EXHIBIT 4.2
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THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE ACTS"), AND SHALL
NOT BE SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED, UNLESS SUCH TRANSFER IS
MADE IN COMPLIANCE WITH THE ACT AND THE STATE ACTS.
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DIGITAL LEARNING INSTITUTE, INC.
7.00% CONVERTIBLE DEBENTURE
$1,000,000 NO. 2
DATE OF ISSUE: FEBRUARY 27, 2004
DIGITAL LEARNING INSTITUTE, INC., a Delaware corporation (the "Borrower"),
for value received, promises to pay to:
THE FROST NATIONAL BANK, CUSTODIAN FBO
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
TRUST NO. W00740000
or to its order, (together with any assignee, jointly or severally, the "Holder"
or "Lender") on or before February 27, 2011 (the "Due Date") (unless this
Debenture shall have been sooner called for redemption or presented for
conversion as herein provided), the sum of One Million Dollars ($1,000,000) (the
"Principal Amount") and to pay interest on the unpaid Principal Amount at the
rate of 7.00% per annum. All payments of both principal and interest shall be
made at the address of the Holder hereof as it appears in the books and records
of the Borrower, or at such other place as may be designated by the Holder
hereof. Borrower shall, at all times during which this Debenture is outstanding,
be a wholly owned subsidiary of XxxxXXXXxxxx.Xxx, Inc., a Nevada corporation
(the "Company"), to be renamed Digital Learning Management Corporation.
1. Interest. Interest on the Principal Amount outstanding from time to
time shall be payable in monthly installments commencing April 1, 2004, and
subsequent payments shall be made on the first day of each month thereafter
until the Principal Amount and all accrued and unpaid interest shall have been
paid in full. Overdue principal and interest on the Debenture shall bear
interest at the maximum rate permitted by applicable law.
2. Maturity. If not sooner paid, redeemed or converted, this Debenture
shall mature on February 27, 2011 at which time the remaining unpaid Principal
Amount, and all accrued and unpaid interest and any other charges then due under
the Convertible Loan Agreement, shall be due and payable in full. This Debenture
shall be prepaid pro rata with any prepayments of Indebtedness other than Senior
Obligations. This Debenture shall be senior in right of payment to all other
Indebtedness of the Company, except the Senior Obligations approved by Lender.
3. Mandatory Principal Installments. If this Debenture is not sooner
redeemed or converted as provided hereunder, Borrower shall pay to Holder,
commencing on February 27, 2007 and continuing on the first day of each
successive month thereafter prior to maturity, mandatory principal redemption
installments, each of such installments to be in the amount of Ten Dollars ($10)
per One Thousand Dollars ($1,000) of the then remaining Principal Amount, and
further, at maturity, Borrower shall pay to Holder a final installment of the
remaining unpaid Principal Amount and all accrued and unpaid interest on this
Debenture and any other charges then due under this Debenture or the Convertible
Loan Agreement.
4. Optional Redemption by Holder.
(a) If at any time after the date hereof (i) the Company's Common
Stock, par value $0.01 per share ("Common Stock"), is not listed on the New York
Stock Exchange ("NYSE") or the American Stock Exchange ("AMEX"), or quoted on
the NASDAQ National Market System ("National Market") or the NASDAQ SmallCap
System ("SmallCap") or the Over-the-Counter Bulletin Board ("OTCBB"), (ii) there
is a change of control of the Company's voting securities, without the written
consent of the Holder, (iii) there is a change of at least one-half (1/2) of the
members of the Company's Board of Directors as it exists on the date hereof,
without the written consent of the Holder, or (iv) the Company is merged or
consolidated with or into any other entity, without the written consent of
Holder, the Holder shall have the right to require this Debenture to be redeemed
by the Company at the sum equal to the Principal Amount then outstanding,
together with an amount equal to an 18% annual yield on the Principal Amount
through the date of redemption (the "Redemption Date").
(b) The Holder may exercise its right to require that the Company
redeem this Debenture pursuant to Section 4(a) prior to maturity by giving
notice thereof to the Company, which notice shall specify the terms of
redemption (including the place at which the Holder may obtain payment), the
total redemption payment and the Redemption Date, which date shall not be less
than 30 days nor more than 90 days after the date of the notice.
