EXHIBIT 4.1
DEBENTURE AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL,
FACE AMOUNT $192,000
PRICE $160,000
INTEREST RATE 10% per year
DEBENTURE NUMBER November 0000-000
XXXXXXXX DATE November 1, 2005
MATURITY DATE November 1, 2010
FOR VALUE RECEIVED, Xxxx Xxxxx Corp d/b/a Bootie Beer Corp, a Florida
corporation and it's wholly owned subsidiary Bootie Beer Company (the
"Company"), hereby promises to pay to the order of DUTCHESS PRIVATE EQUITIES
FUND, II, L,P. (the "Holder") on November,1 2010, (the "Maturity Date") the
principal amount of One Hundred Ninety-Two Thousand Dollars ($192,000) U.S., and
to pay interest on the principal amount hereof, in such amounts, at such times
and on such terms and conditions as are specified herein.
Article 1 Interest
The Company shall pay interest on the unpaid principal amount of this Debenture
(the "Debenture") each month until the principal amount hereof is paid in full
or has been convened. The Debentures shall pay ten percent (10%) per annum and
is payable, at the Holder's option, in cash or in stock upon each conversion.
The closing shall be deemed to have occurred on November 1st, 2005. The
Debentures are subject to automatic conversion at the end of five (5) years from
the date of issuance at which time all Debentures outstanding will be
automatically converted based upon the formula set forth in Section 3.2.
Article 2 Method of Payment
This Debenture must be surrendered to the Company in order for the Holder to
receive payment of the principal amount hereof. The Company shall have the
option of paying the interest on this Debenture in United States dollars
pursuant to Article 1 hereof. The Company may draw a check for the payment of
interest to the order of the Holder of this Debenture and mail it to the
Holder's address as follows:
Dutchess Private Equities Fund, II, L.P.
00 Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx, Xxxxxxxxxxxxx 00000
Interest and principal payments shall be subject to withholding under applicable
United States Federal Internal Revenue Service Regulations.
Article 3 Conversion
Section 3.1 Conversion Privilege
(a) The Holder of this Debenture shall have the right to convert it into shares
of Common Stock at any time following the Closing Date and which is before the
close of business on the Maturity Date, except as set forth in Section 3.1(c)
below. The number of shares of Common Stock issuable upon the conversion of this
Debenture is determined not to exceed the face amount, interest and accrued
penalties as stated above and pursuant to Section 3.2 and rounding the result to
the nearest whole share,
(b) This Debenture may not be converted, whether in whole or in part, except in
accordance with this Article 3.
(c) In the event all or any portion of this Debenture remains outstanding on the
Maturity Date, the unconverted portion of such Debenture will automatically be
converted into shares of Common Stock on such date in the manner set forth in
Section 3.2
Section 3.2 Conversion Procedure,
(a) Conversion Procedures. The face amount of this Debenture may be converted,
in whole or in part, any time following the Closing Date, Such conversion shall
be effectuated by surrendering to the Company, or its attorney, this Debenture
to be converted together with a facsimile or original of the signed Notice of
Conversion which evidences Holder's intention to convert the Debenture
indicated. The date on which the Notice of Conversion is effective ("Conversion
Date") shall be deemed to be the date on which the Holder has delivered to the
Company a facsimile or original of the signed Notice of Conversion, as long as
the original Debenture(s) to be converted are received by the Company within
five (5) business days thereafter. At such time that the original Debenture has
been submitted to the Company, the Holder can elect to whether a reissuance of
the debenture is warranted, or whether the Company can retain the Debenture as
to a continual conversion by Holder. Notwithstanding the above, any Notice of
Conversion received by 4:00 P.M. EST, shall be deemed to have been received the
previous business day. Receipt being via a confirmation of time of facsimile of
the Holder.
(b) Common Stock to be Issued, Upon the conversion of any Debentures and upon
receipt by the Company or its attorney of a facsimile or original of Holder's
signed Notice of Conversion the Company shall instruct its transfer agent to
issue stock certificates without restrictive legend or stop transfer
instructions, if at that time the Registration Statement has been declared
effective (or with proper restrictive legend if the Registration Statement has
not as yet been declared effective), in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion, as applicable. The Company shall act as Registrar and shall maintain
an appropriate ledger containing the necessary information with respect to each
Debenture. The Company warrants that no instructions, other than these
instructions, have been given or will be given to the transfer agent and that
the Common Stock shall otherwise be freely resold, except as may be set forth
herein,
(c) Conversion Rate. Holder is entitled to convert the face amount of this
Debenture, plus accrued interest, anytime following the Closing Date, at $1.00
per share ("Fixed Conversion Price"), the "Conversion Price", No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share.
