Adjustment to Conversion Price Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
Conversion Privilege and Conversion Price Securities of any series which are convertible shall be convertible in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article Seventeen. Subject to and upon compliance with the provisions of this Article Seventeen, at any time during the period specified in the Securities, at the option of the Holder thereof, any Security or any portion of the principal amount thereof which is $1,000 or an integral multiple of $1,000 may be converted at the principal amount thereof, or of such portion thereof, into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock of the Company, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion. In case a Security or portion thereof is called for redemption, such conversion right in respect of the Security or portion so called shall expire at the close of business on the Business Day immediately preceding the Redemption Date, unless the Company defaults in making the payment due upon redemption, in which case such conversion right shall terminate on the date such default is cured. The price at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Price") of Securities of any series shall be specified in such Securities. The Conversion Price shall be adjusted in certain instances as provided in Section 1704. In case the Company shall, by dividend or otherwise, declare or make a distribution on its Common Stock referred to in paragraph (4) of Section 1704, the Holder of each Security, upon the conversion thereof pursuant to this Article Seventeen subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution pursuant to paragraph (4) of Section 1704, shall be entitled to receive for each share of Common Stock into which such Security is converted, the portion of the evidence of indebtedness, shares of Capital Stock or assets so distributed applicable to one share of Common Stock; PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be evidenced by a Board Resolution filed with the Trustee) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution filed with the Trustee). If any conversion of a Security entitled to the benefits described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the Holder of the Security so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a Board Resolution filed with the Trustee) to distribute to such Holder a due bill xxx the evidences of indebtedness, shares of Capital Stock or assets to which such Holder is so entitled, provided that such due bill (x) meets any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded, and (ii) requires payment or delivery of such evidences of indebtedness or assets no later than the date of payment or delivery thereof to holders of Common Stock receiving such distribution.
Notice of Adjustments of Conversion Price Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in accordance with Section 14.04 and shall prepare a certificate signed by the Treasurer or other appropriate officer of the Company setting forth the adjusted conversion price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall promptly be filed with the Trustee and with the Conversion Agent at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 10.02; and
(b) a notice stating that the conversion price has been adjusted and setting forth the adjusted conversion price shall be required, and as soon as practicable after it is required, such notice shall be delivered electronically or mailed by the Company to all Holders at their last addresses as they shall appear in the Security Register.
Adjustment of Conversion Price The Conversion Price in effect at any date shall be subject to adjustment from time to time as follows:
(a) if and whenever at any time during the Adjustment Period, the Corporation shall:
(i) subdivide, redivide or change its outstanding Common Shares into a greater number of such shares; or
(ii) reduce, combine or consolidate its outstanding Common Shares into a smaller number of such shares; the Conversion Price in effect on the effective date of such subdivision, redivision, change, reduction, combination or consolidation, as the case may be, shall in the case of the events referred to in (i) above, be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or change, or shall, in the case of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation in each case by multiplying the Conversion Price in effect on such effective date by a fraction of which the numerator shall be the total number of Common Shares outstanding immediately prior to such date and the denominator shall be the total number of Common Shares outstanding immediately after such date. Such adjustment shall be made successively whenever any event referred to in this Section 7.1(a) shall occur;
(b) if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) at a price per share (or having a conversion or exchange price per share) less than the Twenty Day Weighted Average Trading Price on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the amount determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date multiplied by the Twenty Day Weighted Average Trading Price on such record date, less the fair market value (as determined by the Directors, subject to Section 7.4) of such rights, options or warrants, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such Twenty Day Weighted Average Trading Price provided that
(i) any Common Shares owned by or held for the account of the corporation or any subsidiary shall be deemed not to be outstanding for the purpose of any such computation;
(ii) such adjustment shall be made successively whenever such a record date is fixed;
(iii) to the extent that any such rights, options or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible or exchangeable into Common Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be;
(c) if and whenever at any time during the Adjustment Period the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of (i) shares of any class, whether of the Corporation or any other corporation (including stock dividends), (ii) rights, options or warrants (excluding those referred to in Section 7.1(b)); (iii) evidences of its indebtedness or (iv) assets (including cash) of the Corporation, then, in each such case, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date multiplied by the Twenty Day Weighted Average Trading Price on such record date, less the fair market value (as determined by the Directors, subject to Section 7.4 of such shares, rights, options, warrants, evidences of indebtedness or assets so distributed, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such Twenty Day Weighted Average Trading Price provided that:
(i) Common Shares owned by or held for the account of the Corporation or any subsidiary shall be deemed not to be outstanding for the purpose of any such computation;
(ii) such adjustment shall be made successively whenever such a record date is fixed;
(iii) to the extent that such distribution is not so made, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon such shares or rights, options or warrants or evidences of indebtedness or assets actually distributed, as the case may be;
(d) if and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 7.1(a) or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, the Holder shall, upon the exercise of the Conversion Right, be entitled to receive and shall accept, in lieu of the number of shares then sought to be acquired by it, the number of Common Shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such merger, amalgamation, arrangement or consolidation, or to which such sale or conveyance may be made, as the case may be, that the Holder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, if, on the record date or the effective date thereof, as the case may be, the Holder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the Conversion Right and a contemporaneous and equal adjustment shall be made to the Conversion Price;
(e) in any case in which Section 7.1(b) or 7.1(c) require that an adjustment be made to the Conversion Price, no such adjustment shall be made if, subject to the prior approval of applicable stock exchanges the Holder receives the rights, options or warrants referred to in Section 7.1(b) or the share rights, options, warrants, evidences of indebtedness or assets referred to in Section 7.1(c), as the case may be, in such kind and number as it would have received if it had been a holder of Common Shares on the applicable record date or effective date, as the case may be, by virtue of the Principal Sum having then been converted into Common Shares at the Conversion Price in effect on the applicable record or effective date, as the case may be;
(f) the adjustments provided for in this Section 7.1 are cumulative, and shall, in the case of adjustments to the Conversion Price be computed to the nearest whole cent and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 7.1.
