Contract
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND IS BEING
OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF
THE SECURITIES ACT AND SUCH LAWS. THIS SECURITY MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS.
7
¼ % CONVERTIBLE DEBENTURE
Company:
Platina Energy Group, Inc.
Company
Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000-X, Xxxxxxxx, Xxxxxxx,
00000
Closing
Date: August 30, 2007
Maturity
Date: August 30, 2010
Principal
Amount: $300,000
Platina
Energy Group, Inc., a Delaware corporation, and any successor or resulting
corporation by way of merger, consolidation, sale or exchange of all or
substantially all of the assets or otherwise (the “Company”),
for value received, hereby promises to pay to the Holder (as such term is
hereinafter defined), or such other Person (as such term is hereinafter defined)
upon order of the Holder, on the Maturity Date, the Principal Amount (as
such
term is hereinafter defined), as such sum may be adjusted pursuant to Article
3,
and to pay interest thereon from the Closing Date, upon each Conversion Date,
at
the rate of seven percent and one-quarter (7 ¼ %) per annum (the
“Debenture Interest Rate”). All interest payable on the
Principal Amount of this Debenture shall be calculated on the basis of a
360-day
year for the actual number of days elapsed. Payment of interest on
this Debenture shall be in cash or, at the option of the Holder, in shares
of
Common Stock of the Company valued at the then applicable Conversion Price
(as
defined herein). Except as set forth in Section 2.5 or Section 3.1(b) of
this
Debenture, this Debenture may not be prepaid without the prior written consent
of the Holder.
ARTICLE
1
DEFINITIONS
SECTION
1.1 Definitions. The
terms defined in this Article whenever used in this Debenture have the following
respective meanings:
(i) “Affiliate”
has the meaning ascribed to such term in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended.
(ii) “Bankruptcy
Code” means the United States Bankruptcy Code of 1986, as amended (11
U.S.C. §§ 101 et. seq.).
(iii) “Business
Day” means a day other than Saturday, Sunday or any day on which banks
located in the State of California are authorized or obligated to
close.
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“Capital
Shares” means the Common Stock and any other shares of any other class
or series of capital stock, whether now or hereafter authorized and however
designated, which have the right to participate in the distribution of earnings
and assets (upon dissolution, liquidation or winding-up) of the
Company.
(iv) “Common
Shares” or “Common Stock” means shares of the
Company’s Common Stock.
(v) “Common
Stock Issued at Conversion”, when used with reference to the securities
deliverable upon conversion of this Debenture, means all Common Shares now
or
hereafter Outstanding and securities of any other class or series into which
this Debenture hereafter shall have been changed or substituted, whether
now or
hereafter created and however designated.
(vi) “Conversion”
or“conversion” means the repayment by the Company of the
Principal Amount of this Debenture (and, to the extent the Holder elects
as
permitted by Section 3.1, accrued and unpaid interest thereon) by the delivery
of Common Stock on the terms provided in Section 3.2, and
“convert,”“converted,”“convertible”
and like words shall have a corresponding meaning.
(vii) “Conversion
Date” means any day on which all or any portion of the Principal Amount
of this Debenture is converted in accordance with the provisions
hereof.
(viii) “Conversion
Notice” means a written notice of conversion substantially in the form
annexed hereto as Exhibit A.
(ix) “Conversion
Price” on any date of determination means the applicable price for the
conversion of this Debenture into Common Shares on such day as set forth
in
Section 3.1(a).
(x) “Current
Market Price” on any date of determination means the closing price of a
Common Share on such day as reported in the “pink sheets” through the
Interdealer Trading Quotation System; provided, if such security is not traded
on the over the counter market via the pink sheets, then the closing price
on
the NASDAQ OTCBB Exchange; provided further, that, if such security is
not listed or admitted to trading on the NASDAQ OTCBB, as reported on the
principal national security exchange or quotation system on which such security
is quoted or listed or admitted to trading, or, if not quoted or listed or
admitted to trading on any national securities exchange or quotation system,
the
closing bid price of such security on the over-the-counter market on the
day in
question as reported by Bloomberg LP or a similar generally accepted reporting
service, as the case may be.
(xi) “Debenture”
or “Debentures” means this Convertible Debenture of
the Company or such other convertible debenture(s) exchanged therefor as
provided in Section 2.1.
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(xii) “Discount
Multiplier” has the meaning set forth in Section 3.1(a).
(xiii) “Event
of Default” has the meaning set forth in Section 6.1.
(xiv) “Holder”
means La Jolla Cove Investors, Inc., any successor thereto, or any Person
to
whom this Debenture is subsequently transferred in accordance with the
provisions hereof.
(xv) “Interest
Payment Due Date” has the meaning set forth in the opening paragraph of
this Debenture.
