EXHIBIT 4.3
-----------
THIS SECURITY HAS NOT 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. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY.
Original Issue Date: June 8, 2005
$ _______________
SERIES B VARIABLE RATE SECURED DEBENTURE
THIS SERIES B VARIABLE RATE SECURED DEBENTURE is one of a series of
duly authorized and issued Series B Variable Rate Secured Debentures of Western
Power & Equipment Corp., a Delaware corporation, a Delaware Company (the
"Company"), having a principal place of business at 0000 X.X. 00xx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000, designated as its Series B Variable Rate Secured
Debenture (this debenture, the "Debenture" and collectively with the other such
series of debentures, the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to
________________________ or its registered assigns (the "Holder"), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ on
December 7, 2005 or such earlier date as this Debenture is required or permitted
to be repaid as provided hereunder (the "Maturity Date"), and to pay interest to
the Holder on the then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Debenture is subject to the
following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) 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
1
the State of New York are authorized or required by law or other
government action to close.
"Change of Control Transaction" means the occurrence after the
date hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company,
by contract or otherwise) of in excess of 40% of the voting securities
of the Company, or (b) the Company merges into or consolidates with any
other Person, or any Person merges into or consolidates with the
Company and, after giving effect to such transaction, the stockholders
of the Company immediately prior to such transaction own less than 60%
of the aggregate voting power of the Company or the successor entity of
such transaction, or (c) the Company sells or transfers its assets, as
an entirety or substantially as an entirety, to another Person and the
stockholders of the Company immediately prior to such transaction own
less than 60% of the aggregate voting power of the acquiring entity
immediately after the transaction, (d) a replacement at one time or
within a three year period 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), or (e) 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 (a) or (d).
"Common Stock" means the common stock, par value $0.001 per
share, of the Company and stock of any other class of securities into
which such securities may hereafter have been reclassified or changed
into.
"Debenture Register" shall have the meaning set forth in
Section 2(b).
"Event of Default" shall have the meaning set forth in Section
6.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fundamental Transaction" shall mean (a) the Company effects
any merger or consolidation of the Company with or into another Person,
(b) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, or (c) any tender
offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property.
"Interest Payment Date" shall have the meaning set forth in
Section 2(a).
2
"Interest Period" means, initially, the period beginning on
and including the Original Issue Date and ending on and including the
last day of the month of the Original Issue Date and each successive
period as follows: the period beginning on and including the first day
of each successive month and ending on and including the last day of
each successive month.
"Inventory Floor Plan Financing Agreement" means that certain
Wholesale Financing and Security Agreement, dated November 17, 1992,
between the Company, Case Corporation, and Case Credit Corporation, as
amended prior to the Original Issue Date, granting Case Corporation and
Case Credit Corporation a security interest on inventory purchased by
the Company for resale from Case Corporation
"Late Fees" shall have the meaning set forth in Section 2(c).
"LIBOR" means, for each Interest Period (i) the six -month
London Interbank Offered Rate for deposits in U.S. dollars, as shown on
such the Trading Day immediately prior to the beginning of such
Interest Period in The Wall Street Journal (Eastern Edition) under the
caption "Money Rates - London Interbank Offered Rates (LIBOR)"; or (ii)
if The Wall Street Journal does not publish such rate, the offered
one-month rate for deposits in U.S. dollars which appears on the
Reuters Screen LIBO Page as of 10:00 a.m., New York time, the Trading
Day immediately prior to the beginning of such Interest Period,
provided that if at least two rates appear on the Reuters Screen LIBO
Page on any such Trading Day, the "LIBOR" for such day shall be the
arithmetic mean of such rates.
"Mandatory Default Amount" shall equal the sum of 120% of the
principal amount of this Debenture to be prepaid, plus all accrued and
unpaid interest thereon and all other amounts, costs, expenses and
liquidated damages due in respect of such this Debenture.
"Monthly Redemption" shall mean the redemption of this
Debenture pursuant to Section 4 hereof.
"Monthly Redemption Amount" shall mean $___________(1).
"Monthly Redemption Date" means the 1st of each month,
commencing on the first such date after the Original Issue Date and
ending upon the full redemption of this Debenture.