(d) Nothing contained in this Debenture shall be deemed to establish or require
the payment of interest to the Holder at a rate in excess of the maximum rate
permitted by governing law. In the event that the rate of interest required to
be paid exceeds the maximum rate permitted by governing law, the rate of
interest required to be paid thereunder shall be automatically reduced to the
maximum rate permitted under the governing law and such excess shall be returned
with reasonable promptness by the Holder to the Company.
(e) It shall be the Company's responsibility to take all necessary actions and
to bear all such costs to issue the Common Stock as provided herein, including
the responsibility and cost for delivery of an opinion letter to the transfer
agent, if so required. The person in whose name the certificate of Common Stock
is to be registered shall be treated as a shareholder of record on and after the
conversion date. Upon surrender of any Debentures that arc to be converted in
part, the Company shall issue to the Holder a new Debenture equal to the
unconverted amount, if so requested in writing by Holder.
(f) Within three (3) business days after receipt of the documentation referenced
to above in Section 3.2(a), the Company shall deliver a certificate, in
accordance with Section 3, 2(c) for the number of shares of Common Stock
issuable upon the conversion. In the event the Company does not make delivery of
the Common Stock, as instructed by Holder, within three (3) business days after
the Conversion Date, then in such event the Company shall pay to Holder one
percent (1%) in cash, of the dollar value of the Debentures being converted,
compounded daily, per each day after the third (3rd) business day following the
Conversion Date that the Common Stock is not delivered to the Purchaser.
The Company acknowledges that its failure to deliver the Common Stock within
three (3) business days after the Conversion Date will cause the Holder to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Debenture a
provision for liquidated damages. The parties acknowledge and agree that, the
liquidated damages provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of this
Debenture.
To the extent that the failure of the Company to issue the Common Stock pursuant
to this Section 3.2(f) is due to the unavailability of authorized but unissued
shares of Common Stock, the provisions of this Section 3.2(1) shall not apply
but instead the provisions of Section 3.2(g) shall apply.
The Company shall make any payments incurred under this Section 3.2(f) in
immediately available funds within three (3) business days from the date the
Common Stock is fully delivered, Nothing herein shall limit a Holder's right to
pursue actual damages or cancel the conversion for the Company's failure to
issue and deliver Common Stock to the Holder within three (3) business days
after the Conversion Date.
(g) The Company shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have available all
Common Stock necessary to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder
-submits a Notice of Conversion and the Company does not have sufficient
authorized but unissued shares of Common Stock (or alternative shares of Common
Stock as may be contributed by Stockholders) available to effect, in full, a
conversion of the Debentures (a "Conversion Default", the date of such default
being referred to herein as the "Conversion Default Date"), the Company shall
issue to the Holder all of the shares of Common Stock which arc available, and
the Notice of Conversion as to any Debentures requested to be converted but not
converted (the "Unconverted Debentures"), may be deemed null and void upon
written notice sent by the Holder to the Company. The Company shall provide
notice of such Conversion Default ("Notice of Conversion Default") to all
existing Holders of outstanding Debentures, by facsimile, within three (3)
business day of such default (with the original delivered by overnight or two
day courier), and the Holder shall give notice to the Company by facsimile
within five business days of receipt of the original Notice of Conversion
Default (with the original delivered by overnight or two day courier) of its
election to either nullify or confirm the Notice of Conversion.
The Company agrees to pay to all Holders of outstanding Debentures payments for
a Conversion Default ("Conversion Default Payments") in the amount of (N/365) x
(.24) x the initial issuance price of the outstanding and/or tendered but not
converted Debentures held by each Holder where N = the number of days from the
Conversion Default Date to the date (the "Authorization Date") that the Company
authorizes a sufficient number of shares of Common Stock to effect conversion of
all remaining Debentures. The Company shall send notice ("Authorization Notice")
to each Holder of outstanding Debentures that additional shares of Common Stock
have been authorized the Authorization Date and the amount of Holder's accrued
Conversion Default Payments. The accrued Conversion Default shall be paid in
cash or shall be convertible into Common Stock at the Conversion Rate, upon
written notice sent by the Holder to the Company, which Conversion Default shall
be payable as follows: (i) in the event Holder elects to lake such payment in
cash, cash payments shall be made to such Holder of outstanding Debentures by
the fifth day of the following calendar month, or (ii) in the event Holder
elects to take such payment in stock, the Holder may convert such payment amount
into Common Stock at the conversion rate set forth in Section 3.2(c) at any time
after the 5th day of the calendar month following the month in which the
Authorization Notice was received, until the expiration of the mandatory five
(5) year conversion period.
