Exhibit 10-b
Dated: August 1, 2005
NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE
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. CCP-1 $2,500,000
GLOBAL CONCEPTS, LTD.
Secured Convertible Debenture
Due February 1, 2007
This Secured Convertible Debenture (the "Debenture") is issued by
GLOBAL CONCEPTS, LTD., a Colorado corporation (the "Obligor"), to CORNELL
CAPITAL PARTNERS, LP (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 Two Million Five Hundred
Thousand Dollars ($2,500,000) together with accrued but unpaid interest on
or before February 1, 2007 (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 twelve percent (12%). 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 (as defined in Section 4) in
whose name this Debenture is registered on the records of the Obligor
regarding registration and transfers of Debentures (the "Debenture
Register").
Monthly Payments. The Obligor shall make monthly scheduled payments
("Scheduled Payments") consisting of principal and accrued interest. The
first Scheduled Payment shall be due and payable on the earlier of (a) the
first (1st) day of the first (1st) month immediately following the date that
the Underlying Shares Registration Statement is declared effective by the
Commission, or (b) the date one hundred fifty (150) days from the date
hereof. After the first (1st) Scheduled Payment, each subsequent Scheduled
Payment shall be due and payable on the same day of each subsequent
calendar month until the Maturity Date. The principal amount of each
Scheduled Payment shall be determined by dividing the outstanding principal
amount of this Debenture as of the date of such Scheduled Payment by the
number of Scheduled Payments remaining until the Maturity Date. For
example, if on the date of the first Scheduled Payment the outstanding
principal balance of this Debenture is $2,500,000 and there are 7 Scheduled
Payments remaining prior to the Maturity Date then the first Scheduled
Payment would consist of $357,142.86 of principal plus accrued interest at
the interest rate specified above. All payments in respect of the
indebtedness evidenced hereby shall be made in collected funds, and shall
be applied to principal, accrued interest and charges and expenses owing
under or in connection with this Debenture in such order as the Holder
elects, except that payments shall be applied to accrued interest before
principal. Notwithstanding the foregoing, this Debenture shall become due
and immediately payable, including all accrued but unpaid interest, upon
an Event of Default (as defined in Section 2 hereof).
Right of Redemption. If the closing bid price of the of the
Obligor's Common Stock, as reported by Bloomberg, LP, is less than the
Conversion Price, the Obligor at its option shall have the right, with
three (3) business days advance written notice (the "Redemption Notice"),
to redeem a portion or all amounts outstanding under this Debenture prior
to the Maturity Date or any Scheduled Payment date in an amount equal to
the principal amount outstanding and accrued interest being redeemed, plus
a redemption premium of twenty percent (20%) ("Redemption Premium") of the
amount redeemed (collectively referred to as the "Redemption Amount").
The Obligor shall deliver to the Holder the Redemption Amount on the
third (3rd) business day after the Redemption Notice.
In the event that the Obligor redeems a portion of the amount
outstanding under this Debenture, or the Holder converts a portion of the
principal amount outstanding and accrued interest under this Debenture as
contemplated herein, the Obligor shall be entitled to an off-set of the
amount of principal and accrued interest due pursuant to the Schedule
Payment equal to the amount of principal and accrued interest redeemed or
converted (the "Off-Set Amount"). In such event the Obligor shall still be
obligated to make a Scheduled Payment reduced by the Off Set Amount as
contemplated hereunder.
Notwithstanding the foregoing in the event that the Obligor has
elected to redeem a portion of the outstanding principal amount and accrued
interest under this Debenture the Holder shall still be entitled to
effectuate Conversions as contemplated hereunder.
Security Agreements. This Debenture is secured by a Security
Agreement (the "Security Agreement") of even date herewith between the
Obligor and the Holder.
Consent of Holder to Sell Capital Stock or Grant Security Interests.
Except for the capital stock to be issued pursuant to the Standby Equity
Distribution Agreement of even date herewith between the Obligor and
Cornell Capital Partners, LP, so long as any of the principal amount or
interest on this Debenture remains unpaid and unconverted, the Obligor
shall not, without the prior consent of the Holder, (i) issue or sell any
common stock or preferred stock with or without consideration, (ii) issue
or sell any preferred stock, warrant, option, right, contract, call, or
other security or instrument granting the holder thereof the right to
acquire common stock with or without consideration, (iii) enter into any
security instrument granting the holder a security interest in any of the
assets of the Obligor, or (iv) file any registration statements on Form S-8.
This Debenture is subject to the following additional provisions:
Section 1. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures 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.
