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Exhibit 4.3
DATED: _____________, 2006
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS
CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.
No. ______ $__________
MILE MARKER INTERNATIONAL, INC.
SUBORDINATED UNSECURED CONVERTIBLE NOTE
DUE DECEMBER ___, 2009
This Subordinated Unsecured Convertible Note (the "Note") is issued
by
Mile Marker International, Inc., a Florida corporation (the
"Obligor") to
_________________ (the "Holder"), pursuant to that certain
Securities Purchase
Agreement (the "Securities Purchase Agreement") of even date
herewith.
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the
Holder or
its successors and assigns the principal sum of _______________
Dollars
($__________) together with accrued but unpaid interest on or
before December
____, 2009 (the "Maturity Date") in accordance with the following
terms:
INTEREST. Interest shall accrue on the outstanding principal
balance
hereof at an annual rate equal to ten percent (10%). Interest shall
be
calculated on the basis of a 360-day year and the actual number of
days elapsed,
to the extent permitted by applicable law. Interest hereunder will
be paid to
the Holder or its assignee in whose name this Note is registered on
the records
of the Obligor regarding registration and transfers of Notes (the
"Note
Register"). Interest is payable quarterly in arrears commencing
April 1, 2007
(which quarterly interest payment shall be adjusted to comply with
the issuance
date of this Note), and on the first day of July, October, January
and April
thereafter until the principal and interest of this Note are paid
in full or the
Note is converted in accordance with its terms.
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<PAGE>
RIGHT OF REDEMPTION. The Obligor at its option shall have the
right,
with ten (10) business days advance written notice (the "Redemption
Notice"), to
redeem a portion or all amounts outstanding under this Note prior
to the
Maturity Date for an amount equal to the principal amount being
redeemed plus a
redemption premium equal to five percent (5%) of the principal
amount being
redeemed if the Note is redeemed before its first anniversary date,
three
percent (3%) if between the first and second anniversary date, and
one and
one-half (1 1/2%) if after the second anniversary date and before
the Maturity
Date ("Redemption Premium"), together with accrued interest
(collectively
referred to as the "Redemption Amount").
The Obligor shall deliver to the Holder the Redemption Amount on
the
eleventh (11th) Business Day after the Redemption Notice.
Notwithstanding the foregoing, in the event that the Obligor
has
elected to redeem all or a portion of the outstanding principal
amount and
accrued interest under this Note the Holder shall be permitted to
convert all or
any portion of this Note during such ten (10) Business Day
period.
NOTE UNSECURED. This Note is not secured by any collateral of
any
kind.
NOTE SERIES. The Note is one of a series of notes of like tenor
and
terms having an authorized maximum principal amount of $1,000,000
(together
called the "10% Notes").
NO INDENTURE. No indenture, trust agreement, or like instrument
governs
the terms of the 10% Notes, and no agent or trustee of any kind has
been
appointed to act on behalf of the holders of the 10% Notes as a
group.
NOTE SUBORDINATE. Payment of principal and interest on this Note
is
subordinate to the Obligor's loan obligations to Merrill Lynch
Business
Financial Services, Inc. and any successor or additional commercial
lender, and
may be subordinated by the Obligor to any existing or future
indebtedness of the
Obligor.
This Note is subject to the following additional provisions:
SECTION 1. EXCHANGE FOR OTHER DENOMINATIONS. This Note is
exchangeable
for an equal aggregate principal amount of Notes of different
authorized
denominations, as requested by the Holder surrendering the same. No
service
charge will be made for such registration of transfer or
exchange.
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<PAGE>
SECTION 2. EVENTS OF DEFAULT.
