EXHIBIT A
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: March __, 2006
$___________
8% CONVERTIBLE DEBENTURE
DUE MARCH ____, 2009
THIS 8% CONVERTIBLE DEBENTURE is one of a series of duly authorized and
issued 8% Convertible Debentures of CYBRA Corporation, a New York corporation,
having a principal place of business at Xxx Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, XX
00000-0000 (the "Company"), designated as its 8% Convertible Debenture, due
March ___, 2009 (the "Debenture(s)").
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 $__________ by March ___, 2009, or such
earlier date as the Debentures are required or permitted to be repaid as
provided hereunder (the "Maturity Date"), and to pay interest to the Holder on
the aggregate unconverted and then outstanding principal amount of this
Debenture in accordance with the provisions hereof. All payments shall be made
by certified check to the address of the Holder as provided in Section 9(a) or
by wire transfer of immediately available funds pursuant to instructions as may
be provided from time to time by Xxxxxx. 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: "Actual Effective Date"
shall have the meaning set forth in Section 6(c).
1
"Alternate Consideration" shall have the meaning set forth in
Section 5(d).
"Base Conversion Price" shall have the meaning set forth in Section
5(b).
"Buy-In" shall have the meaning set forth in Section 4(d)(v).
"Change of Control Transaction" means the occurrence after the date
hereof 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 45% of the voting securities of the Company, or
(ii) 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 55% of the aggregate voting power
of the Company or the successor entity of such transaction, or (iii) 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 55% of the aggregate
voting power of the acquiring entity immediately after the transaction,
(iv) 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 (v) 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) or (iv).
"Conversion Date" shall have the meaning set forth in Section 4(a).
"Conversion Price" shall have the meaning set forth in Section 4(b).
"Conversion Shares" means the shares of Common Stock issuable upon
conversion of Debentures.
"Debenture Register" shall have the meaning set forth in Section
2(c).
"Dilutive Issuance" shall have the meaning set forth in Section
5(b).
"Dilutive Issuance Notice" shall have the meaning set forth in
Section 5(b).
"Equity Conditions" shall mean, during the period in question, (i)
the Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring by virtue of one or more Notice of
Conversions of the Holder, if any, (ii) all liquidated damages and other
amounts owing to the Holder in respect of the Debentures shall have been
paid; (iii) there is a sufficient number of authorized but unissued and
2
otherwise unreserved shares of Common Stock for the issuance of all of the
shares issuable pursuant to the Transaction Documents, (iv) there is then
existing no Event of Default or event which, with the passage of time or
the giving of notice, would constitute an Event of Default, (v) if after
the date hereof the Company becomes subject to the reporting requirements
of the Exchange Act, the issuance of the shares in question (or, in the
case of a redemption, the shares issuable upon conversion in full of the
redemption amount) to the Holder would not violate the limitations set
forth in Section 4(c) and (vi) no public announcement of a pending or
proposed Fundamental Transaction, Change of Control Transaction or
acquisition transaction has occurred, which transaction has not been
consummated, excluding transaction which have been publicly announced and
subsequently abandoned.
"Event of Default" shall have the meaning set forth in Section 8.
"Fundamental Transaction" shall have the meaning set forth in
Section 5(d).
"Interest Payment Date" shall have the meaning set forth in Section
2(a).
"Late Fees" shall have the meaning set forth in Section 2(c).
"Lookback Period" shall have the meaning set forth in Section 6(c).
"Mandatory Conversion" shall have the meaning set forth in Section
6(c).
"Mandatory Conversion Date" shall have the meaning set forth in
Section 6(c).
"Mandatory Prepayment Amount" for any Debentures shall equal the sum
of (i) the greater of: (A) 120% of the principal amount of Debentures to
be prepaid, plus all accrued and unpaid interest thereon, or (B) the
principal amount of Debentures to be prepaid, plus all other accrued and
unpaid interest hereon, 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 is less,
multiplied by the VWAP 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 is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Debentures.
"New York Courts" shall have the meaning set forth in Section 9(d).
"Notice of Conversion" shall have the meaning set forth in Section
4(a).
"Notice of Mandatory Conversion" shall have the meaning set forth in
Section 6(c).
"Optional Redemption" shall have the meaning set forth in Section
6(a).