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 Debenture, free of any claim of
subordination, as and when the same shall become due and payable (whether
on a Scheduled Payment due date, a Conversion Date or the Maturity Date or
by acceleration or otherwise);
(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 Debenture (except as may be
covered by Section 2(a)(i) hereof) or any Transaction Document (as defined
in Section 4) which is not cured with in the time prescribed;
(iii) The Obligor or any subsidiary of the Obligor shall
commence, or there shall be commenced against the Obligor or any subsidiary
of the Obligor under any applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or the Obligor or any
subsidiary of 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 any
subsidiary of the Obligor or there is commenced against the Obligor or any
subsidiary of the Obligor any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 61 days; or the
Obligor or any subsidiary of 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 or any subsidiary of 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 or any subsidiary of the Obligor makes a general assignment for
the benefit of creditors; or the Obligor or any subsidiary of 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 or
any subsidiary of 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 or any subsidiary of 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 or any subsidiary of the Obligor for the purpose of effecting any
of the foregoing;
(iv) The Obligor or any subsidiary of the Obligor shall
default in any of its obligations under any other debenture 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 or any subsidiary of the Obligor in an amount exceeding
$100,000, 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;
(v) The Common Stock shall cease to be quoted for trading or
listed for trading on either the Nasdaq OTC Bulletin Board ("OTC"), Nasdaq
SmallCap Market, New York Stock Exchange, American Stock Exchange or the
Nasdaq National Market (each, a "Subsequent Market") and shall not again be
quoted or listed for trading thereon within five (5) Trading Days of such
delisting;
(vi) The Obligor or any subsidiary of the Obligor shall be a
party to any Change of Control Transaction (as defined in Section 4);
(vii) The Obligor shall fail to file the Underlying Shares
Registration Statement (as defined in Section 4) with the Commission (as
defined in Section 4), or the Underlying Shares Registration Statement
shall not have been declared effective by the Commission, in each case
within the time periods set forth in the Registration Rights Agreement of
even date herewith between the Obligor and the Holder;
(viii) If the effectiveness of the Underlying Shares
Registration Statement lapses for any reason or the Holder shall not be
permitted to resell the shares of Common Stock underlying this Debenture
under the Underlying Shares Registration Statement, in either case, for
more than five (5) consecutive Trading Days or an aggregate of eight
Trading Days (which need not be consecutive Trading Days);
(ix) The Obligor shall fail for any reason to deliver Common
Stock certificates to a Holder prior to the fifth (5th) Trading 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 Debenture in accordance
with the terms hereof;
(x) The Obligor shall fail for any reason to deliver the
payment in cash pursuant to a Buy-In (as defined herein) within three (3)
days after notice is claimed delivered hereunder;
(b) During the time that any portion of this Debenture is
outstanding, if any Event of Default has occurred, the full principal
amount of this Debenture, 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. If an Event of Default occurs and
remains uncured, the Conversion Price shall be reduced to Six Cents
($0.06). In addition to any other remedies, the Holder shall have the
right (but not the obligation) to convert this Debenture 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 Xxxxxx 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. Upon an Event of Default,
notwithstanding any other provision of this Debenture or any Transaction
Document, the Holder shall have no obligation to comply with or adhere to
any limitations, if any, on the conversion of this Debenture or the sale of
the Underlying Shares.
Section 3. Conversion.
(a) (i) Conversion at Option of Holder.
(A) This Debenture 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 4)
(subject to the limitations on conversion set forth in Section 3(a)(ii)
hereof). The number of shares of Common Stock issuable upon a conversion
hereunder equals the quotient obtained by dividing (x) the outstanding
amount of this Debenture to be converted by (y) the Conversion Price (as
defined in Section 3(c)(i)). The Obligor shall deliver Common Stock
certificates to the Holder prior to the Fifth (5th) Trading Day after a
Conversion Date.
(B) Notwithstanding anything to the contrary contained
herein, if on any Conversion Date: (1) the number of shares of Common
Stock at the time authorized, unissued and unreserved for all purposes, or
held as treasury stock, is insufficient to pay principal and interest
hereunder in shares of Common Stock; (2) the Common Stock is not listed or
quoted for trading on the OTC or on a Subsequent Market; (3) the Obligor
has failed to timely satisfy its conversion; or (4) the issuance of such
shares of Common Stock would result in a violation of Section 3(a)(ii),
then, at the option of the Holder, the Obligor, in lieu of delivering
shares of Common Stock pursuant to Section 3(a)(i)(A), shall deliver,
within three (3) Trading Days of each applicable Conversion Date, an amount
in cash equal to the product of the outstanding principal amount to be
converted plus any interest due therein divided by the Conversion Price and
multiplied by the highest closing price of the stock from date of the
conversion notice till the date that such cash payment is made.