(a) An "Event of Default," wherever used herein, means any one of
the
following events (whatever the reason and whether it shall be
voluntary or
involuntary or effected by operation of law or pursuant to any
judgment, decree
or order of any court, or any order, rule or regulation of any
administrative or
governmental body):
(i) Any default in the payment of the principal of, interest
on or other charges in respect of this Note which remains uncured
for ten (10)
consecutive Business Days after the same shall have become due and
payable;
(ii) The Obligor shall fail to observe or perform any other
covenant, agreement or warranty contained in, or otherwise commit
any breach or
default of any provision of this Note in any material respect which
is not cured
within the time prescribed;
(iii) The Obligor shall commence, or there shall be commenced
against the Obligor under any applicable bankruptcy or insolvency
laws as now or
hereafter in effect or any successor thereto, or the Obligor
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
Obligor or there
is commenced against the Obligor any such bankruptcy, insolvency or
other
proceeding which remains undismissed for a period of 61 days; or
the Obligor is
adjudicated insolvent or bankrupt; or any order of relief or other
order
approving any such case or proceeding is entered; or the Obligor
suffers any
appointment of any custodian, private or court appointed receiver
or the like
for it or any substantial part of its property which continues
undischarged or
unstayed for a period of sixty one (61) days; or the Obligor makes
a general
assignment for the benefit of creditors; or the Obligor shall fail
to pay, or
shall state that it is unable to pay, or shall be unable to pay,
its debts
generally as they become due; or the Obligor shall call a meeting
of its
creditors with a view to arranging a composition, adjustment or
restructuring of
its debts; or the Obligor shall by any act or failure to act
expressly indicate
its consent to, approval of or acquiescence in any of the
foregoing; or any
corporate or other action is taken by the Obligor for the purpose
of effecting
any of the foregoing;
(iv) The Obligor shall default in any of its obligations under
any other note, or any mortgage, credit agreement or other
facility, indenture
agreement, factoring agreement or other instrument under which
there may be
issued, or by which there may be secured or evidenced any
indebtedness for
borrowed money or money due under any long term leasing or
factoring arrangement
of the Obligor in an amount exceeding $1,000,000, whether such
indebtedness now
exists or shall hereafter be created and such default shall result
in such
indebtedness becoming or being declared due and payable prior to
the date on
which it would otherwise become due and payable;
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(v) The Obligor shall be a party to any Change of Control
Transaction (as defined in Section 5); or
(vi) The Obligor shall fail, due to actions of the Obligor, to
deliver Common Stock certificates to a Holder prior to the tenth
(10th) business
day after a Conversion Date or the Obligor shall provide notice to
the Holder,
including by way of public announcement, at any time, of its
intention not to
comply with requests for conversions of this Note in accordance
with the terms
hereof.
(b) During the time that any portion of this Note is outstanding,
if
any Event of Default has occurred, the full principal amount of
this Note,
together with interest and other amounts owing in respect thereof,
to the date
of acceleration shall become, at the Holder's election, immediately
due and
payable in cash, PROVIDED HOWEVER, the Holder may request (but
shall have no
obligation to request) payment of such amounts in Common Stock of
the Obligor.
In addition to any other remedies, the Holder shall have the right
(but not the
obligation) to convert this Note at the Conversion Price at any
time after (x)
an Event of default or (y) the Maturity Date at the Conversion
Price then in
effect. The Holder need not provide and the Obligor hereby waives
any
presentment, demand, protest or other notice of any kind, and the
Holder may
immediately and without expiration of any grace period enforce any
and all of
its rights and remedies hereunder and all other remedies available
to it under
applicable law. Such declaration may be rescinded and annulled by
Holder at any
time prior to payment hereunder. No such rescission or annulment
shall affect
any subsequent Event of Default or impair any right consequent
thereon.
SECTION 3. CONVERSION.
(a) CONVERSION AT OPTION OF HOLDER.
(i) This Note shall be convertible into shares of Common Stock
at the option of the Holder, in whole or in part at any time and
from time to
time, after the Original Issue Date (as defined in Section 5). The
number of
shares of Common Stock issuable upon a conversion hereunder ("the
Conversion
Shares") shall equal fifty percent (50%) of the outstanding amount
of principal
and accrued interest on this Note at the Conversion Date. The
Obligor shall use
its best efforts to deliver Common Stock certificates to the Holder
prior to the
tenth (10th) business day after a Conversion Date.
(ii) The Holder shall effect conversions by delivering to the
Obligor a completed notice in the form attached hereto as Exhibit A
("Conversion
Notice"). The date on which a Conversion Notice is delivered is the
"Conversion
Date." The Holder is required to physically surrender this Note to
the Obligor
in order to effect conversions. Conversions hereunder shall have
the effect of
lowering the outstanding principal amount of this Note plus all
accrued and
unpaid interest thereon in an amount equal to the applicable
conversion. The
Holder and the Obligor shall maintain records showing the principal
amount
converted and the date of such conversions.
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(b) CONVERSION PRICE AND ADJUSTMENTS TO CONVERSION PRICE.