(xvi) “Market
Disruption Event” means any event that results in a material suspension
or limitation of trading of the Common Shares.
(xvii) “Market
Price” per Common Share means the lowest price of the Common Shares
during any Trading Day as reported in the “pink sheets” through the Interdealer
Trading Quotation System; provided, if such security is not traded on the
over
the counter market via the pink sheets, then the lowest price on the NASDAQ
OTCBB; provided further, that, if such security is not listed or admitted
to trading on the NASDAQ OTCBB, as reported on the principal national security
exchange or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading on
any
national securities exchange or quotation system, the lowest price of the
Common
Shares during any Trading Day on the over-the-counter market as reported
by
Bloomberg LP or a similar generally accepted reporting service, as the case
may
be.
(xviii) “Maximum
Rate” has the meaning set forth in Section 6.4.
(xix) “Outstanding”
when used with reference to Common Shares or Capital Shares (collectively,
“Shares”) means, on any date of determination, all issued and
outstanding Shares, and includes all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in
such
Shares; provided, however, that any such Shares directly or
indirectly owned or held by or for the account of the Company or any Subsidiary
of the Company shall not be deemed “Outstanding” for purposes
hereof.
(xx) “Person”
means an individual, a corporation, a partnership, an association, a limited
liability company, an unincorporated business organization, a trust or other
entity or organization, and any government or political subdivision or any
agency or instrumentality thereof.
(xxi) “Principal
Amount” means, for any date of calculation, the principal sum set forth
in the first paragraph of this Debenture (but only such principal amount
as to
which the Holder has (a) actually advanced, and (b) not theretofore furnished
a
Conversion Notice in compliance with Section 3.2).
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(xxii) “SEC”
means the United States Securities and Exchange Commission.
(xxiii) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, all as in effect at the time.
(xxiv) “Securities
Purchase Agreement” means that certain Securities Purchase Agreement of
even date herewith by and among the Company and Holder, as the same may be
amended from time to time.
(xxv) “Subsidiary”
means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are owned directly or indirectly by
the
Company.
(xxvi) “Trading
Day” means any day on which (i) purchases and sales of securities on
the principal national security exchange or quotation system on which the
Common
Shares are traded are reported thereon, or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, as reported
by Bloomberg LP or a similar generally accepted reporting service, as the
case
may be (the “Trading Market”), (ii) at least one bid for the
trading of Common Shares is reported and (iii) no Market Disruption Event
occurs.
(xxvii) “Warrant”
means that certain Warrant to Purchase Common Stock issued by the Company
to
Holder as of even date herewith, as the same may be amended from time to
time.
All
references to “cash” or “$” herein means currency of the United States of
America.
ARTICLE
2
EXCHANGES,
TRANSFER AND REPAYMENT
SECTION
2.1 Registration
of Transfer of Debentures. This Debenture, when presented for registration
of transfer, shall (if so required by the Company) be duly endorsed, or be
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Company duly executed, by the Holder duly authorized in
writing.
SECTION
2.2 Loss,
Theft, Destruction of Debenture. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation
of
this Debenture and, in the case of any such loss, theft or destruction, upon
receipt of indemnity or security reasonably satisfactory to the Company,
or, in
the case of any such mutilation, upon surrender and cancellation of this
Debenture, the Company shall make, issue and deliver, in lieu of such lost,
stolen, destroyed or mutilated Debenture, a new Debenture of like tenor and
unpaid Principal Xxxxxx dated as of the date hereof (which shall accrue interest
from the most recent Interest Payment Due Date on which an interest payment
was
made in full).
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This
Debenture shall be held and owned upon the express condition that the provisions
of this Section 2.2 are exclusive with respect to the replacement of a
mutilated, destroyed, lost or stolen Debenture and shall preclude any and
all
other rights and remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without the surrender thereof.
SECTION
2.3 Who
Deemed Absolute Owner. The Company may deem the Person in whose
name this Debenture shall be registered upon the registry books of the Company
to be, and may treat it as, the absolute owner of this Debenture (whether
or not
this Debenture shall be overdue) for the purpose of receiving payment of
or on
account of the Principal Amount of this Debenture, for the conversion of
this
Debenture and for all other purposes, and the Company shall not be affected
by
any notice to the contrary. All such payments and such conversions
shall be valid and effectual to satisfy and discharge the liability upon
this
Debenture to the extent of the sum or sums so paid or the conversion or
conversions so made.
SECTION
2.4 Repayment
at Maturity. At the Maturity Date, the Company shall repay the
outstanding Principal Amount of this Debenture in whole in cash, together
with
all accrued and unpaid interest thereon, in cash, to the Maturity
Date.