Further, if the Obligor shall not have delivered any cash due in
respect of conversion of this Debenture or as payment of interest thereon
by the fifth (5th) Trading Day after the Conversion Date, the Holder may,
by notice to the Obligor, require the Obligor to issue shares of Common
Stock pursuant to Section 3(c), except that for such purpose the Conversion
Price applicable thereto shall be the lesser of the Conversion Price on the
Conversion Date and the Conversion Price on the date of such Holder demand.
Any such shares will be subject to the provisions of this Section.
(C) The Holder shall effect conversions by delivering to
the Obligor a completed notice in the form attached hereto as Exhibit A (a
"Conversion Notice"). The date on which a Conversion Notice is delivered
is the "Conversion Date." Unless the Holder is converting the entire
principal amount outstanding under this Debenture, the Holder is not
required to physically surrender this Debenture to the Obligor in order to
effect conversions. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture 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. In the event
of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.
(ii) Certain Conversion Restrictions.
(A) A Holder may not convert this Debenture or
receive shares of Common Stock as payment of interest hereunder to the extent
such conversion or receipt of such interest payment would result in the Holder,
together with any affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.9% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of
interest on, this Debenture held by such Holder after application of this
Section. Since the Holder will not be obligated to report to the Obligor
the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the
issuance of shares of Common Stock in excess of 4.9% of the then
outstanding shares of Common Stock without regard to any other shares which
may be beneficially owned by the Holder or an affiliate thereof, the Holder
shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of
the principal amount of this Debenture is convertible shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Conversion Notice for a principal amount of this Debenture that, without
regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted
amount hereunder, the Obligor shall notify the Holder of this fact and
shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with the periods described
in Section 3(a)(i)(A) and, at the option of the Holder, either retain any
principal amount tendered for conversion in excess of the permitted amount
hereunder for future conversions or return such excess principal amount to
the Holder. The provisions of this Section may be waived by a Holder (but
only as to itself and not to any other Holder) upon not less than 65 days
prior notice to the Obligor. Other Holders shall be unaffected by any such
waiver.
(b) (i) Nothing herein shall limit a Holder's right to pursue
actual damages or declare an Event of Default pursuant to Section 2 herein
for the Obligor 's failure to deliver certificates representing shares of
Common Stock upon conversion within the period specified herein and such
Holder shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific
performance and/or injunctive relief, in each case without the need to post
a bond or provide other security. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
(ii) In addition to any other rights available to the Holder,
if the Obligor fails to deliver to the Holder such certificate or
certificates pursuant to Section 3(a)(i)(A) by the fifth (5th) Trading Day
after the Conversion Date, and if after such fifth (5th) Trading Day the
Holder purchases (in an open market transaction or otherwise) Common Stock
to deliver in satisfaction of a sale by such Holder of the Underlying
Shares which the Holder anticipated receiving upon such conversion (a "Buy-
In"), then the Obligor shall (A) pay in cash to the Holder (in addition to
any remedies available to or elected by the Holder) the amount by which (x)
the Holder's total purchase price (including brokerage commissions, if any)
for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder anticipated
receiving from the conversion at issue multiplied by (2) the market price
of the Common Stock at the time of the sale giving rise to such purchase
obligation and (B) at the option of the Holder, either reissue a Debenture
in the principal amount equal to the principal amount of the attempted
conversion or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Obligor timely complied with its
delivery requirements under Section 3(a)(i)(A). For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of Debentures with respect
to which the market price of the Underlying Shares on the date of
conversion was a total of $10,000 under clause (A) of the immediately
preceding sentence, the Obligor shall be required to pay the Holder $1,000.
The Holder shall provide the Obligor written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
(c) (i) The conversion price (the "Conversion Price") in effect
on any Conversion Date shall be equal to Twenty Cents ($0.20), which may be
adjusted pursuant to the other terms of this Debenture.
(ii) If the Obligor, at any time while this Debenture 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 Debenture 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 Closing
Bid Price at the record date mentioned below, 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 such Closing Bid 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.