5. Optional Redemption by Company.
(a) On any interest payment date, and after receipt of irrevocable
notice from the Company as provided for below, this Debenture is redeemable, in
whole but not in part, at 101% of the Principal Amount then outstanding,
together with accrued and unpaid interest through the Redemption Date, by the
Company, if all of the following conditions are satisfied: (i) the average
closing bid price for the Common Stock for the twenty (20) consecutive trading
days prior to the date of notice exceeds an amount equal to three (3) times the
Conversion Price then in effect, and the Common Stock is listed or quoted on the
National Market, the SmallCap, AMEX, OTCBB or NYSE; (ii) the average daily
trading volume for the twenty (20) consecutive trading days prior to the date of
the irrevocable notice shall be no less than fifty thousand (50,000) shares;
(iii) the market price for the Common Stock at the time of notice reflects a
price-to-earnings ratio of no greater than thirty (30) times fully diluted
earnings per share, excluding any extraordinary gains and any non-cash charges
relating to the issuance of the Loan and warrants; and (iv) the shares of Common
Stock issuable upon conversion of this Debenture shall have been fully
registered under applicable securities laws. The Company's right of redemption
is subject to the Holder's prior right of conversion of the Debenture. The
Company may exercise its right to redeem this Debenture pursuant to Section 5(a)
prior to maturity by giving notice thereof to the Holder of this Debenture as
such name appears on the books of the Borrower, which notice shall specify the
terms of redemption (including the place at which the Holder may obtain
payment), the total redemption payment and the Redemption Date, which date shall
not be less than 30 days nor more than 90 days after the date of the notice.
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(b) In the event of a one time adjustment to the trading price
described in Section 7 hereof, the Holder shall not be entitled to convert this
Debenture for a period of 10 days thereafter (the "10-day period"). During the
10-day period, the Company shall have the right to redeem this Debenture in
whole but not in part at a sum equal to the principal amount then outstanding,
together with an amount equal to an 18% annual yield on the principal amount
through the Redemption Date. Such redemption shall be conditional on the
delivery of a notice of redemption set forth in Section 5(b) delivered to the
Holders within the 10-day period. The Company may exercise its right to redeem
the Debenture pursuant to Section 5(b) by giving notice thereof within the
10-day period as such name appears on the books of Borrower, which notice shall
specify the terms of the redemption (including the place at which the Holder may
obtain payment), the total redemption payment and the redemption date, which
date shall not be less than 30 days nor more than 90 days after the date of the
notice. The failure of the Company to redeem the Debenture after giving notice
thereof pursuant to Section 5(b) hereof shall constitute an Event of Default
under the Loan Agreement, without affecting the application of the provisions of
Section 7 hereof.
6. Conversion Right. The Holder of this Debenture shall have the right, at
Holder's option, at any time, to convert all, or, any part of this Debenture
into such number of fully paid and nonassessable shares of Common Stock as
provided herein. The Holder of this Debenture may exercise the conversion right
by giving written notice (the "Conversion Notice") to the Company of the
exercise of such right and stating the name or names in which the stock
certificate or stock certificates for the shares of Common Stock are to be
issued and the address to which such certificates shall be delivered. The
Conversion Notice shall be accompanied by the Debenture. The number of shares of
Common Stock that shall be issuable upon conversion of the Debenture shall equal
the outstanding Principal Amount of the Debenture divided by the Conversion
Price (as defined below) and in effect on the date the Conversion Notice is
given; provided, however, that in the event that this Debenture shall have been
partially redeemed, shares of Common Stock shall be issued pro rata, rounded to
the nearest whole share. Conversion shall be deemed to have been effected on the
date the Conversion Notice is received (the "Conversion Date"). In the case of
any Debenture called for redemption, the conversion rights will expire at the
close of business on the Redemption Date. Within twenty (20) business days after
receipt of the Conversion Notice, the Company shall issue and deliver by hand
against a signed receipt therefor or by United States registered mail, return
receipt requested, to the address designated in the Conversion Notice, a stock
certificate or stock certificates of the Company representing the number of
shares of Common Stock to which Holder is entitled and a check or cash in
payment of all interest accrued and unpaid on the Debenture up to and including
the Conversion Date. The conversion rights will be governed by the following
provisions:
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(a) Conversion Price. The initial Conversion Price shall be $3.523,
entitling the Holder to 283,842 shares of Common Stock, and shall become
$0.4478, entitling the Holder to 2,233,278 shares on a post-split basis when a
7.86802:1 split of the Common Stock is effected in March 2004, which number of
shares shall equal 8.334% of the Company's Common Stock as of the date hereof
and as of the date the Common Stock split is effected, assuming full conversion
of the Debenture. The Conversion Price is subject to subsequent adjustment, as
provided herein.