The Company acknowledges that its failure to maintain a sufficient number of
authorized but unissued shares of Common Stock to effect in full a conversion of
the Debentures will cause the Holder to suffer damages in an amount that will be
difficult to ascertain. Accordingly, the parties agree that it is appropriate to
include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture. Nothing herein shall limit the Holder's
right to pursue actual damages for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock.
(h) If, by the third (3rd) business day after the Conversion Date of any portion
of the Debentures to be converted (the "Delivery Date"), the transfer agent
fails for any reason to deliver the Common Stock upon conversion by the Holder
and after such Delivery Date the Holder purchases, in an open market transaction
or otherwise, shares of Common Stock (the "Covering Shares") solely in order to
make delivery in satisfaction of a sale of Common Stock by the Holder (the "Sold
Shares"), which delivery such Holder anticipated to make using the Common Stock
issuable upon conversion (a "Buy-In"), the Company shall pay to the Holder, in
addition to any other amounts due to Holder pursuant to this Debenture, and not
in lieu thereof, the Buy-In Adjustment Amount (as defined below). The "Buy In
Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
Covering Shares over (y) the net proceeds (after brokerage commissions, if any)
received by the Holder from the sale of the Sold Shares. The Company shall pay
the Buy-In Adjustment Amount to the Holder in immediately available funds within
five (5) business days of written demand by the Holder, By way of illustration
and not in limitation of the foregoing, if the Holder purchases shares of Common
Stock having a total purchase price (including brokerage commissions) of $
11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Buy-In Adjustment Amount which the Company will he
required to pay to the Holder will be $1,000.
(i) Prospectus and Other Documents. The Company shall furnish to Holder such
number of prospectuses and other documents incidental to the registration of the
shares of Common Stock underlying the Debentures, including any amendment of or
supplements thereto.
(j) Limitation on Issuance of Shares. If the Company's Common Stock becomes
listed on the NASDAQ Small Cap Market after the issuance of the Debentures, the
Company may be limited in the number of shares of Common Stock it may issue by
virtue of (X) the number of authorized shares or (Y) the applicable rules and
regulations of the principal securities market on which the Common Stock is
listed or traded, including, but not necessarily limited to, NASDAQ Rule
4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable (collectively, the
"Cap Regulations") Without, limiting the other provisions thereof, (i) the
Company will take all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of the Debentures without violating the Cap
Regulations and (ii) if, despite taking such steps, the Company still cannot
issue such shares of Common Stock without violating the Cap Regulations, the
holder of a Debenture which cannot be converted as result of the Cap Regulations
(each such Debenture, an "Unconverted Debenture") shall have the right to elect
either of the following remedies;
(x) if permitted by the Cap Regulations, require the Company to issue shares of
Common Stock in accordance with such holder's Notice of Conversion at a
conversion purchase price equal to the average of the closing bid price per
share of Common Stock for any five (5) consecutive trading days (subject to
certain equitable adjustments for certain events occurring during such period)
during the sixty (60) trading days immediately preceding the Conversion Date; or
(y) require the Company to redeem each Unconverted Debenture for an amount (the
"Redemption Amount"), payable in cash, equal to the sum of (i) one hundred
thirty-three percent (133%) of the principal of an Unconverted Debenture, plus
(ii) any accrued but unpaid interest thereon through and including the date (the
"Redemption Date") on which the Redemption Amount is paid to the holder.
A holder of an Unconverted Debenture may elect one of the above remedies with
respect to a portion of such Unconverted Debenture and the other remedy with
respect to other portions of the Unconverted Debenture, The Debentures shall
contain provisions substantially consistent with the above terms, with such
additional provisions as may be consented to by the Holder. The provisions of
this section are not intended to limit the scope of the provisions otherwise
included in the Debentures.