SECTION
2.5 Redemption
by the Company. Notwithstanding any other provision in this
Debenture, at any time during the period that commences on the Closing Date
and
terminates on the six month anniversary of the Closing Date, the Company
shall
have the right to prepay all remaining outstanding principal and accrued
and
unpaid interest by paying an amount equal to one hundred twenty percent (120%)
of such outstanding principal and accrued and unpaid interest (the
“Prepayment Amount”). To affect this redemption by
the Company, the Company shall provide the Holder with ten (10) days prior
written notice of such redemption and upon receipt of such notice, the right
of
Conversion by the Holder shall terminate unless the Holder fails to receive
the
Prepayment Amount prior to the date that is twelve (12) days from the date
of
Holder’s receipt of notice of such redemption.
ARTICLE
3
CONVERSION
OF DEBENTURE
SECTION
3.1 Conversion;
Conversion Price; Valuation Event.
(a) At
the option of the Holder, this Debenture may be converted, either in whole
or in
part, up to the full Principal Amount hereof into Common Shares (calculated
as
to each such conversion to the nearest 1/100th of a share), at any time and
from
time to time on any Business Day, subject to compliance with Section 3.2.
The
number of Common Shares into which this Debenture may be converted is equal
to
the dollar amount of the Debenture being converted multiplied by eleven,
minus
the product of the Conversion Price multiplied by ten times the dollar amount
of
the Debenture being converted, and the entire foregoing result shall be divided
by the Conversion Price. The “Conversion Price” shall be equal
to the lesser of (i) $1.00, or (ii) 80% of the average of the 3 lowest prices
of
the Common Shares during any three Trading Days as reported in the “pink sheets”
through the Interdealer Trading Quotation System; provided, if such security
is
not traded on the over the counter market via the pink sheets, then the
lowest
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price
on
the NASDAQ OTCBB; provided further, that, if such security is not listed
or admitted to trading on the NASDAQ OTCBB, as reported on the principal
national security exchange or quotation system on which such security is
quoted
or listed or admitted to trading, or, if not quoted or listed or admitted
to
trading on any national securities exchange or quotation system, the lowest
price of the Common Shares during any Trading Day on the over-the-counter
market
as reported by Bloomberg LP or a similar generally accepted reporting service,
as the case may be, during the 20 Trading Days prior to Xxxxxx’s election to
convert (the percentage figure being a “Discount Multiplier”).
The Company reserves the right to increase the number of Trading Days in
clause
(ii) above, as it deems appropriate.
Notwithstanding
the foregoing, beginning in the first full calendar month after the date
upon
which the Common Stock Issued at Conversion is registered under the Securities
Act, or such shares may be sold by Holder pursuant to Rule 144 promulgated
by
the SEC pursuant to the Securities Act, as such Rule may be amended from
time to
time, or any similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule (“Rule 144”), Holder
shall convert at least 10% but not more than 15% of the face value of the
Debenture per calendar month into Common Shares of the Company, provided
that
the Common Shares are available, registered under the Securities Act, or
exempt
from registration under the Securities Act and Holder is able to sell such
shares under Rule 144, or such shares are otherwise freely tradable. If Holder
converts more than 10% of the face value of the Debenture in any calendar
month,
the excess over 10% shall be credited against the next month’s minimum
conversion amount. In the event Holder does not convert at least 10% of the
Debenture in any particular calendar month, the Company’s sole and exclusive
remedy shall be limited to Holder not being entitled to collect interest
on the
Debenture for that month.
(b) If
at any time that any Principal Amount remains outstanding under the Debenture
the closing price of the Common Stock of the Company on the Trading Market
is
$1.00 or greater, the Company shall have the option, upon five Trading Days’
prior written notice to Holder (with such written notice referred to herein
as
the “Prepayment Notice”), to prepay all, but not less than all,
of the Debenture for an amount equal to the outstanding Principal Amount
of the
Debenture as of the Prepayment Date (as hereafter defined) plus any accrued
and
unpaid interest thereon, with such prepayment amount referred to herein as
the
“Redemption Amount”. The “Prepayment
Date” is the date upon which the Company delivers to Holder the
Redemption Amount, provided however, that the Company may not, without the
prior
written consent of Holder, deliver the Redemption Amount prior to five Trading
Days after Xxxxxx’s receipt of the Prepayment Notice, and provided further, that
if the Company fails to deliver the entire Redemption Amount to Holder by
the
date that is seven Trading Days after the date of Holder’s receipt of the
Prepayment Notice, then the Company must provide an additional five Trading
Days’ prior written notice prior to the prepayment of the Debenture, and such
prepayment shall again be subject to the terms and limitations of this Section
3.1(b). Notwithstanding the foregoing, in the event that the Company
delivers a Prepayment Notice to Holder under the terms of this Section 3.1(b),
Holder shall have the option, in Holder’s sole and absolute discretion, to
extend the Prepayment Date to the date that is fifteen Trading Days after
Xxxxxx’s receipt of the Prepayment Notice, in exchange for delivery by Holder to
the Company within five Trading Days of the date of Xxxxxx’s receipt of the
Prepayment Notice of an amount equal to one
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hundred
thousand dollars ($100,000). Holder shall have the right to continue
to convert the Debenture under the terms of this Debenture until the Prepayment
Date.
