EXECUTION COPY
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, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
ORIGINAL ISSUE DATE: JUNE 29, 2001
No. 3 DATE OF AMENDMENT: JULY 16, 2001
$794,119.79
ACHIEVEMENT TEC HOLDINGS, INC.
AMENDED AND RESTATED
10% SECURED CONVERTIBLE DEBENTURE
DUE JUNE 29, 2003
THIS DEBENTURE is one of a series of duly authorized debentures of
Achievement Tec Holdings, Inc. (f/k/a Silver Xxxxxx Mining, Inc.), a delaware
corporation, having a principal place of business at 0000 Xxxxxxx 000, Xxxxx
000-X, Xxxxx Xxxxxxx, Xxxxx 00000 (the "COMPANY"), designated as its 10% Secured
Convertible Debentures, due June 29, 2003, in the aggregate principal amount for
all such debentures of One Million One Hundred Ninety Two Thousand Nine Hundred
Forty Nine and 9/100 Dollars ($1,192,949.09) (the "DEBENTURES"). All references
herein to dollars ($) are to US$ (United States Dollars), unless otherwise
specified.
FOR VALUE RECEIVED, the Company promises to pay to New Millennium Capital
Partners II, LLC or its registered assigns (the "HOLDER"), the principal sum of
$794,119.79, on June 29, 2003 or such earlier date as this Debentures is
required or permitted to be repaid as provided hereunder (the "MATURITY DATE")
and to pay interest to the Holder on the aggregate outstanding principal amount
of this Debenture at the rate of 10% per annum, payable on each Conversion Date
(as defined herein) (each an "INTEREST PAYMENT DATE") in cash or, if permitted
hereunder, shares of Common Stock (as defined in Section 6). Subject to the
terms and conditions herein, the decision whether to pay interest hereunder in
shares of Common Stock or cash shall be at the discretion of the Company. Not
less than five Trading Days (as defined in Section 6) prior to each Interest
Payment Date, the Company shall provide the Holder with written notice of its
election to pay
interest hereunder in cash or in shares of Common Stock pursuant to the terms of
Section 4(a)(i). The Company may indicate in such notice that the election
contained in such notice shall continue for later periods until revised. Failure
to timely provide such written notice shall be deemed an election by the Company
to pay the interest on such Interest Payment Date in shares of Common Stock
pursuant to the terms of Section 4(a)(iii). Interest shall be calculated on the
basis on a 360-day year and shall accrue daily commencing on the Original Issue
Date (as defined in Section 6) until paid in full of the principal sum. Interest
hereunder will be paid to the Person (as defined in Section 6) in whose name
this Debenture is registered on the records of the Company regarding
registration and transfers of Debentures (the "DEBENTURE REGISTER"). All overdue
accrued and unpaid interest to be paid in cash hereunder shall entail a late fee
at the rate of 15% per annum ("LATE FEE") (or such lower maximum amount of
interest permitted to be charged under applicable law) which will accrue daily,
from the date such interest is due hereunder through and including the date of
payment.
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. This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the Person (as defined in Section 6) in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
SECTION 3. EVENTS OF DEFAULT.
(a) "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 Late Fees on or liquidated damages in respect of, any Debentures,
free of any claim of subordination, as and when the same shall become due
and payable (whether by acceleration or otherwise);
(ii) the Company shall fail to observe or perform any other
covenant, agreement contained in, or otherwise commit any breach of any of
the Transaction Documents (as defined in Section 6), and such failure or
breach shall not have been remedied
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within five days after the date on which notice of such failure or breach
shall have been given;
(iii) The representations and warranties of the Company
contained in the Purchase Agreement and in this Debenture shall be true
and correct in all material respects as of the date when made.