3
"Optional Redemption Amount" shall mean the sum of (i) 120% of the
principal amount of the Debenture then outstanding, (ii) accrued but
unpaid interest and (iii) all liquidated damages and other amounts due in
respect of the Debenture.
"Optional Redemption Notice" shall have the meaning set forth in
Section 6(a).
"Optional Redemption Notice Date" shall have the meaning set forth
in Section 6(a). "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.
"Permitted Debt" means trade payables and indebtedness consisting of
capitalized lease obligations and purchase money indebtedness incurred in
connection with acquisition of capital assets and obligations under
sale-leaseback arrangements with respect to newly acquired or leased
assets.
"Permitted Lien" mean (a) Liens with respect to the payment of taxes
or governmental charges in all cases which are not yet due or which are
subject to a good faith contest; (b) any Liens incurred in connection with
Permitted Debt provided that such liens are not secured by assets of the
Company or its Subsidiaries other than the assets so acquired or leased;
and (c) statutory Liens of landlords or equipment lessors against any
property of the Company or its Subsidiaries existing as of the date of the
Purchase Agreement in favor of suppliers, mechanics, carriers,
materialmen, warehousemen or workmen.
"Purchase Agreement" means the Securities Purchase Agreement, dated
as of March __, 2006, to which the Company and the original Holder are
parties, as amended, modified or supplemented from time to time in
accordance with its terms.
Section 2. Interest.
a) Payment of Interest. The Company shall pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this
Debenture at the rate of 8% per annum, payable semi-annually on June 30
and December 31, beginning on the second such date after the Original
Issue Date, on each Conversion Date (as to that principal amount then
being converted), on each Optional Redemption Date (as to that principal
amount being redeemed), on each Mandatory Conversion Date (as to that
principal amount then being converted) 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"), in cash and/or Common Stock as described below. The
Company may elect to pay interest with shares of Common Stock valued at
the Conversion Price in effect on the third Business Day preceding the
relevant Interest Payment Date. The Company may elect to pay such interest
with shares of Common Stock only if (i) notice of such election is giving
to the Holder not less than ten Business Days prior to the relevant
Interest Payment Date, (ii) such payment is made ratably among all Holders
due interest on the Interest Payment Date, (iii) all of the Equity
Conditions have been satisfied, and (iv) such shares of Common Stock are
registered for public resale in an effective Registration Statement as of
thirty days prior to and through the relevant Interest Payment Date.
4
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 shall cease to accrue with respect to any principal
amount converted, provided that the Company in fact delivers the
Conversion Shares within the time period required by Section 4(d)(ii).
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 15% per annum (or such
lower maximum amount of interest permitted to be charged under applicable
law) ("Late Fees") 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.
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. Conversion.
5
a) Voluntary Conversion. At any time after the Original Issue Date
until this Debenture is no longer outstanding, 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 (subject to the
limitations on conversion set forth in Section 4(c) hereof). The Holder
shall effect conversions by delivering to the Company the form of Notice
of Conversion attached hereto as Annex A (a "Notice of Conversion"),
specifying therein the principal amount of Debentures to be converted and
the date on which such conversion is to be effected (a "Conversion Date").
If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is
provided hereunder. To effect conversions hereunder, the Holder shall not
be required to physically surrender Debentures to the Company unless the
entire principal amount of this Debenture plus all accrued and unpaid
interest thereon has been so converted. Conversions hereunder shall have
the effect of lowering the outstanding principal amount of this Debenture
in an amount equal to the applicable conversion. The Holder and the
Company shall maintain records showing the principal amount converted and
the date of such conversions. The Company shall deliver any objection to
any Notice of Conversion within 2 Business Days of receipt of such notice.
In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error.
The Holder and any assignee, by acceptance of this Debenture, acknowledge
and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Debenture, the unpaid and unconverted
principal amount of this Debenture may be less than the amount stated on
the face hereof.
b) Conversion Price. The conversion price (the "Conversion Price")
in effect on the Original Issue Date is $0.50. Within 2 Business Days of
the request of the Holder, the Company shall provide the Holder an
Officer's Certificate stating the number of issued and outstanding shares
of Fully-Diluted Outstanding Capital Stock.