(i) The Holder shall be entitled to convert, at its sole
option, at any time a portion or all amounts of principal and
interest due and
outstanding under this Note into that number of Conversion Shares
to which the
Holder is entitled under Section 3(a)(i) at a price of $2.50 per
share of common
stock (the "Conversion Price"). The Conversion Price may be
adjusted pursuant to
the other terms of this Note. In the event that the outstanding
principal and
interest on the Note on the Conversion Date are less than the
product of the
Conversion Price times the Conversion Shares purchasable by the
Holder, the
Holder shall have the right to pay the difference to the company in
cash on the
Conversion Date.
(ii) If the Obligor, at any time while this Note is
outstanding, shall (a) pay a stock dividend or otherwise make a
distribution or
distributions on shares of its Common Stock or any other equity or
equity
equivalent securities payable in shares of Common Stock, (b)
subdivide
outstanding shares of Common Stock into a larger number of shares,
(c) combine
(including by way of reverse stock split) outstanding shares of
Common Stock
into a smaller number of shares, or (d) issue by reclassification
of shares of
the Common Stock any shares of capital stock of the Obligor, then
the Conversion
Price shall be multiplied by a fraction of which the numerator
shall be the
number of shares of Common Stock (excluding treasury shares, if
any) outstanding
before such event and of which the denominator shall be the number
of shares of
Common Stock outstanding after such event. Any adjustment made
pursuant to this
Section shall become effective immediately after the record date
for the
determination of stockholders entitled to receive such dividend or
distribution
and shall become effective immediately after the effective date in
the case of a
subdivision, combination or re-classification.
(iii) If the Obligor, at any time while this Note is
outstanding, shall issue rights, options or warrants to all holders
of Common
Stock (and not to the Holder) entitling them to subscribe for or
purchase shares
of Common Stock, at a price per share less than the Conversion
Price, then the
Conversion Price shall be multiplied by a fraction of which the
denominator
shall be the number of shares of the Common Stock (excluding
treasury shares, if
any) outstanding on the date of issuance of such rights or warrants
(plus the
number of additional shares of Common Stock offered for
subscription or
purchase), and of which the numerator shall be the number of shares
of the
Common Stock (excluding treasury shares, if any) outstanding on the
date of
issuance of such rights or warrants, plus the number of shares
which the
aggregate offering price of the total number of shares so offered
would purchase
at the Conversion Price. Such adjustment shall be made whenever
such rights or
warrants are issued, and shall become effective immediately after
the record
date for the determination of stockholders entitled to receive such
rights,
options or warrants. However, upon the expiration of any such
right, option or
warrant to purchase shares of the Common Stock the issuance of
which resulted in
an adjustment in the Conversion Price pursuant to this Section, if
any such
right, option or warrant shall expire and shall not have been
exercised, the
Conversion Price shall immediately upon such expiration be
recomputed and
effective immediately upon such expiration be increased to the
price which it
would have been (but reflecting any other adjustments in the
Conversion Price
made pursuant to the provisions of this Section after the issuance
of such
rights or warrants) had the adjustment of the Conversion Price made
upon the
issuance of such rights, options or warrants been made on the basis
of offering
for subscription or purchase only that number of shares of the
Common Stock
actually purchased upon the exercise of such rights, options or
warrants
actually exercised.
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(iv) If the Obligor at any time while this Note is outstanding
shall issue shares of Common Stock or rights, warrants, options or
other
securities or debt that are convertible into or exchangeable for
shares of
Common Stock ("Common Stock Equivalents") entitling any Person to
acquire shares
of Common Stock at a price per share less than the Conversion
Price, then, at
the sole option of the Holder, the Conversion Price shall be
adjusted to mirror
the conversion, exchange or purchase price for such Common Stock or
Common Stock
Equivalents (including any reset provisions thereof) at issue. Such
adjustment
shall be made whenever such Common Stock or Common Stock
Equivalents are issued.
The Obligor shall notify the Holder in writing, no later than two
(2) Business
Days following the issuance of any Common Stock or Common Stock
Equivalent
subject to this Section, indicating therein the applicable issuance
price, or of
applicable reset price, exchange price, conversion price and other
pricing
terms. No adjustment under this Section shall be made as a result
of issuances
and exercises of options, warrants or stock grants to purchase
shares of Common
Stock issued for compensatory purposes pursuant to any of the
Obligor's stock
option or stock purchase plans.
(v) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
converted into
other securities, cash or property at any time while this Note is
outstanding,
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