(k) Limitation on Amount of Conversion and Ownership. Notwithstanding anything
to the contrary in this Debenture, in no event shall the Holder be entitled to
convert that amount of Debenture, and in no event shall the Company permit that
amount of conversion, into that number of shares, which when added to the sum of
the number of shares of Common Stock beneficially owned, (as such term is
defined under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of
1934, as may be amended, (the "1934 Act")), by the Holder, would exceed 4.99% of
the number of shares of Common Stock outstanding on the Conversion Date, as
determined in accordance with Rule 13d-1(j) of the 1934 Act. In the event that
the number of shares of Common Stock outstanding as determined in accordance
with Section 13(d) of the 1934 Act is different on any Conversion Date than it
was on the Closing Date, then the number of shares of Common Stock outstanding
on such Conversion Date shall govern for purposes of determining whether the
Holder would be acquiring beneficial ownership of more than 4.99% of the number
of shares of Common Stock outstanding on such Conversion Date.
(l) Legend. The Holder acknowledges that each certificate representing the
Debentures and the Common Stock unless registered pursuant to the Registration
Rights Agreement, shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
(m) Prior to conversion of all the Debentures, if at any time the conversion of
all the Debentures and exercise of all the Warrants outstanding would result in
an insufficient number of authorized shares of Common Stock being available to
cover all the conversions, then in such event, the Company will move to call and
hold a shareholder's meeting or have shareholder action with written consent of
the proper number of shareholders within thirty (30) days of such event, or such
greater period of time if statutorily required or reasonably necessary as
regards standard brokerage house and/or SEC requirements and/or procedures, for
the purpose of authorizing additional shares of Common Stock to facilitate the
conversions. In such an event management of the Company shall recommend to all
shareholders to vote their shares in favor of increasing the authorized number
of shares of Common Stock. Management of the Company shall vote all of its
shares of Common Stock in favor of increasing the number of shares of authorized
Common Stock, Company represents and warrants that under no circumstances will
it deny or prevent Holder's right to convert the Debentures as permitted under
the terms of this Subscription Agreement or the Registration Rights Agreement.
Nothing in this Section shall limit the obligation of the Company to make the
payments set forth in Section 3.2(g), The Holder, at their option, may request
the company to authorize and issue additional shares if the Holder feels it is
necessary for conversions in the future In the event the Company's shareholder's
meeting does not result in the necessary authorization, the Company shall redeem
the outstanding Debentures for an amount equal to (x) the sum of the principal
of the outstanding Debentures plus accrued interest thereon multiplied by (y)
133%.
Section 3.3 Fractional Shares. The Company shall not issue fractional shares of
Common Stock, or scrip representing fractions of such shares, upon the
conversion of this Debenture. Instead, the Company shall round up or down, as
the case may be, to the nearest whole share.
Section 3.4 Taxes on Conversion. The Company shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock upon
the conversion of this Debenture. However, the Holder shall pay any such tax
which is due because the shares are issued in a name other than its name.
Section 3.5 Company to Reserve Stock, The Company shall reserve the number of
shares of Common Stock required pursuant to and upon the terms set forth in the
Subscription Agreement to permit the conversion of this Debenture. All shares of
Common Stock which may be issued upon the conversion hereof shall upon issuance
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.
Section 3.6 Restrictions on Sale, This Debenture has not been registered under
the Securities Act of 1933, as amended, (the "Act") and is being issued under
Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the Act.
This Debenture and the Common Stock issuable upon the conversion thereof may
only be sold pursuant to registration under or an exemption from the Act.
Section 3.7 Reserved
Section 3.8 Company Mandatory Redemption, The Holder, at its sole option, shall
have the right to exercise a "Mandatory Redemption" to redeem, in whole or in
part, the outstanding amount of the Debenture, from the proceeds of a future
financing between the Company and the Holder ("Future Funding"). The Holder must
notify the Company in writing, via facsimile transmission, that it is exercising
its right of Mandatory Redemption; the redemption amount shall be paid to the
Holder from a Closing of a Future Funding.
Article 4 Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes in
writing the obligations of the Company under this Debenture and immediately
after such transaction no Event of Default exists. Any reference herein to the
Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written assumption.
Article 5 Reports
The Company will mail to the Holder hereof at its address as shown on the
Register a copy of any annual, quarterly or current report that it files with
the Securities and Exchange Commission promptly after the filing thereof and a
copy of any annual, quarterly or other repot or proxy statement that it gives to
its shareholders generally at the time such report or statement is sent to
shareholders.