c) Conversion Limitations; Xxxxxx's Restriction on Conversion. At
any time after the Common Stock is registered under Section 12 of the
Exchange Act, the Company shall not effect any conversion of this
Debenture, and the Holder shall not have the right to convert any portion
of this Debenture, pursuant to Section 4(a) or otherwise, to the extent
that after giving effect to such conversion, the Holder (together with the
Holder's affiliates), as set forth on the applicable Notice of Conversion,
would beneficially own in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to such
conversion. For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon conversion of
this Debenture with respect to which the determination of such sentence is
being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Debenture beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or
6
nonconverted portion of any other securities of the Company (including,
without limitation, any other Debentures or the Warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its affiliates. Except
as set forth in the preceding sentence, for purposes of this Section 4(c),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act. To the extent that the limitation contained in this
section applies, the determination of whether this Debenture is
convertible (in relation to other securities owned by the Holder) and of
which a portion of this Debenture is convertible shall be in the sole
discretion of such Holder. To ensure compliance with this restriction, the
Holder will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have no
obligation to verify or confirm the accuracy of such determination. For
purposes of this Section 4(c), in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) Schedule 3.1(g) to the Purchase
Agreement, (y) a more recent public announcement by the Company or (z) any
other notice by the Company or the Company's Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two Business Days confirm
orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Debenture, by the
Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The provisions of this
Section 4(c) may be amended by the Holder, at the election of the Holder,
upon not less than 61 days' prior notice to the Company, and the
provisions of this Section 4(c) shall continue to apply until such 61st
day (or such later date, as determined by the Holder, as may be specified
in such notice of waiver). No amendment by the Holder may have the effect
of increasing the 4.99% figure stated above to greater than 9.99%.
d) Mechanics of Conversion
i. Conversion Shares Issuable Upon Conversion of Principal
Amount. The number of shares of Common Stock issuable upon a
conversion hereunder shall be determined by the quotient obtained by
dividing (x) the outstanding principal amount of this Debenture to
be converted by (y) the Conversion Price. i.
ii. Delivery of Certificate Upon Conversion. Not later than
four Business Days after any Conversion Date, the Company will
deliver or cause to be delivered to the Holder (A) a certificate or
certificates representing the Conversion Shares which shall be free
of restrictive legends and trading restrictions (other than those
required by the Purchase Agreement) representing the number of
shares of Common Stock being acquired upon the conversion of
Debentures and (B) a bank check in the amount of accrued and unpaid
interest. The Company shall, if available and if allowed under
applicable securities laws, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company
under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions.
7
iii. Failure to Deliver Certificates. If in the case of any
Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the third
Business 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 certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return
the certificates representing the principal amount of Debentures
tendered for conversion.
iv. Obligation Absolute; Partial Liquidated Damages. If the
Company fails for any reason to deliver to the Holder such
certificate or certificates pursuant to Section 4(d)(ii) by the
fifth Business Day after the Conversion Date, the Company shall pay
to such Holder, in cash, as liquidated damages and not as a penalty,
for each $1000 of principal amount being converted, $10 per Business
Day (increasing to $20 per Business Day after 5 Business Days after
such damages begin to accrue) for each Business Day after such fifth
Business Day until such certificates are delivered. The Company's
obligations to issue and deliver the Conversion Shares upon
conversion of this Debenture in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by the Holder or any other person, and irrespective of any other
circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, such delivery shall not
operate as a waiver by the Company of any such action the Company
may have against the Holder. In the event a Holder of this Debenture
shall elect to convert any or all of the outstanding principal
amount hereof, the Company may not refuse conversion based on any
claim that the Holder or any one associated or affiliated with the
Holder has been engaged in any violation of law, agreement or for
any other reason, unless, an injunction from a court, on notice,
restraining and or enjoining conversion of all or part of this
Debenture shall have been sought and obtained and the Company posts
a surety bond for the benefit of the Holder in the amount of 150% of
the principal amount of this Debenture outstanding, which is subject
to the injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of an injunction precluding the same, the
Company shall issue Conversion Shares or, if applicable, cash, upon
a properly noticed conversion. Nothing herein shall limit a Xxxxxx's
right to pursue actual damages or declare an Event of Default
pursuant to Section 8 herein for the Company's failure to deliver
Conversion Shares 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 Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.