"New York Courts" shall have the meaning set forth in Section
7(e).
"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.
---------------------
(1) 1/6th of the original principal amount of this Debenture.
3
"Permitted Indebtedness" shall mean the individual and
collective reference to the following: (a) Indebtedness incurred
pursuant to the Series A Debentures and the Series B Debentures, (b)
Existing Indebtedness as it exists on the date of the Purchase
Agreement but excluding any Existing Indebtedness paid off at the
Closing, including the GE Facility and the APM Purchase Note, (c)
additional Indebtedness to Case Corporation pursuant to the Inventory
Floor Plan Financing Agreement, (d) additional Indebtedness incurred in
connection with the acquisition of capital assets and obligations under
sale-leaseback arrangements with respect to newly acquired or leased
assets to Persons, other than Case Corporation, up to, in the aggregate
at any one time outstanding, and together with any then outstanding
Existing Indebtedness, a maximum of $3,200,000 from the Original Issue
Date until the 18 month anniversary of the Original Issue Date (with no
such obligation (other than Existing Indebtedness as it exists on the
date of the Purchase Agreement but excluding any Existing Indebtedness
paid off at the Closing, including the GE Facility) individually
exceeding $100,000); provided such aggregate maximum aggregate (subject
still to the $100,000 individual maximum amount) shall increase to
$4,100,000 during the period following such 18 month anniversary to the
30 month anniversary of the Original Issue Date and to $5,000,000 after
the 30 month anniversary of the Original Issue Date until this
Debenture is no longer outstanding and (e) Indebtedness incurred by the
Company that does not mature prior to the four year anniversary of the
Original Issue Date and is made expressly subordinate in right of
payment to the Indebtedness evidenced by this Xxxxxxxxx, as reflected
in a written agreement acceptable to the Holder and approved by the
Holder in writing.
"Permitted Lien" shall mean the individual and collective
reference to the following: (a) Liens for taxes, assessments and other
governmental charges or levies not yet due or Liens for taxes,
assessments and other governmental charges or levies being contested in
good faith and by appropriate proceedings for which adequate reserves
(in the good faith judgment of the management of the Company) have been
established in accordance with GAAP; (b) any Liens incurred in
connection with Permitted Indebtedness under clause (e) in the
definition of Permitted Indebtedness above, provided that such liens
are not secured by assets of the Company or its Subsidiaries other than
the assets so acquired or leased; (c) Liens imposed by law which were
incurred in the ordinary course of business, such as carriers',
warehousemen's and mechanics' Liens, statutory landlords' Liens, and
other similar Liens arising in the ordinary course of business, and (x)
which do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to
such Lien; (d) Liens created in favor of the Purchasers pursuant to the
Security Documents and (e) Existing Liens as they exist on the date of
the Purchase Agreement, but excluding any Existing Liens on Existing
Indebtedness paid off at the Closing, including Liens on the GE
Facility.
4
"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 Securities Purchase Agreement,
dated as of June 8, 2005, 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.
"Subsidiary" shall have the meaning given to such term in the
Purchase Agreement.
Section 2. Interest.
a) Payment of Interest in Cash. The Company shall pay
interest, in cash, to the Holder on the then outstanding principal
amount of this Debenture at the rate per annum equal to LIBOR for the
applicable Interest Payment Period plus 6.0% or such lesser rate as
shall be the highest rate permitted by applicable law, payable monthly
on the first day of each month, beginning on the first such date after
the Original Issue Date, on each Monthly Redemption Date (as to that
principal amount then being redeemed) and on the Maturity Date (except
that, if any such date is not a Business Day, then such payment shall
be due on the next succeeding Business Day) (each such date, an
"Interest Payment Date").
b) Interest Calculations. Interest shall be calculated on the
basis of a 360-day year and shall accrue daily commencing on the
Original Issue Date until payment in full of the principal sum,
together with all accrued and unpaid interest and other amounts which
may become due hereunder, has been made. Interest hereunder will be
paid to the Person in whose name this Debenture is registered on the
records of the Company regarding registration and transfers of
Debentures (the "Debenture Register").
c) Late Fee. All overdue accrued and unpaid interest to be
paid hereunder shall entail a late fee at the rate of 18% per annum (or
such lower maximum amount of interest permitted to be charged under
applicable law) ("Late Fee") which will accrue daily, from the date
such interest is due hereunder through and including the date of
payment.
d) Prepayment. Except as otherwise set forth in this
Debenture, the Company may not prepay any portion of the principal
amount of this Debenture without the prior written consent of the
Holder.