Article 6 Defaults and Remedies
Section 6.1 Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture by
conversion into Common Stock within ten (10) business days of the Maturity Date,
upon redemption or otherwise, (b) the Company does not make a payment, other
than a payment of principal, for a period of three (3) business days thereafter,
(c) any of the Company's representations or warranties contained in the
Subscription Agreement, or this Debenture were false when made or the Company
fails to comply with any of its other agreements in the Subscription Agreement
or this Debenture and such failure continues for the period and after the notice
specified below, (d) the Company pursuant to or within the meaning of any
Bankruptcy Law (as hereinafter defined): (i) commences a voluntary case; (ii)
consents to the entry of an order for relief against, it in an involuntary case;
(iii) consents to the appointment of a Custodian (as hereinafter defined) of it
or for all or substantially all of its property or (iv) makes a general
assignment for the benefit of its creditors or (v) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for
relief against the Company in an involuntary case; (B) appoints a Custodian of
tine Company or for all or substantially all of its property or (C) orders the
liquidation of the Company, and the order or decree remains unstayed and in
effect for sixty (60) calendar days, (e) the Company's Common Stock is suspended
or no longer listed on any recognized exchange including electronic
over-the-counter bulletin board for in excess of five (5) consecutive trading
days.
As used in this Section 6.1, the term "Bankruptcy Law" means Title 11 of the
United States Code or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. A default under clause (c) above
is not an Event of Default until the holders of at least 25% of the aggregate
principal amount of the Debentures outstanding notify the Company of such
default and the Company does not cure it within thirty (30) business days after
the receipt of such notice, unless the Company commences to cure such default
within such period, which must specify the default, demand that it be remedied
and state that it is a "Notice of Default". Prior to the expiration of the time
for curing a default as set forth in the preceding sentence, the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
(exclusive of Debentures then owned by the Company or any subsidiary or
affiliate) may, on behalf of the holders of all of the Debentures, waive any
past Event of Default hereunder (or any past event which, with the lapse of time
or notice and lapse of time designated in subsection (a), would constitute an
Event of Default hereunder) and its consequences, except a default in the
payment of the principal of or interest on any of the Debentures. In the case of
any such waiver, such default or Event of Default shall be deemed to have been
cured for every purpose of this Debenture and the Company and the holders of the
Debentures shall be restored to their former positions and rights hereunder,
respectively; but, no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
In the Event of Default and provided the Debentures have not been paid
in full, the Holder may elect to secure a portion of the Company's assets not to
exceed 200% of the Face Amount of the Note, in Pledged Collateral (as defined
in the Security Agreement). The Holder may also elect to garnishee Revenue from
the Company in an amount that will repay the Holder on the schedules outlined in
this Agreement.
In the Event of Default, as outlined in this Agreement, the Holder can
exercise its right to increase the Face Amount of the Debenture by ten percent
(10%) as an initial penalty and for each Event of Default under this Agreement.
In addition, the Holder may elect to increase the Face Amount by two and
one-half percent (2.5%) per month (pro-rata for partial periods) paid as a
penalty for liquated damages ("Liquidated Damages"). The Liquated Damages will
be compounded daily. It is the intention and acknowledgement of both parties
that the Liquidated Damages not be deemed as interest.
Section 6.2 Acceleration. If an Event of Default occurs and is continuing, the
Holder hereof by notice to the Company may declare the remaining principal
amount of this Debenture, together with all accrued interest and any liquidated
damages, lo be due and payable. Upon such declaration, the remaining principal
amount shall be due and payable immediately.
Section 6.3 Seniority. No indebtedness of the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise.
Article 7 Registered Debentures
Section 7.1 Record Ownership. The Company, or its attorney, shall maintain
a register of the holders of the Debentures (the "Register") showing their names
and addresses and the serial numbers and principal amounts of Debentures issued
to them. The Register may be maintained in electronic, magnetic or other
computerized form. The Company may treat the person named as the Holder of this
Debenture in the Register as the sole owner of this Debenture. The Holder of
this Debenture is the person exclusively entitled to receive payments of
interest on this Debenture, receive notifications with respect to this
Debenture, convert it into Common Stock and otherwise exercise all of the rights
and powers as the absolute owner hereof.