8
v. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Conversion. In addition to any other rights
available to the Holder and only if after the Original Issue Date
the Company becomes subject to the reporting requirements of the
Exchange Act, if the Company fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section 4(d)(ii)
by the third Business Day after the Conversion Date, and if after
such third Business Day the Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise) Common
Stock to deliver in satisfaction of a sale by such Holder of the
Conversion 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 actual sale price of
the Common Stock at the time of the sale (including brokerage
commissions, if any) 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(d)(ii). 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 actual sale price of the
Conversion Shares at the time of the sale (including brokerage
commissions, if any) giving rise to such purchase obligation 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
required to pay such Holder liquidated damages under Section
4(d)(iv) in respect of the certificates resulting in such Buy-In.
9
vi. Reservation of Shares Issuable Upon Conversion. 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, as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other than the
Holder (and the other Holders of the Debentures), 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) be issuable (taking into
account the adjustments and restrictions of Section 5) upon the
conversion of the outstanding principal amount of the Debentures.
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 Registration
Statement is then effective under the Securities Act, registered for
public sale in accordance with such Registration Statement.
vii. Fractional Shares. 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 VWAP 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.
viii. Transfer Taxes. The issuance of certificates for shares
of the Common Stock on conversion of this Debenture shall be made
without charge to the Holder hereof 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.
Section 5. Certain Adjustments.
a) Stock Dividends And Stock Splits. If the Company, at any time
while this Debenture is outstanding: (A) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include
any shares of Common Stock issued by the Company pursuant to this
Debenture, including as interest thereon), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (D) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately 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.
10
b) Subsequent Equity Sales. Except for an Exempt Issuance, if the
Company or any Subsidiary thereof, as applicable, at any time while this
Debenture is outstanding, shall sell, grant any option to purchase or
offer, sell or grant any right to reprice its securities, or otherwise
dispose of or issue any Common Stock or Common Stock Equivalents entitling
any Person to acquire shares of Common Stock, at an effective price per
share less than the then Conversion Price (such lower price, the "BASE
CONVERSION PRICE" and such issuances collectively, a "DILUTIVE ISSUANCE"),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents 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 an effective price per share which is
less than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base
Conversion Price. Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued. Notwithstanding the foregoing, no
adjustment will be made under this Section 5(b) in respect of an Exempt
Issuance. The Company shall notify the Holder in writing, no later than
the Business Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms (such notice the "DILUTIVE
ISSUANCE NOTICE"). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 5(b),
upon the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Holder is entitled to receive a number of Conversion
Shares based upon the Base Conversion Price regardless of whether the
Holder accurately refers to the Base Conversion Price in the Notice of
Conversion.
c) Pro Rata Distributions. If the Company, at any time while this
Debenture is outstanding, shall distribute to all holders of Common Stock
(and not to the holders of the Debenture) evidences of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security, then in each such case the
Conversion Price shall be adjusted by multiplying such 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 VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by
the Board of Directors in good faith. In either case the adjustments shall
be described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
11
d) Fundamental Transaction. If, at any time while this Debenture is
outstanding, (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, (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, or (D) the Company effects 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 (in any such case, a
"FUNDAMENTAL TRANSACTION"), then upon any subsequent conversion of this
Debenture, the Holder shall have the right to receive, for each Conversion
Share that would have been issuable upon such conversion immediately prior
to the occurrence of such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had
been, immediately prior to such Fundamental Transaction, the holder of one
share of Common Stock (the "ALTERNATE CONSIDERATION"). For purposes of any
such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration based on
the amount of Alternate Consideration issuable in respect of one share of
Common Stock in such Fundamental Transaction, and the Company shall
apportion the Conversion Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any conversion of this
Debenture following such Fundamental Transaction. To the extent necessary
to effectuate he foregoing provisions, any successor to the Company or
surviving entity in such 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 amounts and the interest rates of the
Debentures held by the Holder and having similar ranking to the 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 on the conversion or redemption of this
Debenture.
12
e) Calculations. All calculations under this Section 5 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.
f) Notice To The Holder.
i. Adjustment To Conversion Price. Whenever the
Conversion Price is adjusted pursuant to any of this Section
5, the Company shall promptly mail to each Holder a notice
setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment. If the Company issues a variable rate security,
despite the prohibition thereon in the Purchase Agreement, the
Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or
exercise price at which such securities may be converted or
exercised in the case of a Variable Rate Transaction (as
defined in the Purchase Agreement).
ii. Notice To Allow Conversion By Holder. 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 this Debenture, and shall cause to be mailed to
the Holder at its last addresses as it shall appear upon the
stock books of the Company, at least 10 calendar days prior to
the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption,
13
rights or warrants, or if a record is not to be taken, the
date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of
the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange;
PROVIDED, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in
such notice. The Holder is entitled to convert this Debenture
during the 10-day period commencing the date of such notice to
the effective date of the event triggering such notice.