(iv) If the Obligor or any subsidiary thereof, as applicable,
with respect to Common Stock Equivalents (as defined below), at any time
while this Debenture 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 (if the holder of the Common
Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at a price per
share which is less than the Conversion Price, such issuance shall be
deemed to have occurred for 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 one (1) business day 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 to purchase
shares of Common Stock issued for compensatory purposes pursuant to any of
the Obligor's stock option or stock purchase plans.
(v) If the Obligor, at any time while this Debenture is
outstanding, shall distribute to all holders of Common Stock (and not to
the Holder) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security, then in each such case the
Conversion Price at which this Debenture shall thereafter be convertible
shall be determined by multiplying the Conversion Price in effect
immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which
the denominator shall be the Closing Bid Price determined as of the record
date mentioned above, and of which the numerator shall be such Closing Bid
Price on such record date less the then fair market value at such record
date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(vi) 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, the Holder shall have
the right thereafter to, at its option, (A) convert the then outstanding
principal amount, together with all accrued but unpaid interest and any
other amounts then owing hereunder in respect of this Debenture into the
shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of the Common Stock following such
reclassification or share exchange, and the Holder of this Debenture shall
be entitled upon such event to receive such amount of securities, cash or
property as the shares of the Common Stock of the Obligor into which the
then outstanding principal amount, together with all accrued but unpaid
interest and any other amounts then owing hereunder in respect of this
Debenture could have been converted immediately prior to such
reclassification or share exchange would have been entitled, or (B) require
the Obligor to prepay the outstanding principal amount of this Debenture,
plus all interest and other amounts due and payable thereon. The entire
prepayment price shall be paid in cash. This provision shall similarly
apply to successive reclassifications or share exchanges.
(vii) The Obligor shall maintain a share reserve of not less
than one hundred percent (100%) of the shares of Common Stock issuable upon
conversion of this Debenture; and within three (3) Business Days following
the receipt by the Obligor of a Holder's notice that such minimum number of
Underlying Shares is not so reserved, the Obligor shall promptly reserve a
sufficient number of shares of Common Stock to comply with such
requirement.
(viii) All calculations under this Section 3 shall be
rounded up to the nearest $0.001 of a share.
(ix) Whenever the Conversion Price is adjusted pursuant to
Section 3 hereof, the Obligor shall promptly mail to the Holder a notice
setting forth the Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment.
(x) If (A) the Obligor shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Obligor shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Obligor shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights; (D) the approval of any stockholders of the
Obligor shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Obligor is a party,
any sale or transfer of all or substantially all of the assets of the
Obligor, of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Obligor; then, in each case, the Obligor shall
cause to be filed at each office or agency maintained for the purpose of
conversion of this Debenture, and shall cause to be mailed to the Holder at
its last address as it shall appear upon the stock books of the Obligor, at
least twenty (20) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be
specified in such notice. The Holder is entitled to convert this Debenture
during the 20-day calendar period commencing the date of such notice to the
effective date of the event triggering such notice.
(xi) In case of any (1) merger or consolidation of the Obligor
or any subsidiary of the Obligor with or into another Person, or (2) sale
by the Obligor or any subsidiary of the Obligor of more than one-half of
the assets of the Obligor in one or a series of related transactions, a
Holder shall have the right to (A) exercise any rights under Section 2(b),
(B) convert the aggregate amount of this Debenture then outstanding into
the shares of stock and other securities, cash and property receivable upon
or deemed to be held by holders of Common Stock following such merger,
consolidation or sale, and such Holder shall be entitled upon such event or
series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal
amount of this Debenture could have been converted immediately prior to
such merger, consolidation or sales would have been entitled, or (C) in the
case of a merger or consolidation, require the surviving entity to issue to
the Holder a convertible Debenture with a principal amount equal to the
aggregate principal amount of this Debenture then held by such Holder, plus
all accrued and unpaid interest and other amounts owing thereon, which such
newly issued convertible Debenture shall have terms identical (including
with respect to conversion) to the terms of this Debenture, and shall be
entitled to all of the rights and privileges of the Holder of this
Debenture set forth herein and the agreements pursuant to which this
Debentures were issued. In the case of clause (C), the conversion price
applicable for the newly issued shares of convertible preferred stock or
convertible Debentures shall be based upon the amount of securities, cash
and property that each share of Common Stock would receive in such
transaction and the Conversion Price in effect immediately prior to the
effectiveness or closing date for such transaction. The terms of any such
merger, sale or consolidation shall include such terms so as to continue to
give the Holder the right to receive the securities, cash and property set
forth in this Section upon any conversion or redemption following such
event. This provision shall similarly apply to successive such events.