Section 7.2 Worn or Lost Debentures. If this Debenture becomes worn, defaced or
mutilated but is still substantially intact and recognizable, the Company or its
agent may issue a new Debenture in lieu hereof upon its surrender. Where the
Holder of this Debenture claims that the Debenture has been lost, destroyed or
wrongfully taken, the Company shall issue a new Debenture in place of the
original Debenture if the Holder so requests by written notice to the Company
actually received by the Company before it is notified that the Debenture has
been acquired by a bona fide purchaser and the Holder has delivered to the
Company an indemnity bond in such amount and issued by such surety as the
Company deems satisfactory together with an affidavit of the Holder setting
forth the facts concerning such loss, destruction or wrongful taking and such
other information in such form with such proof or verification as the Company
may request.
Article 8 Notice.
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Debenture 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 a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) 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:
Xxxxx Xxxxxxxxx
Bootie Beer Company
000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
If to the Holder:
Xxxxxxx X. Xxxxxxxx
Dutchess Private Equities Fund, II, L.P.
00 Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx, Xxxxxxxxxxxxx 00000
Each party shall provide five (5) business days prior notice to the other party
of any change in address, phone number or facsimile number.
Article 9 Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. A "business day" shall
mean a day on which the banks in New York are not required or allowed to be
closed.
Article 10 No Assignment
This Debenture shall not be assignable.
Article 11 Rules of Construction.
In this Debenture, unless the context otherwise requires, words in the singular
number include the plural, and in the plural include the singular, and words of
the masculine gender include the feminine and the neuter, and when the -sense so
indicates, words of the neuter gender may refer to any gender. The numbers and
titles of sections contained in the Debenture are inserted for convenience of
reference only, and they neither form a part of this Debenture nor are they to
be used in the construction or interpretation hereof. Wherever, in this
Debenture, a determination of the Company is required or allowed, such
determination shall he made by a majority of the Board of Directors of the
Company and if it in made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.
Article 12 Governing Law
The validity, terms, performance and enforcement, of this Debenture shall be
governed and construed by (he provisions hereof and in accordance with the laws
of the Commonwealth of Massachusetts applicable to agreements that arc
negotiated, executed, delivered and performed solely in the Commonwealth of
Massachusetts.
Article 13 Litigation
DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW
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All disputes arising under this agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, without regard
to principles of conflict of laws. The parties to this agreement will submit all
disputes arising under this agreement to arbitration in Boston, Massachusetts
before a single arbitrator of the American Arbitration Association ("AAA"). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section.
Article 14 Warrants
As an additional inducement to Bolder, the Company shall issue a warrant
for two hundred thousand (200,000) shares of its common stock to be purchased at
the Fixed Conversion Price. Any partial amount invested shall be pro-rated on
the basis of the investment by Holder. These shares shall have piggyback
registration rights.
Article 15 Redemption
The Holder shall have the right to be redeemed from the Debenture, in
whole or in part, at a price equal to one hundred and thirty percent (130%) of
the outstanding principal amount of the Debenture, including accrued interest
(and penalties if applicable). Any Payments, as defined in Article 2 above,
shall apply to the Redemption Amount. The Investor also holds the right to use
the existing equity line to redeem the Debenture
Article 16 Document Preparation Fees
The Company shall pay to Dutchess Advisors, LLC ten thousand dollars ($10,000)
directly from closing on November 1st, 2005, and ten thousand dollars ($10,000)
directly from closing on December 1st, 2005 for the preparation of documents.
Article 17 Waiver
The Holder's delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waiver, affect, or diminish any right of the Holder under this Agreement to
demand strict compliance and performance herewith. Any waiver by the Holder of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of the
same or a different type. None of the undertakings, agreements and covenants of
the Company contained in this Agreement, and no Event of Default, shall be
deemed to have been waived by the Holder, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification is
evidenced by an instrument in writing specifying such waiver, amendment, change
or modification and signed by the Holder and Company.
Article 18 Waiver of Jury Trial
AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
Article 19 Use of Funds
The Company shall use the funds from the Debenture specifically as outlined in
Exhibit A, attached hereto and incorporate by reference.
*.*.*
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the date
first written above.
XXXX XXXXX CORP. D/B/A BOOTIE BEER CORP.
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
CEO and Chairperson
DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
BY ITS GENERAL PARTNER
DUTCHESS CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Managing Member