(iv) the Company or any of its subsidiaries shall commence, or
there shall be commenced against the Company or any such subsidiary a case
under any applicable bankruptcy or insolvency laws as now or hereafter in
effect or any successor thereto, or the Company 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
Company or any subsidiary thereof or there is commenced against the
Company or any subsidiary thereof any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 60 days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of
its property which continues undischarged or unstayed for a period of 60
days; or the Company or any subsidiary thereof makes a general assignment
for the benefit of creditors; or the Company 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 Company or any subsidiary thereof
shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the Company or
any subsidiary thereof 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 Company or any
subsidiary thereof for the purpose of effecting any of the foregoing;
(v) the Company 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 (including, without limitation, any credit agreements
or other facility and security agreements entered between the Company and
Silicon Valley Bank), or by which there may be secured or evidenced any
indebtedness for borrowed money or money due in an amount exceeding
$25,000, 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;
(vi) the Common Stock shall not be eligible for quotation on
and quoted for trading on the OTC Bulletin Board ("OTC") or listed for
trading on the Nasdaq SmallCap Market, New York Stock Exchange, American
Stock Exchange or the Nasdaq National Market (each, a "SUBSEQUENT MARKET")
five Trading Days;
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(vii) the Company shall be a party to any Change of Control
Transaction (as defined in Section 6), shall agree to sell or dispose all
or in excess of 33% of its assets in one or more transactions (whether or
not such sale would constitute a Change of Control Transaction), or shall
redeem or repurchase more than a de minimis number of shares of Common
Stock or other equity securities of the Company (other than redemptions of
Underlying Shares (as defined in Section 6));
(viii) an Underlying Shares Registration Statement (as defined
in Section 6) shall not have been declared effective by the Commission (as
defined in Section 6) on or prior to the 120th day after the Original
Issue Date;
(ix) if, during the Effectiveness Period (as defined in the
Registration Rights Agreement (as defined in Section 6)), the
effectiveness of the Underlying Shares Registration Statement lapses for
any reason or the Holder shall not be permitted to resell Registrable
Securities (as defined in the Registration Rights Agreement) under the
Underlying Shares Registration Statement, in either case, for more than
five consecutive Trading Days or an aggregate of eight Trading Days (which
need not be consecutive Trading Days);
(x) an Event (as defined in the Registration Rights Agreement)
shall not have been cured to the satisfaction of the Holder prior to the
expiration of thirty days from the Event Date (as defined in the
Registration Rights Agreement) relating thereto (other than an Event
resulting from a failure of an Underlying Shares Registration Statement to
be declared effective by the Commission on or prior to the 120th day after
the Original Issue Date, which shall be covered by Section 3(a)(vii));
(xi) the Company shall fail for any reason to deliver
certificates to a Holder prior to the third Trading Day after a Conversion
Date pursuant to and in accordance with Section 4(b) or the Company 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
any Debentures in accordance with the terms hereof; or
(xi) the Company shall fail for any reason to deliver the
payment in cash pursuant to a Buy-In (as defined herein) within five days
after notice is claimed delivered hereunder.
(b) If any Event of Default occurs and is continuing, the full
principal amount of this Debenture (and, at the Holder's option, all other
Debentures then held by such Holder), 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. The aggregate amount
payable upon an Event of Default shall be equal to the sum of: (i) the Mandatory
Prepayment Amount (as defined in Section 6) plus (ii) the product of (A) the
number of Underlying Shares issued in respect of conversions hereunder within
thirty days of the date of a declaration of an Event of Default and then
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held by the Holder and (B) the Per Share Market Value (as defined in Section 6)
on the date of default, the date that prepayment is due or the date the full
prepayment price is paid, whichever is greatest. Interest shall accrue on the
prepayment amount hereunder from the seventh day after such amount is due (being
the date of an Event of Default) through the date of prepayment in full thereof
at the rate of 15% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law), to accrue daily from the date such payment is due
hereunder through and including the date of payment. All Debentures and
Underlying Shares for which the full prepayment price hereunder shall have been
paid in accordance herewith shall promptly be surrendered to or as directed by
the Company. The Holder need not provide and the Company 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 and the Holder shall have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
shall have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
SECTION 4. CONVERSION.
(a) (i) CONVERSION AT OPTION OF HOLDER. 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
(subject to the limitations on conversion set forth in Section 4(a)(ii) hereof).
The Holder shall effect conversions by delivering to the Company a completed
notice in the form attached hereto as EXHIBIT A (a "CONVERSION NOTICE"),
including a completed Conversion Schedule in the form of SCHEDULE 1 to the
Conversion Notice (on each Conversion Date, the "CONVERSION SCHEDULE"). The
Conversion Schedule shall set forth the remaining principal amount of this
Debenture and all accrued and unpaid interest thereon subsequent to the
conversion at issue. 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 be required to physically
surrender this Debenture to the Company in order to effect conversions. Subject
to Section 4(b), each Conversion Notice, once given, shall be irrevocable.