(d) The Obligor covenants that it will at all times reserve and
keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of this Debenture and
payment of interest on this Debenture, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder, not less than such number of shares of the Common
Stock as shall (subject to any additional requirements of the Obligor as to
reservation of such shares set forth in this Debenture) be issuable (taking
into account the adjustments and restrictions of Sections 2(b) and 3(c))
upon the conversion of the outstanding principal amount of this Debenture
and payment of interest hereunder. The Obligor covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and
validly authorized, issued and fully paid, nonassessable and, if the
Underlying Shares Registration Statement has been declared effective under
the Securities Act, registered for public sale in accordance with such
Underlying Shares Registration Statement.
(e) Upon a conversion hereunder the Obligor shall not be required
to issue stock certificates representing fractions of shares of the Common
Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Closing Bid Price at such time.
If the Obligor elects not, or is unable, to make such a cash payment, the
Holder shall be entitled to receive, in lieu of the final fraction of a
share, one whole share of Common Stock.
(f) The issuance of certificates for shares of the Common Stock on
conversion of this Debenture shall be made without charge to the Holder
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the
Obligor shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder of such
Debenture so converted and the Obligor shall not be required to issue or
deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Obligor the amount of such tax
or shall have established to the satisfaction of the Obligor that such tax
has been paid.
(g) Any notices, consents, waivers or other communications required
or permitted to be given under the terms hereof must be in writing and will
be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation
of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii) one (1) trading day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company, to:
Global Concepts, Ltd.
00 Xxxxxxxx Xxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx, Esq,
000 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder:
Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address and/or facsimile number and/or to the attention of
such other person as the recipient party has specified by written notice
given to each other party three (3) business days prior to the
effectiveness of such change. Written confirmation of receipt (i) given by
the recipient of such notice, consent, waiver or other communication, (ii)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the
first page of such transmission or (iii) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii)
or (iii) above, respectively.
Section 4. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Business Day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday in the United States or a day on
which banking institutions are authorized or required by law or other
government action to close.
"Change of Control Transaction" means the occurrence of (a) an
acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through legal or beneficial ownership of
capital stock of the Obligor, by contract or otherwise) of in excess of
fifty percent (50%) of the voting securities of the Obligor (except that
the acquisition of voting securities by the Holder shall not constitute a
Change of Control Transaction for purposes hereof), (b) a replacement at
one time or over time of more than one-half of the members of the board of
directors of the Obligor which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof
(or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was
approved by a majority of the members of the board of directors who are
members on the date hereof), (c) the merger, consolidation or sale of fifty
percent (50%) or more of the assets of the Obligor or any subsidiary of the
Obligor in one or a series of related transactions with or into another
entity, or (d) the execution by the Obligor of an agreement to which the
Obligor is a party or by which it is bound, providing for any of the events
set forth above in (a), (b) or (c).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, no par value, of the Obligor
and stock of any other class into which such shares may hereafter be
changed or reclassified.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Original Issue Date" shall mean the date of the first issuance of
this Debenture regardless of the number of transfers and regardless of the
number of instruments, which may be issued to evidence such Debenture.
"Closing Bid Price" means the price per share in the last reported
trade of the Common Stock on the OTC or on the exchange which the Common
Stock is then listed as quoted by Bloomberg, LP.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Trading Day" means a day on which the shares of Common Stock are
quoted on the OTC or quoted or traded on such Subsequent Market on which
the shares of Common Stock are then quoted or listed; provided, that in the
event that the shares of Common Stock are not listed or quoted, then
Trading Day shall mean a Business Day.
"Transaction Documents" means the Securities Purchase Agreement or
any other agreement delivered in connection with the Securities Purchase
Agreement, including, without limitation, the Security Agreement, the
Subsidiary Security Agreement, and the Investor Registration Rights
Agreement.
"Underlying Shares" means the shares of Common Stock issuable upon
conversion of this Debenture or as payment of interest in accordance with
the terms hereof.
"Underlying Shares Registration Statement" means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Underlying Shares
and naming the Holder as a "selling stockholder" thereunder.
Section 5. Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligations of the Obligor, which are
absolute and unconditional, to pay the principal of, interest and other
charges (if any) on, this Debenture at the time, place, and rate, and in
the coin or currency, herein prescribed. This Debenture is a direct
obligation of the Obligor. This Debenture ranks pari passu with all other
Debentures now or hereafter issued under the terms set forth herein. As
long as this Debenture is outstanding, the Obligor shall not and shall
cause their subsidiaries not to, without the consent of the Holder, (i)
amend its certificate of incorporation, bylaws or other charter documents
so as to adversely affect any rights of the Holder; (ii) repay, repurchase
or offer to repay, repurchase or otherwise acquire shares of its Common
Stock or other equity securities other than as to the Underlying Shares to
the extent permitted or required under the Transaction Documents; or (iii)
enter into any agreement with respect to any of the foregoing.