(b) Adjustment for Issuance of Shares at Less Than the Conversion
Price. If and whenever any Additional Common Stock shall be issued by the
Company (the "Stock Issue Date") for a consideration per share less than the
Conversion Price, then in each such case the initial Conversion Price shall be
reduced to a new Conversion Price in an amount equal to the price per share for
the Additional Common Stock then issued, if issued in connection with a sale of
shares, or the value of the Additional Common Stock then issued, as determined
in accordance with generally accepted accounting principles, if issued other
than for cash, and the number of shares issuable to Holder upon conversion shall
be proportionately increased; and, in the case of Additional Common Stock issued
without consideration, the initial Conversion Price shall be reduced in amount
and the number of shares issued upon conversion shall be increased in an amount
so as to maintain for the Holder the right to convert the Debenture into shares
equal in amount to the same percentage interest in the Common Stock of the
Company as existed for the Holder immediately preceding the Stock Issue Date.
(c) Sale of Shares. In case of the issuance of Additional Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the gross amount of the cash
paid to the Company for such shares, before deducting any underwriting
compensation or discount in the sale, underwriting or purchase thereof by
underwriters or dealers or others performing similar services or for any
expenses incurred in connection therewith. In case of the issuance of any shares
of Additional Common Stock for a consideration part or all of which shall be
other than cash, the amount of the consideration therefor, other than cash,
shall be deemed to be the then fair market value of the property received.
(d) Stock Splits, Subdivisions or Combinations. When a 7.86802:1
split of the Common Stock is effected in March 2004, the Conversion Price and
number of shares of Common Stock then issuable upon conversion shall be as set
forth in paragraph 6(a) above. In the event of a subsequent stock split or
subdivision of shares of Common Stock into a greater number of shares, the
Conversion Price shall be proportionately decreased, and in the event of a
combination of shares of Common Stock into a smaller number of shares, the
Conversion Price shall be proportionately increased, such increase or decrease,
as the case may be, becoming effective at the record date.
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(e) Stock Dividends. Shares of Common Stock issued as a dividend or
other distribution on any class of capital stock of the Company shall be deemed
to have been issued without consideration.
(f) Exceptions. The term "Additional Common Stock" herein shall mean
all shares of Common Stock or securities convertible or exercisable into shares
of Common Stock hereafter issued by the Company (including Common Stock held in
the treasury of the Company), except (A) Common Stock issued upon the conversion
of any of the Debentures; (B) Common Stock issuable upon exercise of presently
outstanding warrants or stock options; or (C) up to 700,000 shares of Common
Stock, issuable upon exercise of employee stock options to be granted in the
future at less than the initial Conversion Price.
(g) Adjustment for Mergers and Consolidations. In the event of any
consolidation or merger of the Company with or into, or the sale of all or
substantially all of the properties and assets of the Company, to any person,
and in connection therewith, consideration is payable to holders of Common Stock
in cash, securities or other property, then as a condition of such
consolidation, merger or sale, lawful provision shall be made, and duly executed
documents evidencing the same shall be delivered to the Holder, so that the
Holder shall have the right at any time prior to the maturity of this Debenture
to purchase, at a total price equal to the Conversion Price immediately prior to
such event, the kind and amount of cash, securities or other property receivable
in connection with such consolidation, merger or sale, by a holder of the same
number of shares of Common Stock as were convertible by the Holder immediately
prior to such consolidation, merger or sale. In any such case, appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
cash, securities or property deliverable upon exercise hereof. Notwithstanding
the foregoing, (i) if the Company merges or consolidates with, or sells all or
substantially all of its property and assets to, any other person, and
consideration is payable to holders of Common Stock in exchange for their Common
Stock in connection with such merger, consolidation or sale which consists
solely of cash, or (ii) in the event of the dissolution, liquidation or winding
up of the Company, then the Holder shall be entitled to receive distributions on
the date of such event on the same basis with holders of Common Stock as if this
Debenture had been converted immediately prior to such event, less the
Conversion Price. Upon receipt of such payment, if any, the rights of the Holder
shall terminate and cease and this Debenture shall expire. In case of any such
merger, consolidation or sale of assets, the surviving or acquiring person and,
in the event of any dissolution, liquidation or winding up of the Company, the
Company shall promptly, after receipt of this surrendered Debenture, make
payment by delivering a check in such amount as is appropriate (or, in the case
of consideration other than cash, such other consideration as is appropriate) to
such person as it may be directed in writing by the Holder surrendering this
Debenture.