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, which shall be evidenced by
entries set forth in the Conversion Schedule. The Holder and the Company 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 Debentures 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
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in accordance with Section 13(d) of the Exchange Act (as defined in Section 6)
and the rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon conversion
of, and payment of interest on, the Debentures held by such Holder after
application of this Section. If the Holder has delivered a Conversion Notice for
a principal amount of Debentures 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 Company 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 4(b) 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. In the event of a merger or consolidation of the Company with or into
another Person, this paragraph shall not apply with respect to a determination
of the number of shares of common stock issuable upon conversion in full of the
Debenture if such determination is necessary to establish the securities or
other assets which the holders of Common Stock shall be entitled to receive upon
the effectiveness of such merger or consolidation. The provisions of this
Section 4(a)(ii)(A) may be waived by the Holder upon not less than 61 days prior
notice to the Company.
(B) A Holder may not convert Debentures 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 9.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon conversion of, and payment of interest on, the Debentures held by
such Holder after application of this Section. If the Holder has delivered a
Conversion Notice for a principal amount of Debentures 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 Company
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 4(b) 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. In the event of a merger or consolidation of the
Company with or into another Person, this paragraph shall not apply with respect
to a determination of the number of shares of common stock issuable upon
conversion in full of the Debenture if such determination is necessary to
establish the securities or other assets which the holders of Common Stock shall
be entitled to receive upon the effectiveness of such merger or consolidation.
The provisions of this Section 4(a)(ii)(B) may be waived by the Holder upon not
less than 61 days prior notice to the Company.
(iii) NUMBER OF UNDERLYING SHARES ISSUABLE UPON CONVERSION. (A) The
number of shares of Common Stock issuable upon a conversion hereunder shall be
determined by adding the sum of: (i) the quotient obtained by dividing (x) the
outstanding principal amount of this Debenture to be converted and (y) the
Conversion Price, and (ii) the amount equal to (I) the product
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of (x) the outstanding principal amount of this Debenture to be converted and
(y) the product of (1) the quotient obtained by dividing .10 by 360 and (2) the
number of days for which such principal amount was outstanding, divided by (II)
the Conversion Price on the Conversion Date, PROVIDED, that if the Company shall
have elected to pay the interest due on a Conversion Date in cash pursuant to
the terms hereof, subsection (ii) shall not be used in the calculation of the
number of shares of Common Stock issuable upon a conversion hereunder.
(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 interest hereunder in shares of Common
Stock;
(2) the Underlying Shares issuable for such conversion
(including any interest payable in shares) (x) are not registered for
resale pursuant to an effective Underlying Shares Registration Statement
and (y) may not be sold without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act;
(3) the Common Stock is not listed or quoted for trading on
the OTC or a Subsequent Market;
(4) the issuance of such shares of Common Stock would result
in a violation of Sections 4(a)(ii)(A) or (B),
then, the Company may not pay interest in kind and must pay
interest in cash by delivering, within three Trading Days of each
applicable Conversion Date, an amount in cash equal to the product of: (a)
the outstanding principal amount of the Debentures to be converted on such
Conversion Date and (b) the product of (x) the quotient obtained by
dividing .10 by 360 and (y) the number of days for which such principal
amount was outstanding.
(b) (i) Not later than three Trading Days after any Conversion Date:
(i) the Company shall deliver to the Holder a certificate or certificates which
shall be free of restrictive legends and trading restrictions (other than those
required by Section 3.1(b) of the Purchase Agreement) representing the number of
shares of Common Stock issuable upon such conversion in accordance with the
terms hereof, and (ii) if accrued interest is paid in cash, the Company will
deliver to the Holder a bank check, payable to Holder, in the amount of accrued
and unpaid interest. If requested by a Holder, the Company will use its best
efforts to deliver conversion shares electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions. If shares of Common Stock issuable following a Conversion Notice are
not delivered to or as directed by the Holder by the third Trading Day after a
Conversion Date, the Holder shall be entitled by written notice to the Company
at any time on or before its receipt of such shares, to rescind such conversion,
in which event the Company shall immediately return to the
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Holder a Debenture in principal amount equal to the principal amount, interest
and all other amounts due in respect of the Conversion Notice (provided the
Holder is converting the entire principal amount outstanding under this
Debenture).