Section 3. Registration of Transfers and Exchanges.
5
a) Different Denominations. 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.
b) Investment Representations. This Debenture has been issued
subject to certain investment representations of the original Holder
set forth in the Purchase Agreement and may be transferred or exchanged
only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c) Reliance on Debenture Register. Prior to due presentment to
the Company for transfer of this Debenture, the Company and any agent
of the Company may treat the Person 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 4. Monthly Redemption. On each Monthly Redemption Date, the
Company shall redeem the Monthly Redemption Amount plus accrued but
unpaid interest, the sum of all liquidated damages and any other
amounts then owing to such Holder in respect of this Debenture. The
Monthly Redemption Amount due on each Monthly Redemption Date shall be
paid in cash. The payment of cash pursuant to a Monthly Redemption
shall be made on the Monthly Redemption Date. If any portion of the
cash payment for a Monthly Redemption shall not be paid by the Company
by the respective due date, interest shall accrue thereon at the rate
of 18% per annum (or the maximum rate permitted by applicable law,
whichever is less) until the payment of the Monthly Redemption Amount,
plus all amounts owing thereon is paid in full.
Section 5. Negative Covenants. So long as any portion of this Debenture
is outstanding, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:
a) except in connection with Permitted Liens, enter into,
create, incur, assume, guarantee or suffer to exist any Indebtedness;
b) except in connection with Permitted Liens, enter into,
create, incur, assume or suffer to exist any Lien;
c) amend its certificate of incorporation, bylaws or other
charter documents so as to materially and adversely affect any rights
of the Holder;
d) repay, repurchase or offer to repay, repurchase or
otherwise acquire more than a de minimis number of shares of its Common
Stock or Common Stock Equivalents
6
other than as to the Conversion Shares to the extent permitted or
required under the Transaction Documents or as otherwise permitted by
the Transaction Documents;
e) enter into any agreement with respect to any of the
foregoing; or
f) pay cash dividends on any equity securities of the Company
or effect any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property.
Section 6. 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 (A) the principal
amount of any Debenture, or (B) interest (including Late Fees)
on, or liquidated damages in respect of, any Debenture, as and
when the same shall become due and payable (whether on a
Monthly Redemption Date, the Maturity Date or by acceleration
or otherwise);
ii. the Company shall fail to observe or perform any
other covenant or agreement contained in this Debenture or any
other Debenture which failure is not cured, if possible to
cure, within the earlier to occur of (A) 10 calendar days
after notice of such default sent by the Holder or by any
other Holder and (B)10 Business Days after the Company shall
become or should have become aware of such failure;
iii. a default or event of default (subject to any
grace or cure period provided for in the applicable agreement,
document or instrument) shall occur under (A) any of the
Transaction Documents, or (B) any other material agreement,
lease, document or instrument to which the Company or any
Subsidiary of the Company is bound;
iv. any representation or warranty made herein, in
any other Transaction Documents, in any written statement
pursuant hereto or thereto, or in any other report, financial
statement or certificate made or delivered to the Holder or
any other holder of Debentures shall be untrue or incorrect in
any material respect as of the date when made or deemed made;
v. if (i) the Company or any of its material
Subsidiaries shall commence a case, as debtor, or there shall
be commenced against the Company or any material Subsidiary of
the Company, a case under any applicable bankruptcy
7
or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company or any such material
Subsidiary of 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 such Subsidiary of the Company
or (ii) there is commenced against the Company or any material
Subsidiary of the Company any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 60
days; or (iii) the Company or any material Subsidiary of the
Company is adjudicated by a court of competent jurisdiction
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or (iv) the
Company or any material Subsidiary of the Company 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 (v) the Company or any
material Subsidiary of the Company makes a general assignment
for the benefit of creditors; or (vi) 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
(vii) the Company or any material Subsidiary of the Company
thereof shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its
debts; or (viii) the Company or any Subsidiary of the Company
thereof shall by any act or failure to act expressly indicate
its consent to, approval of or acquiescence in any of the
foregoing; or (ix) any corporate or other action is taken by
the Company or any material Subsidiary of the Company for the
purpose of effecting any of the foregoing;
vi. the Company or any Subsidiary of the Company
shall default in any of its obligations under any mortgage,
credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may
be issued, or by which there may be secured or evidenced any
Indebtedness for borrowed money or money due under any long
term leasing or factoring arrangement of the Company in an
amount exceeding $300,000, 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; or
vii. the Company shall be a party to any Change of
Control Transaction or Fundamental Transaction, shall agree to
sell or dispose of all or in excess of 40% 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 its outstanding
shares of Common Stock or other equity securities of the
Company (other than repurchases of shares of Common Stock or
other equity securities of departing officers and directors of
the Company; provided such repurchases shall not exceed
$100,000, in the aggregate, for all officers and directors
during the term of this Debenture).