(h) Distributions. In the event of distribution to all Common Stock
holders of any securities, cash or properties or assets or other rights to
purchase securities or assets, then, after such event, this debenture will also
be convertible into the kind and amount of securities, cash and other property
which the Holder would have been entitled to receive if the Holder owned the
Common Stock issuable upon conversion of the Debenture immediately prior to the
occurrence of such event.
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(i) Capital Reorganization and Reclassification. In case of any
capital reorganization or reclassification of the Common Stock of the Company
(other than a change in par value or as a result of a stock dividend,
subdivision, split up or combination of shares), this Debenture shall be
convertible into the kind and number of shares of stock or other securities or
property of the Company to which the Holder of the Debenture would have been
entitled to receive if the Holder owned the Common Stock issuable upon
conversion of the Debenture immediately prior to the occurrence of such event.
The provisions of the immediately foregoing sentence shall similarly apply to
successive reorganizations, reclassifications, consolidations, exchanges,
leases, transfers or other dispositions or other share exchanges.
(j) Notice. In the event the Company shall propose to take any
action which shall result in an adjustment in the Conversion Price, the Company
shall give notice to the Holder of this Debenture, which notice shall specify
the record date, if any, with respect to such action and the date on which such
action is to take place. Such notice shall be given on or before the earlier of
10 days before the record date or the date on which such action shall be taken.
Such notice shall also set forth all facts (to the extent known) material to the
effect of such action on the Conversion Price and the number, kind or class of
shares or other securities or property which shall be deliverable or purchasable
upon the occurrence of such action or deliverable upon conversion of this
Debenture.
(k) Certificate. Following completion of an event which results in
an adjustment to the Conversion Price, the Company shall furnish to the Holder
of this Debenture a statement, signed by the Chief Executive Officer and the
Secretary of the Company, of the facts creating such adjustment and specifying
the resultant adjusted Conversion Price then in effect, which statement shall
constitute an amendment to this Debenture.
7. One-Time Adjustment to Conversion Price. Notwithstanding the provisions
of Section 6 hereof, if the volume-weighted average closing bid price of the
Common Stock, as reported in The Wall Street Journal, for the 10 consecutive
trading days (the "Trading Period") following the Company's public press release
of its fiscal 2004 financial results (such volume-weighted average closing bid
price herein referred to as the "One-Time Adjusted Conversion Price") is a price
less than the initial Conversion Price and if the Company does not achieve
fiscal 2004 net income of $675,000, excluding extraordinary gains and losses and
any non-cash charges relating to the issuance of the Loan and warrants, then the
Conversion Price shall be automatically adjusted downward to an amount equal to
100% of the One-Time Adjusted Conversion Price. If an adjustment occurs pursuant
to this Section 7, then the Company shall furnish to the holder of this
Debenture a statement, within ten days of the occurrence thereof, signed by the
Chief Financial Officer and the Secretary of the Company, of the facts creating
such adjustment and specifying the resulting One-Time Adjusted Conversion Price
then in effect. The Holder shall not convert this Debenture or sell any shares
of Common Stock during the Trading Period or the ten consecutive trading days
prior to such period.
8. Reservation of Shares. Borrower warrants and agrees that it shall at
all times reserve and keep available, free from preemptive rights, sufficient
authorized and unissued shares of Common Stock or treasury shares of Common
Stock necessary to effect conversion of this Debenture.