Section 6. Optional and Mandatory Redemption.
a) Optional Redemption at Election of Company. Subject to the
provisions of this Section 6, at any time after the Closing Date and until
one year after the Closing Date, the Company may deliver a notice to the
Holders (an "Optional Redemption Notice" and the date such notice is
deemed delivered hereunder, the "Optional Redemption Notice Date") of its
irrevocable election to redeem some or all of the then outstanding
Debentures, for an amount, in cash, equal to the Optional Redemption
Amount on the 30th calendar day following the Optional Redemption Notice
Date (such date, the "Optional Redemption Date" and such redemption, the
"Optional Redemption"). The Optional Redemption Amount is due in full on
the Optional Redemption Date. The Company may only effect an Optional
Redemption if during the period commencing on the Optional Redemption
Notice Date through to the Optional Redemption Date and through and
including the date such shares of Common Stock are issued to the Holder,
each of the Equity Conditions shall have been met. If any of the Equity
Conditions shall cease to be satisfied at any time during the required
period, then the Holder may elect to nullify the Optional Redemption
Notice by notice to the Company within 3 calendar days after the first day
on which any such Equity Condition has not been met (provided that if, by
a provision of the Transaction Documents the Company is obligated to
notify the Holder of the non-existence of an Equity Condition, such notice
period shall be extended to the third calendar day after proper notice
from the Company) in which case the Optional Redemption Notice shall be
null and void, ab initio. The Company covenants and agrees that it will
honor all Notice of Conversions tendered from the time of delivery of the
Optional Redemption Notice through the date all amounts owing thereon are
due and paid in full.
14
b) Redemption Procedure. The payment of cash pursuant to an Optional
Redemption shall be made on the Optional Redemption Date. If any portion
of the cash payment for an Optional Redemption shall not be paid by the
Company by the 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 Optional Redemption Amount plus all amounts
owing thereon is paid in full. Alternatively, if any portion of the
Optional Redemption Amount remains unpaid after such date, the Holders
subject to such redemption may elect, by written notice to the Company
given at any time thereafter, to invalidate ab initio all or part of such
redemption, notwithstanding anything herein contained to the contrary,
and, with respect the failure to honor the Optional Redemption the Company
shall have no further right to exercise such Optional Redemption.
Notwithstanding anything to the contrary in this Section 6, the Company's
determination to redeem in cash or its elections under Section 6(b) shall
be applied among the Holders of Debentures ratably. The Holder may elect
to convert the outstanding principal amount of the Debenture pursuant to
Section 4 prior to actual payment in cash for any redemption under this
Section 6 by fax delivery of a Notice of Conversion to the Company.
c) Mandatory Conversion. Provided the Equity Conditions have been
continuously satisfied, then commencing after the date the Registration
Statement has been declared effective ("Actual Effective Date"), the
Company will have the option by written notice to the Holder ("Notice of
Mandatory Conversion") of compelling the Holder to convert the outstanding
and unpaid principal of this Debenture into Common Stock at the Conversion
Price then in affect ("Mandatory Conversion"). The Notice of Mandatory
Conversion must be given, if at all, on the first business day following a
consecutive ten day trading period ("Lookback Period") during which the
closing price of the Common Stock on a Trading Market is more than 150% of
the Conversion Price each day during the Lookback Period. The date the
Notice of Mandatory Conversion is given is the "Mandatory Conversion
Date." The Notice of Mandatory Conversion shall specify the aggregate
principal amount of the Debenture which is subject to Mandatory
Conversion. Mandatory Conversion Notices must be given proportionately to
all Holders of Debentures who received Debentures similar in terms and
tenure as this Debenture. A Notice of Mandatory Conversion may not be
given unless the Registration Statement has been effective for the
unrestricted public resale of the Registrable Securities each day during
the Lookback Period. The amount of Debenture principal included in a
Mandatory Redemption Notice shall be reduced to an amount that would not
cause the Holder to exceed the limitation described in Section 4(c) of
this Debenture. A further Mandatory Conversion Notice may not be given
until thirty (30) trading days have elapsed from the preceding Mandatory
Conversion Date. Each Mandatory Conversion Date shall be a deemed
Conversion Date and the Company will be required to deliver the Common
Stock issuable pursuant to a Mandatory Conversion Notice in the same
manner and time period as described in this Debenture.
