trustee or similar
officer for it or for all or any
substantial part of its property, or such
receiver, custodian, trustee or
similar officer shall be appointed without
the application or consent of the
Borrower; or the Borrower shall institute
(by petition, application, answer,
consent or otherwise), or take any action
to authorize the institution of, any
bankruptcy, insolvency, reorganization,
dissolution, liquidation or similar
proceeding relating to the Borrower under
the laws of any jurisdiction; or any
such proceeding shall be instituted (by
petition, application or otherwise)
against the Borrower and such proceeding
shall not be dismissed within sixty
(60) days after being instituted.
Notwithstanding any Event of Default, the
Holder shall have no enforcement
rights whatsoever, including, but not
limited to, accelerating the date upon
which this Note shall mature, unless and
until all of the Senior Debt has been
paid in full, in cash. After the Senior
Debt has been paid in full in cash and
in the event that an Event of Default has
occurred and is continuing, the unpaid
principal amount of, and accrued and unpaid
interest on, this Note shall
automatically become immediately due and
payable, together with all other
amounts payable under this Note, without
presentment, demand, protest, notice of
intent to accelerate, notice of
acceleration or further notice of any kind, all
of which are hereby expressly waived by the
Borrower. Notwithstanding any
provision of section 3 hereof, upon the
occurrence and during the continuance of
an Event of Default, no portion of the
Total Convertible Amount (as defined
below) shall be convertible into common
stock of the Borrower.
3.
CONVERSION.
(a) Subject to and upon compliance with the provisions hereof,
the
Holder shall have the right, from time to
time, to convert all or any portion of
the Total Convertible Amount into as many
shares of common stock of the Borrower
as the portion of the Total Convertible
Amount so converted is a multiple of the
Conversion Price. For the purposes of this
Note, the term "Total Convertible
Amount" shall mean, on any date, the sum of
the unpaid principal amount of this
Note and the accrued and unpaid interest
thereon on such date. For the purposes
of this Note, the term "Conversion Price"
shall mean, as of any date, the fair
market value of one share of common stock
of the Borrower on such date, as
reasonably determined by the board of
directors of the Borrower.
(b) This Note may be converted on any business day prior to the
Maturity Date (any such date of conversion,
a "Conversion Date"). In order to
exercise such conversion privilege, the
Holder shall surrender this Note to the
Borrower accompanied by a written statement
designating the portion of the Total
Convertible Amount to be converted. If the
Holder elects to convert this Note,
or a portion thereof, such conversion (a
"Conversion") shall be deemed to have
taken place immediately prior to the close
of business on the Conversion Date,
and at such time the rights of the Holder
as Holder of this Note shall cease to
the extent of the portion of the Total
Convertible Amount so converted and the
Holder shall be treated for all purposes
(with respect to such portion) as the
record holder of the common stock issuable
upon conversion at such time.
(c) The Borrower, at its expense (including the payment by it of
any
applicable issue taxes, other than any
taxes which may then be payable in
respect of the transfer of any such
shares), will issue and deliver to the
Holder as promptly as practicable on or
after a Conversion Date a certificate or
certificates for the number of share