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9. Taxes. The Company shall pay any documentary or other transactional
taxes attributable to the issuance or delivery of this Debenture or the shares
of Common Stock issued upon conversion by the Holder (excluding any federal,
state or local income taxes and any franchise taxes or taxes imposed upon the
Holder by the jurisdiction, or any political subdivision thereof, under which
such Holder is organized or is qualified to do business).
10. Default.
(a) Event of Default. An "Event of Default" shall exist if an "Event
of Default" (as defined in that certain Convertible Loan Agreement, dated
February 27, 2004, among Borrower, the Company, Lender and XXXX Capital Group,
Inc., a Texas corporation, as agent for the Lender (the "Agent")) shall occur
and be continuing.
(b) Remedies Upon Event of Default. If an Event of Default shall
have occurred and be continuing, then the Holder may exercise any one or more of
the rights and remedies provided in the Loan Documents, as the Holder, in its
sole discretion, may deem necessary or appropriate.
(c) Remedies Nonexclusive. Each right, power or remedy of the Holder
hereof upon the occurrence of any Event of Default as provided for in this
Debenture or now or hereafter existing at law or in equity or by statute shall
be cumulative and concurrent and shall be in addition to every other right,
power or remedy provided for in this Debenture or now or hereafter existing at
law or in equity or by statute, and the exercise or beginning of the exercise by
the Holder or transferee hereof of any one or more of such rights, powers or
remedies shall not preclude the simultaneous or later exercise by the Holder of
any or all such other rights, powers or remedies.
(d) Expenses. Upon the occurrence of a Default or an Event of
Default, which occurrence is not cured within the notice provisions, if any
provided therefore, Borrower and Company agree to pay and shall pay all costs
and expenses (including attorneys' fees and expenses) incurred by the Holder in
connection with the preservation and enforcement of Holder's rights under the
Convertible Loan Agreement, the Debenture, or any other Loan Document.
11. Failure to Act and Waiver. No failure or delay by the Holder hereof to
require the performance of any term or terms of this Debenture or not to
exercise any right or any remedy shall constitute a waiver of any such term or
of any right or of any default, nor shall such delay or failure preclude the
Holder hereof from exercising any such right, power or remedy at any later time
or times. By accepting payment after the due date of any amount payable under
this Debenture, the Holder hereof shall not be deemed to waive the right either
to require payment when due of all other amounts payable, or to later declare a
default for failure to effect such payment of any such other amount. The failure
of the Holder of this Debenture to give notice of any failure or breach of the
Borrower under this Debenture shall not constitute a waiver of any right or
remedy in respect of such continuing failure or breach or any subsequent failure
or breach.
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12. Consent to Jurisdiction. The Borrower and the Company hereby agree and
consent that any action, suit or proceeding arising out of this Debenture shall
be brought exclusively in any state or federal court in Dallas County, Texas,
including the United States District Court for the Northern District of Texas,
and by the issuance and execution of this Debenture, the Borrower and the
Company irrevocably consent to the exclusive jurisdiction and venue of each such
court. The Company hereby irrevocably appoints CT Corporation System, Dallas,
Texas, as agent for the Borrower to accept service of process for and on behalf
of the Borrower or the Company in any action, suit or proceeding arising out of
this Debenture.
13. Holder's Right to Request Multiple Debentures. The Holder shall, upon
written request and presentation of the Debenture, have the right, at any
interest payment date, to request division of this Debenture into multiple
instruments, each of such to be in such amounts as shall be requested.