(ii) If the Company fails for any reason to deliver to the Holder
such certificate or certificates pursuant to Section 4(b)(i) by the third
Trading Day after the Conversion Date, the Company shall pay to such Holder, in
cash, as liquidated damages and not as a penalty, $5,000 for each Trading Day
after such third Trading Day until such certificates are delivered. Nothing
herein shall limit a Xxxxxx's right to pursue actual damages or declare an Event
of Default pursuant to Section 3 herein for the Company'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. The exercise of any
such rights shall not prohibit the Holders from seeking to enforce damages
pursuant to any other Section hereof or under applicable law. Further, if the
Company shall not have delivered any cash due in respect of conversions of
Debentures or as payment of interest thereon by the third Trading Day after the
Conversion Date, the Holder may, by notice to the Company, require the Company
to issue shares of Common Stock pursuant to Section 4(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 provision of this
Section.
(iii) In addition to any other rights available to the Holder, if
the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Trading Day after the
Conversion Date, and if after such third 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 Company 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 Debentures in
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 Company timely complied with its delivery requirements under
Section 4(b)(i). 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 Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
Notwithstanding anything contained herein to the contrary, if a Holder requires
the Company to make payment in respect of a Buy-In for the failure to timely
deliver certificates hereunder and the Company timely pays in full such payment,
the Company shall not be
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required to pay such Holder liquidated damages under Section 4(b)(ii) in respect
of the certificates resulting in such Buy-In.
(c) (i) The conversion price (the "CONVERSION PRICE") in effect on any
Conversion Date shall be the lesser of (1) $0.85 (the "INITIAL CONVERSION
PRICE"), and (2) 60% of the average of the lowest three inter-day trading prices
(which need not occur on consecutive Trading Days but which one or more may
occur on the same Trading Day) during the twenty Trading Days immediately
preceding the applicable Conversion Date (which may include Trading Days prior
to the Original Issue Date), PROVIDED, that such twenty Trading Day period shall
be extended for the number of Trading Days during such period in which: (A)
trading in the Common Stock is suspended by, or not traded on, the OTC or a
Subsequent Market on which the Common Stock is then listed, or (B) after the
date declared effective by the Commission, the Underlying Shares Registration
Statement is either not effective or the Prospectus included in the Underlying
Shares Registration Statement may not be used by the Holder for the resale of
Underlying Shares.
(ii) If the Company, at any time while the Debentures are
outstanding: (a) shall 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 Company, then the Initial
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 Company, at any time while Debentures are outstanding,
shall issue rights, options or warrants to all holders of Common Stock (and not
to Holders) entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Per Share Market Value 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 Per Share Market Value. 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
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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 Company or any subsidiary thereof, as applicable with
respect to Common Stock Equivalents (as defined below), at any time while
Debentures are outstanding, shall issue shares of Common Stock or rights,
warrants, options or other securities or debt that are convertible into or
exchangeable for shares of Common Stock ("COMMON STOCK EQUIVALENTS") entitling
any Person to acquire shares of Common Stock, at a price per share less than the
Conversion Price then 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. 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. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued. The Company shall notify
the Holder in writing, no later than the 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 Company's stock option or stock purchase plans.
(v) If the Company, at any time while Debentures are outstanding,
shall distribute to all holders of Common Stock (and not to Holders) 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 Debentures
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 Per Share Market Value determined
as of the record date mentioned above, and of which the numerator shall be such
Per Share Market Value 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 Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable
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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 Holders shall have the right thereafter
to, at their 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 only 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 Holders of the
Debentures shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Company
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 Company to prepay
the aggregate of its outstanding principal amount of Debentures, plus all
interest and other amounts due and payable thereon, at a price determined in
accordance with Section 3(b). The entire prepayment price shall be paid in cash.
This provision shall similarly apply to successive reclassifications or share
exchanges.
(vii) All calculations under this Section 4 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in either the Conversion Price or the Initial Conversion Price shall
be required if such adjustment is less than $0.01; PROVIDED, HOWEVER, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(viii) Whenever either the Initial Conversion Price or the
Conversion Price is adjusted pursuant to any of Section 4(c)(ii) - (v), the
Company shall promptly mail to each Holder a notice setting forth the Initial
Conversion Price or Conversion Price (as applicable) after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
(ix) If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company 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 Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Debentures, and shall
cause to be mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date
-11-
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. Holders are entitled to convert
Debentures during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.