Section 6. This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Obligor, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive
any notice of, or to attend, meetings of stockholders or any other
proceedings of the Obligor, unless and to the extent converted into shares
of Common Stock in accordance with the terms hereof.
Section 7. If this Debenture is mutilated, lost, stolen or
destroyed, the Obligor shall execute and deliver, in exchange and
substitution for and upon cancellation of the mutilated Debenture, or in
lieu of or in substitution for a lost, stolen or destroyed Debenture, a new
Debenture for the principal amount of this Debenture so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft
or destruction of such Debenture, and of the ownership hereof, and
indemnity, if requested, all reasonably satisfactory to the Obligor.
Section 8. No indebtedness of the Obligor is senior to this
Debenture in right of payment, whether with respect to interest, damages or
upon liquidation or dissolution or otherwise. Without the Holder's
consent, the Obligor will not and will not permit any of their subsidiaries
to, directly or indirectly, enter into, create, incur, assume or suffer to
exist any indebtedness of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein
or any income or profits there from that is senior in any respect to the
obligations of the Obligor under this Debenture.
Section 9. This Debenture shall be governed by and construed in
accordance with the laws of the State of New Jersey, without giving effect
to conflicts of laws thereof. Each of the parties consents to the
jurisdiction of the Superior Courts of the State of New Jersey sitting in
Xxxxxx County, New Jersey and the U.S. District Court for the District of
New Jersey sitting in Newark, New Jersey in connection with any dispute
arising under this Debenture and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens to the bringing of any such proceeding in such jurisdictions.
Section 10. If the Obligor fails to strictly comply with the terms of
this Debenture, then the Obligor shall reimburse the Holder promptly for
all fees, costs and expenses, including, without limitation, attorneys'
fees and expenses incurred by the Holder in any action in connection with
this Debenture, including, without limitation, those incurred: (i) during
any workout, attempted workout, and/or in connection with the rendering of
legal advice as to the Holder's rights, remedies and obligations, (ii)
collecting any sums which become due to the Holder, (iii) defending or
prosecuting any proceeding or any counterclaim to any proceeding or appeal;
or (iv) the protection, preservation or enforcement of any rights or
remedies of the Holder.
Section 11. Any waiver by the Holder of a breach of any provision of
this Debenture shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Holder to insist upon strict adherence
to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Debenture. Any
waiver must be in writing.
Section 12. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. If
it shall be found that any interest or other amount deemed interest due
hereunder shall violate applicable laws governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the
maximum permitted rate of interest. The Obligor covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Obligor from paying all or any portion of the principal of or
interest on this Debenture as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Obligor (to the extent it may
lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law,
hinder, delay or impeded the execution of any power herein granted to the
Holder, but will suffer and permit the execution of every such as though no
such law has been enacted.
Section 13. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day.
Section 14. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]
IN WITNESS WHEREOF, the Obligor has caused this Secured Convertible
Debenture to be duly executed by a duly authorized officer as of the date
set forth above.
GLOBAL CONCEPTS, LTD.
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Executive Officer
EXHIBIT "A"
-----------
NOTICE OF CONVERSION
---------------------
(To be executed by the Holder in order to convert the Debenture)
TO:
The undersigned hereby irrevocably elects to convert $______________
of the principal amount of the above Debenture into Shares of Common Stock of
Global Concepts, Ltd., according to the conditions stated therein, as of the
Conversion Date written below.
Conversion Date:____________________________________________________
Applicable Conversion Price: _______________________________________
Signature: _________________________________________________________
Name:_______________________________________________________________
Address:____________________________________________________________
Amount to be converted: $__________________________________________
Amount of Debenture unconverted: $_________________________________
Conversion Price per share: $_____________________________________
Number of shares of Common Stock to be issued:______________________
Please issue the shares of Common Stock in the
following name and to the following address:
____________________________________________________________________
Issue to:___________________________________________________________
Authorized Signature:_______________________________________________
Name:_______________________________________________________________
Title:______________________________________________________________
Phone Number:_______________________________________________________
Broker DTC Participant Code:________________________________________
Account Number:_____________________________________________________