14. Transfer. Subject to Section 12.07 of the Convertible Loan Agreement,
this Debenture may be transferred on the books of the Borrower by the registered
Holder hereof, or by Holder's attorney duly authorized in writing, only upon (i)
delivery to the Borrower of a duly executed assignment of the Debenture, or part
thereof, to the proposed new Holder, along with a current notation of the amount
of payments received and net Principal Amount yet unfunded, and presentment of
such Debenture to the Borrower for issue of a replacement Debenture, or
Debentures, in the name of the new Holder, (ii) the designation by the new
Holder of the Lender's agent for notice, such agent to be the sole party to whom
Borrower shall be required to provide notice when notice to Holder is required
hereunder and who shall be the sole party authorized to represent Lender in
regard to modification or waivers under the Debenture, the Convertible Loan
Agreement, or other Loan Documents; and any action, consent or waiver (other
than a compromise of principal and interest) when given or taken by Lender's
agent for notice, shall be deemed to be the action of the holders of a majority
in amount of the Principal Amount of the Debenture, as such holders are recorded
on the books of the Borrower, and (iii) in compliance with the legend to read as
follows:
"This Debenture has not been registered under the Securities Act of 1933,
as amended ("Act"), or applicable state securities laws ("State Acts"),
and shall not be sold, hypothecated, or otherwise transferred, unless such
transfer is made in compliance with the Act and the State Acts."
The Company shall be entitled to treat any holder of record of the
Debenture as the Holder in fact thereof and of the Debenture and shall not be
bound to recognize any equitable or other claim to or interest in this Debenture
in the name of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by applicable law.
15. Notices. All notices and communications under this Debenture shall be
in writing and shall be either delivered in person or by overnight service, such
as FedEx, and accompanied by a signed receipt therefor; or mailed first-class
United States certified mail, return receipt requested, postage prepaid, and
addressed as follows: (i) if to the Borrower or the Company at their address for
notice as stated in the Convertible Loan Agreement; and (ii) if to the Holder of
this Debenture, to the address (a) of such Holder as it appears on the books of
the Borrower or (b) in the case of a partial assignment to one or more Holders,
to the Lender's agent for notice, as the case may be. Any notice of
communication shall be deemed given and received as of the date of such delivery
if delivered; or if mailed, then three days after the date of mailing.
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16. Convertible Loan Agreement and Security Agreement. This Debenture is
issued pursuant to the Convertible Loan Agreement, and the Holder is entitled to
all the rights and benefits thereunder. Both Borrower and the Holder have
participated in the negotiation and preparation of the Convertible Loan
Agreement and of this Debenture. Borrower agrees that a copy of the Convertible
Loan Agreement with all amendments, additions and substitutions therefor shall
be available to the Holder at the offices of Borrower. The indebtedness
evidenced by this Debenture is secured pursuant to the Security Agreement dated
of even date herewith among the Company and the Holder, and the Holder is
entitled to all rights and benefits of a secured party thereunder.
17. Maximum Interest Rate.
(a) Regardless of any provision contained in this Debenture, Lender
shall never be entitled to receive, collect or apply as interest on the
Debenture any amount in excess of interest calculated at the Maximum Rate, and,
in the event that Lender ever receives, collects or applies as interest any such
excess, the amount which would be excessive interest shall be deemed to be a
partial prepayment of principal and treated hereunder as such; and, if the
principal amount of the Debenture is paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable under any specific contingency exceeds interest calculated at the
Maximum Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, pro rate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
the Debenture; provided that, if the Debenture is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds interest calculated
at the Maximum Rate, Lender shall refund to Borrower the amount of such excess
or credit the amount of such excess against the principal amount of the
Debenture and, in such event, Lender shall not be subject to any penalties
provided by any laws for contracting for, charging, taking, reserving or
receiving interest in excess of interest calculated at the Maximum Rate.
(b) "Maximum Rate" shall mean, on any day, the highest nonusurious
rate of interest (if any) permitted by applicable law on such day that, at any
time or from time to time, may be contracted for, taken, reserved, charged or
received on the Indebtedness evidenced by the Debenture under the laws which are
presently in effect of the United States of America or by the laws of any other
jurisdiction which are or may be applicable to the Holders of the Debenture and
such Indebtedness or, to the extent permitted by law, under such applicable laws
of the United States of America or by the laws of any other jurisdiction which
are or may be applicable to the Holder of the Debenture and which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
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18. Defined Terms. Capitalized terms used but not defined herein shall
have the meaning given them in the Convertible Loan Agreement.
19. Governing Law. This Debenture shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Texas, without
regard to the conflicts of laws provisions thereof, and the applicable laws of
the United States.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
issued, executed and delivered on the date and year above stated.
DIGITAL LEARNING INSTITUTE, INC.
By:
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Name:
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Title:
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