(x) In case of any (1) merger or consolidation of the Company with
or into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company in one or a series of related transactions, a Holder shall
have the right to (A) exercise any rights under Section 3(b), (B) convert its
aggregate principal amount of Debentures 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 Debentures 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 convertible debentures with a principal
amount equal to the aggregate principal amount of Debentures then held by such
Holder, plus all accrued and unpaid interest and other amounts owing thereon,
which newly issued convertible debentures 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 a Holder of Debentures set forth
herein and the agreements pursuant to which the 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 Holders 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 Company 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 the Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement)
-12-
be issuable upon the conversion of the outstanding principal amount of the
Debentures and payment of interest hereunder. The Company 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 Company 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 Per Share Market Value at such time. If the Company 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 the Debentures shall be made without charge to the Holders 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 Company 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 Debentures so converted and the Company
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 Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
(g) Any and all notices or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice, shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to the Company, at 0000 Xxxxxxx 000,
Xxxxx 000-X, Xxxxx Xxxxxxx, Xxxxx 00000, Facsimile No.: (000) 000 0000, Attn:
Xxxxxx Xxxxxx, Chief Executive Officer, or such other address or facsimile
number as the Company may specify for such purposes by notice to the Holders
delivered in accordance with this Section, with a copy to (other than for
Conversion Notices) Xxxxxxxxx X. Xxxxxxx, III, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, Facsimile: (000) 000-0000. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service or sent by certified or registered mail, postage
prepaid, addressed to each Holder at the facsimile telephone number or address
of such Holder appearing on the books of the Company, or if no such facsimile
telephone number or address appears, at the principal place of business of the
Holder. Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 6:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) four days
after deposit in the United States mail, (iv) the Business Day following the
date of mailing, if sent by nationally recognized overnight
-13-
courier service, or (v) upon actual receipt by the party to whom such notice is
required to be given.
SECTION 5. OPTIONAL PREPAYMENT. During the 30 days immediately following
the Original Issue Date of this Debenture, the Company shall have the right to
prepay all or any portion of the outstanding principal amount of this Debenture
for which Conversion Notices have not previously been delivered by delivery of
the prepayment price to the Holder together with a written accounting of the
principal amount to be prepaid plus other amounts owing thereon. The prepayment
price applicable to prepayments under this Section must accompany the notice of
intention to prepay. The prepayment price shall equal 135% of the principal
amount of the Debentures to be prepaid, and 135% of all unpaid and accrued
interest thereon. Upon receipt of the prepayment price for a prepayment under
this Section, the Holder shall: (i) if such prepayment is only for a portion of
the principal amount then outstanding under this Debenture, promptly deliver to
the Company a revised Conversion Schedule reflecting such prepayment or (ii) if
such prepayment is for the entire then outstanding principal amount under this
Debenture, promptly deliver this Debenture, marked paid in full. The Holder need
not deliver any Debentures and shall still have rights as a Debenture holder
until the full prepayment price hereunder is properly received by it.
SECTION 6. 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 in the State of New York or the State of Texas are authorized or
required by law or other government action to close.
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) 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 Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors 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), (iii) the merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50% or more of the assets of the Company in one or a series of related
transactions, or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, $.001 par value, of the Company and
stock of any other class into which such shares may hereafter have been
reclassified or changed.
-14-
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"MANDATORY PREPAYMENT AMOUNT" for any Debentures shall equal the sum of
(i) the greater of: (A) 130% of the principal amount of Debentures to be
prepaid, plus all accrued and unpaid interest thereon, and (B) the principal
amount of Debentures to be prepaid, plus all accrued and unpaid interest
thereon, divided by the Conversion Price on (x) the date the Mandatory
Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory
Prepayment Amount is paid in full, whichever price is less, multiplied by the
Per Share Market Value on (x) the date the Mandatory Prepayment Amount is
demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is
paid in full, whichever price is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Debentures.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of the
Debentures regardless of the number of transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debenture.
"PER SHARE MARKET VALUE" means on any particular date (a) the closing bid
price per share of Common Stock on such date on the Subsequent Market on which
the shares of Common Stock are then listed or quoted (as reported by Bloomberg
L.P. at 4:15 PM (New York time) for the closing sales price for regular session
trading on such day), or if there is no such price on such date, then the
closing bid price on the Subsequent Market on the date nearest preceding such
date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing
sales price for regular session trading on such day), or (b) if the shares of
Common Stock are not then listed or quoted on a Subsequent Market, the closing
bid price for a share of Common Stock in the OTC, as reported by the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the shares of Common Stock are not then reported by the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the "Pink Sheet" quotes for
the relevant conversion period, as determined in good faith by the Holder, or
(d) if the shares of Common Stock are not then publicly traded the fair market
value of a share of Common Stock as determined by an Appraiser selected in good
faith by the Holders of a majority in interest of the principal amount of
Debentures then outstanding.