Section 7. Negative Covenants. Without the consent of Holders of sixty
percent (60%) of the outstanding Debentures, for 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:
15
a) enter into, create, incur, assume, guarantee or suffer to exist
any indebtedness for borrowed money of any kind, including but not limited
to, a guarantee, 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 to, or pari passu with, in any respect,
the Company's obligations hereunder;
b) enter into, create, incur, assume or suffer to exist any liens 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, other than Permitted Liens;
c) amend its certificate of incorporation, bylaws or other charter
documents so as to 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 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.
Section 8. 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 Conversion Date or
the Maturity Date or by acceleration or otherwise) which default,
solely in the case of an interest payment or other default under
clause (B) above, is not cured, within 5 Business Days;
ii. the Company shall fail to observe or perform any other
covenant or agreement contained in this Debenture (other than a
breach by the Company of its obligations to deliver shares of Common
Stock to the Holder upon conversion which breach is addressed in
clause (viii) below) which failure is not cured, if possible to
cure, within the earlier to occur of (A) 5 Business 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;
16
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
other than the Debentures, or (B) any other material agreement,
lease, document or instrument to which the Company or any Subsidiary
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. (A) 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 or any Subsidiary 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 (B) there is commenced against
the Company or any Subsidiary thereof any such bankruptcy,
insolvency or other proceeding which remains undismissed for a
period of 45 days; or (C) the Company or any Subsidiary thereof 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 (D) 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 45 days; or (E) the Company or any
Subsidiary thereof makes a general assignment for the benefit of
creditors; or (F) 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 except for debts contested in good faith; or (G)
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 (H) 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
(I) any corporate or other action is taken by the Company or any
Subsidiary thereof for the purpose of effecting any of the
foregoing;
vi. the Company or any Subsidiary 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 $100,000, whether such indebtedness now exists or
shall hereafter be created and such default shall result in such
indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable;
17
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 45% 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 redemptions of
Conversion Shares and 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); or
viii. the Company shall fail for any reason to deliver
certificates to a Holder prior to the 7th Business Day after a
Conversion Date pursuant to and in accordance with Section 4(d) 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.
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 Prepayment 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
15% per annum, or such lower maximum amount of interest permitted to be
charged under applicable law. All Debentures for which the full Mandatory
Prepayment Amount 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.
18
Section 9. 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 or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above,
facsimile number (000) 000-0000, attention Xxxxxx Xxxxx, 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. 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 6:00
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 6:00 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 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) 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.
d) 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
19
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
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.
e) 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.
f) 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.
g) 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.
h) 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.
*********************
20
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.
CYBRA CORPORATION
By:__________________________________________
Name: Xxxxxx Xxxxx
Title:
21
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 8%
Convertible Debenture of CYBRA Corporation, a New York corporation (the
"Company"), due on March ___, 2009, into shares of common stock, no par value
per share (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.
By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts determined in accordance with Section 13(d) of the Exchange
Act, specified under Section 4 of this Debenture.
The undersigned agrees to comply with the prospectus delivery requirements
under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debentures to be Converted:
Payment of Interest in Common Stock __ yes __ no
If yes, $___ of Interest Accrued on Account of Conversion
at Issue.
Number of shares of Common Stock to be issued:
Signature:
Name:
Address:
22
Schedule 1
CONVERSION SCHEDULE
The 8% Convertible Debentures due on March ___, 2009, in the aggregate principal
amount of $________ issued by CYBRA Corporation, a New York corporation. This
Conversion Schedule reflects conversions made under Section 4 of the above
referenced Debenture.
Dated:
====================== ====================== ===================== ===============
Aggregate Principal
Amount Remaining
Subsequent to
Date of Conversion Conversion
(or for first entry, (or original
Original Issue Date) Amount of Conversion Principal Amount) Company Attest
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
---------------------- ---------------------- --------------------- ---------------
====================== ====================== ===================== ===============
23