(g) if, in the opinion of the Directors, the provisions of this Section 7.1 are not strictly applicable, or if strictly applicable would not fairly protect the rights of the Holder in accordance with the intent and purposes hereof, the Directors shall make any adjustment in such provisions for the benefit of the Holder as the Directors deem appropriate.
Adjustments to Conversion Price (a) If the Company shall at any time while this Debenture is outstanding subdivide the outstanding shares of its Common Stock, the Conversion Price then in effect immediately before that subdivision shall be proportionately decreased, and if the Company shall at any time while this Debenture is outstanding combine the outstanding shares of Common Stock, the Conversion Price then in effect immediately before that combination shall be proportionately increased. Except as otherwise provided below, any adjustment under this Section 5.3 shall become effective at the close of business on the date the subdivision or combination becomes effective. A dividend on any security of the Company payable in Common Stock, or a split of the Company's Common Stock, shall be considered a subdivision of Common Stock for purposes of this Section 5.3 at the close of business on the record date with respect to such dividend or stock split. A reverse split of the Company's Common Stock shall be considered a combination of Common Stock for purposes of this Section 5.3 at the close of business on the record date with respect to such reverse stock split.
(b) In the event the Company, at any time or from time to time while this Debenture is outstanding, shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution with respect to the Company's Common Stock payable in securities of the Company other than shares of Common Stock, then and in each such event, provisions shall be made so that the Holder shall receive upon conversion hereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Company which he would have received had this Debenture been converted into Common Stock on the date of such event and had the Holder thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by him.
(c) If while this Debenture is outstanding, the Shares issuable upon conversion of this Debenture shall be changed into the same or a different number of shares of any other class or classes of stock of the Company, whether by recapitalization, reclassification or other exchange (other than a subdivision or combination of shares, or a capital reorganization, merger or sale of assets, provided for elsewhere in this Section 5.3), the Holder shall, upon the conversion of this Debenture, be entitled to receive, in lieu of the Shares which the Holder would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the Holder if he had exercised his right of conversion of this Debenture immediately before that change.
(d) If while this Debenture is outstanding, there shall be a merger or consolidation of the Company with or into another corporation (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Company), or the sale of all or substantially all of the Company's properties and assets to any other person, then, as a part of such merger, consolidation or sale, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon conversion of this Debenture, during the period specified in this Debenture, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger, consolidation or sale, to which a holder of the Shares deliverable upon conversion of this Debenture would have been entitled on such merger, consolidation or sale if this Debenture had been converted immediately before such merger, consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5.3 with respect to the rights of the Holder after such merger, consolidation or sale to the end that the provisions of this Section 5.3 (including adjustments of the Conversion Price then in effect and number of shares purchasable upon conversion of this Debenture) shall continue to be applicable after that event and shall be as nearly equivalent to the provisions hereof as may be practicable.
(e) The Company shall promptly and in any case not later than ten (10) days after the date of any adjustment of the Conversion Price give written notice of such adjustment and the number of Shares or other securities issuable upon conversion of this Debenture, by first-class mail, postage prepaid, to the registered Holder at the Holder's address as shown on the Debenture Register. The certificate shall state such adjustment and show in reasonable detail the facts on which such adjustment is based.
(f) The form of this Debenture need not be changed because of any adjustment in the Conversion Price or in the number of Shares issuable upon its conversion. A Debenture issued after any adjustment on any partial conversion or upon replacement may continue to express the same Conversion Price and the same number of Shares (appropriately reduced in the case of partial conversion) as are stated on this Debenture as initially issued, and that Conversion Price and that number of Shares shall be considered to have been so changed as of the close of business on the date of the adjustment.