"PERSON" means a corporation, an association, a partnership, organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
"PURCHASE AGREEMENT" means the Secured Convertible Debenture Purchase and
Exchange Agreement, dated as of the Original Issue Date, to which the Company
and the original Holder are parties, as amended, modified or supplemented from
time to time in accordance with its terms.
-15-
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the Original Issue Date, to which the Company and the original
Holder are parties, as amended, modified or supplemented from time to time in
accordance with its terms.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"TRADING DAY" means (a) a day on which the shares of Common Stock are
traded on the OTC or on such Subsequent Market on which the shares of Common
Stock are then listed or quoted, or (b) if the shares of Common Stock are not
listed on a Subsequent Market, a day on which the shares of Common Stock are
traded in the over-the-counter market, as reported by the OTC, or (c) if the
shares of Common Stock are not quoted on the OTC, a day on which the shares of
Common Stock are quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); PROVIDED, that in the event that
the shares of Common Stock are not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except a Business Day.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in the Purchase
Agreement.
"UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of Debentures and 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 7. Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, interest and liquidated damages (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
Company. This Debenture ranks PARI PASSU with all other Debentures now or
hereafter issued under the terms set forth herein. As long as there are
Debentures outstanding, the Company shall not and shall cause it subsidiaries
not to, without the consent of the Holders, (i) amend its certificate of
incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Holders; (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. The Company may only voluntarily prepay the outstanding principal
amount on the Debentures in accordance with Section 5 hereof.
SECTION 8. This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Company, 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
-16-
proceedings of the Company, unless and to the extent converted into shares of
Common Stock in accordance with the terms hereof.
SECTION 9. If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a 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 Company.
SECTION 10. 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. The Company will not and will not permit any of its
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 therefrom that is senior in any respect to the Company's
obligations under the Debentures.
SECTION 11. This Debenture shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Debenture (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of this Debenture), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
-17-
SECTION 12. Any waiver by the Company or 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 Company or 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 13. 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 Company 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 Company from paying all or any portion of the
principal of or interest on the Debentures 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 Company (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 14. 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 15. The payment obligations under this Debenture and the
obligations of the Company to the Holder arising upon the conversion of all or
any of the Debentures in accordance with the provisions hereof are secured
pursuant to the Security Agreement (as defined in the Purchase Agreement).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-18-
IN WITNESS WHEREOF, the Company has caused this Secured Convertible
Debenture to be duly executed by a duly authorized officer as of the date first
above indicated.
SILVER XXXXXX MINING, INC.
By: ____________________________________
Xxxxxx Xxxxxx
Chief Executive Officer
EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal and, if specified, interest
under the 10% Secured Convertible Debenture of Silver Xxxxxx Mining, Inc. (the
"Company") due June 29, 2003 into shares of common stock, $.001 par value (the
"Common Stock"), of the Company according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.
Conversion calculations:
Date to Effect Conversion
Principal Amount of Debentures to be Converted
Number of shares of Common Stock to be Issued
Applicable Conversion Price
Signature
Name
Address
| | By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its shares ownership of the Company's
Common Stock does not exceed the amounts determined in accordance with
Section 13(d) of the Exchange Act, specified under Section 4(c)(i) of this
Debenture.
SCHEDULE 1
CONVERSION SCHEDULE
Silver Xxxxxx Mining, Inc.
10% Secured Convertible Debentures due June 29, 2003, in the aggregate principal
amount of $794,829.30 issued by Silver Xxxxxx Mining, Inc. This Conversion
Schedule reflects conversions made under Section 4(a)(i) of the above referenced
Debentures.
Dated:
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Aggregate
Principal
Amount
Remaining
Date of Subsequent to
Conversion Conversion
(or for first (or original
entry, Original Amount of Principal
Issue Date) Conversion Amount) Company Attest
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Aggregate
Principal
Amount
Remaining
Date of Subsequent to
Conversion Conversion
(or for first (or original
entry, Original Amount of Principal
Issue Date) Conversion Amount) Company Attest
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-3-