8
b) Remedies Upon Event of Default. If any Event of Default
occurs, the full principal amount of this Debenture, together with
interest and other amounts owing in respect thereof, to the date of
acceleration shall become, at the Holder's election, immediately due
and payable in cash. The aggregate amount payable upon an Event of
Default shall be equal to the Mandatory Default Amount. Commencing 5
days after the occurrence of any Event of Default that results in the
eventual acceleration of this Debenture, the interest rate on this
Debenture shall accrue at the rate of 18% per annum, or such lower
maximum amount of interest permitted to be charged under applicable
law. Upon the payment in full of the Mandatory Default Amount on this
entire Debenture the Holder shall promptly surrender this Debenture.
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 7. Miscellaneous.
a) Notices. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth
above, facsimile number (000) 000-0000, ATTN: CHIEF EXECUTIVE OFFICER,
or such other address or facsimile number as the Company may specify
for such purposes by notice to the Holder delivered in accordance with
this Section. 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 addressed to each Holder at the facsimile
telephone number or address of such Xxxxxx 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 5:30 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 5:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the second Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required
to be given.
b) Absolute Obligation. Except as expressly provided herein,
no provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and
9
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 debt
obligation of the Company. This Debenture ranks pari passu with all
other Debentures now or hereafter issued under the terms set forth
herein.
c) Security Interest. This Debenture is a direct debt
obligation of the Company and pursuant to the Security Agreement shall
be secured by a perfected security interest in all of the assets of the
Company for the benefit of the holders of the Series A Debentures and
the Series B Debentures.
d) Lost or Mutilated Debenture. 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.
e) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of 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 any of the Transaction Documents (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 (the "New York Courts"). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts 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 any of the Transaction Documents), 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, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party 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 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
10
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.
f) Waiver. 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.
g) Severability. 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 violates 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 this Debenture as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the 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.
h) Next Business Day. 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.
i) Headings. The headings contained herein are for convenience
only, do not constitute a part of this Debenture and shall not be
deemed to limit or affect any of the provisions hereof.
j) Assumption. Any successor to the Company or surviving
entity in a Fundamental Transaction shall (i) assume in writing all of
the obligations of the Company under this Debenture and the other
Transaction Documents pursuant to written agreements in form and
substance satisfactory to the Holder (such approval not to be
unreasonably withheld or delayed) prior to such Fundamental Transaction
and (ii) to issue to the Holder a new debenture of such successor
entity evidenced by a written instrument substantially similar in form
and substance to this Debenture, including, without limitation, having
a principal amount and interest rate equal to the principal
11
amounts and the interest rates of the Debentures held by the Holder and
having similar ranking to this Debenture, and satisfactory to the
Holder (any such approval not to be unreasonably withheld or delayed).
The provisions of this Section shall apply similarly and equally to
successive Fundamental Transactions and shall be applied without regard
to any limitations of this Debenture.
*********************
12
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.
WESTERN POWER & EQUIPMENT CORP.
By: _____________________________
Name:
Title:
13