Notice of Conversion Rate Adjustments Upon the effectiveness of any adjustment to the Conversion Rate pursuant to Section 5.05(A), the Company will promptly send notice to the Holders, the Trustee and the Conversion Agent containing (i) a brief description of the transaction or other event on account of which such adjustment was made; (ii) the Conversion Rate in effect immediately after such adjustment; and (iii) the effective time of such adjustment.
Optional Conversion To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York, NY Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant the Rule 144. If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.
Notice of Adjustments of Conversion Rate Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in accordance with Section 12.4 and shall prepare a certificate signed by the Chief Financial Officer of the Company setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall promptly be filed with the Trustee and with each Conversion Agent; and
(2) upon each such adjustment, a notice stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate shall be required, and as soon as practicable after it is required, such notice shall be provided by the Company to all Holders in accordance with Section 1.6. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate or the information and calculations contained therein, except to exhibit the same to any Holder of Securities desiring inspection thereof at its office during normal business hours, and shall not be deemed to have knowledge of any adjustment in the Conversion Rate unless and until a Responsible Officer of the Trustee shall have received such a certificate. Until a Responsible Officer of the Trustee receives such a certificate, the Trustee and each Conversion Agent may assume without inquiry that the last Conversion Rate of which the Trustee has knowledge of remains in effect.
Automatic Conversion Subject to Section 5 below and, at the Company’s election and request, Holder’s reaffirmation of Holder’s representations and warranties under Section 3 of the Convertible Note Purchase Agreement, the principal amount of this Note (and all interest accrued on this Note at the option of the Payor) shall be converted into the number of shares of common stock as follows:
(a) In the event of a next equity financing by the Company in one transaction or series of related transactions which raises an aggregate amount of at least One Million Five Hundred Thousand Dollars ($1,500,000) (the “Next Equity Financing”), the principal amount on this Note shall automatically be converted (regardless of whether or not the Note is surrendered to Payor) into the equity securities issued in the Payor’s Next Equity Financing (the “Next Equity Financing Stock”). Any accrued interest outstanding at the time of the conversion shall be paid in cash by the Company. This Note shall convert into the number of shares at the time of the “Next Equity Financing” equals to ___,000 shares of the Company’s Common Stock at an exercise price of $0.60 per share (the “Exercise Price”) This Note shall be deemed automatically cancelled immediately upon such conversion. As a condition precedent to the issuance of the Next Equity Financing Stock to Holder upon such conversion, Holder shall execute and deliver such agreements, instruments and other documents as are executed and delivered by the other investors in connection with their purchase of the Next Equity Financing Stock.
(b) In the event of the “Company’s Sale”, defined below, at the option of Payor, the principal hereunder and, at the option of the Payor, shall automatically be converted (regardless of whether or not the Note is surrendered to Payor) into the number of shares (the “Company’s Sale Stock”) equals to ____,000 shares of the Company’s Common Stock at an exercise price of $0.60 per share (the “Exercise Price”). This Note shall be deemed automatically cancelled immediately upon such conversion.
Mandatory Conversion Provided an Event of Default or an event which with the passage of time or giving of notice could become an Event of Default has not occurred, then, until the Maturity Date, the Borrower will have the option by written notice to the Holder (“Notice of Mandatory Conversion”) of compelling the Holder to convert all or a portion of the outstanding and unpaid principal of the Note and accrued interest, thereon, into Common Stock at fifty percent (50%) of the Conversion Price, as adjusted, then in affect (“Mandatory Conversion”). The Notice of Mandatory Conversion, which notice must be given on the first day following twenty (20) consecutive trading days (“Lookback Period”) during which the closing price for the Common Stock as reported by Bloomberg, LP for the Principal Market shall be greater than Five Dollars ($5.00) each such trading day and during which twenty (20) trading days, the daily trading volume as reported by Bloomberg L.P. for the Principal Market is greater than 100,000 shares. The date the Notice of Mandatory Conversion is given is the “Mandatory Conversion Date.” The Notice of Mandatory Conversion shall specify the aggregate principal amount of the Note which is subject to Mandatory Conversion. Mandatory Conversion Notices must be given proportionately to all Holders of Notes. The Borrower shall reduce the amount of Note principal subject to a Notice of Mandatory Conversion by the amount of Note Principal and interest for which the Holder had delivered a Notice of Conversion to the Borrower during the twenty (20) trading days preceding the Mandatory Conversion Date. Each Mandatory Conversion Date shall be a deemed Conversion Date and the Borrower will be required to deliver the Common Stock issuable pursuant to a Mandatory Conversion Notice in the same manner and time period as described in the Subscription Agreement. A Notice of Mandatory Conversion may be given only in connection with an amount of Common Stock which would not cause a Holder to exceed the 4.99% (or if increased, 9.99%) beneficial ownership limitation set forth in Section 2.3 of this Note.