(c) If
the Holder elects to convert a portion of the Debenture and, on the day that
the
election is made, the closing price of the Common Stock of the Company on
the
Trading Market is below $0.25, the Company shall have the right to prepay
that
portion of the Debenture that Holder elected to convert, plus any accrued
and
unpaid interest, at 120% of such amount. In the event that the Company elects
to
prepay that portion of the Debenture, Holder shall have the right to withdraw
its Conversion Notice. If, at anytime during the month, the closing price
of the
Common Stock of the Company on the Trading Market is below $0.25, Holder
shall
not be obligated to convert any portion of the Debenture during that
month. If at any time during the term of this Debenture (i) the
closing price of the Common Stock of the Company on the Trading Market is
below
$0.25; (ii) the Company has not authorized or reserved enough shares of its
Common Stock to account for the conversion of this Debenture and the exercise
of
the Warrant Shares (as defined in the Warrant) and the issuance of shares
of the
Common Stock of the Company to Holder in connection therewith; and/or (iii)
the
Holder is prohibited for any reason, including without limitation in connection
with any claim, suit, federal or state law, regulation, order, interpretation,
statute, or similar authority, from otherwise converting this Debenture and,
in
connection with such conversion of the Debenture, exercising such portion
of the
Warrant as is required under the terms of the Warrant, then the Holder shall
have no obligation to exercise any portion of the Warrant, and Holder may
elect
in Holder’s sole and absolute discretion to convert any portion of the
outstanding Principal Amount and accrued and unpaid interest under this
Debenture into such amount of Common Shares of the Company equal to the dollar
amount of the Debenture being converted divided by the Conversion
Price.
SECTION
3.2 Exercise
of Conversion Privilege. (a) Conversion of this Debenture may be
exercised on any Business Day by the Holder by telecopying an executed and
completed Conversion Notice to the Company. Each date on which a
Conversion Notice is telecopied to the Company in accordance with the provisions
of this Section 3.2 shall constitute a Conversion Date. The Company
shall convert this Debenture and issue the Common Stock Issued at Conversion
in
the manner provided below in this Section 3.2, and all voting and other rights
associated with the beneficial ownership of the Common Stock Issued at
Conversion shall vest with the Holder, effective as of the Conversion Date
at
the time specified in the Conversion Notice. The Conversion Notice
also shall state the name or names (with addresses) of the persons who are
to
become the holders of the Common Stock Issued at Conversion in connection
with
such conversion. As promptly as practicable after the receipt of the Conversion
Notice as aforesaid, but in any event not more than three (3) Business Days
after the Company’s receipt of such Conversion Notice, the Company shall (i)
issue the Common Stock Issued at Conversion in accordance with the provisions
of
this Article 3 and (ii) cause to be mailed for delivery by overnight courier
(x)
a certificate or certificate(s) representing the number of Common Shares
to
which the Holder is entitled by virtue of such conversion, (y) cash, as provided
in Section 3.3, in respect of any fraction of a Common Share deliverable
upon
such conversion and (z) cash or shares of Common Stock, as applicable,
representing the amount of accrued and unpaid interest on this Debenture
as of
the Conversion Date. Such conversion shall be deemed to have been
effected at the time at which the Conversion Notice indicates, and at such
time
the rights of the Holder of this Debenture, as such (except if and to the
extent
that any Principal Amount thereof
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remains
unconverted), shall cease and the Person and Persons in whose name or names
the
Common Stock Issued at Conversion shall be issuable shall be deemed to have
become the holder or holders of record of the Common Shares represented thereby,
and all voting and other rights associated with the beneficial ownership
of such
Common Shares shall at such time vest with such Person or
Persons. The Conversion Notice shall constitute a contract between
the Holder and the Company, whereby the Holder shall be deemed to subscribe
for
the number of Common Shares which it will be entitled to receive upon such
conversion and, in payment and satisfaction of such subscription (and for
any
cash adjustment to which it is entitled pursuant to Section 3.4), to surrender
this Debenture and to release the Company from all liability thereon (except
if
and to the extent that any Principal Amount thereof remains
unconverted). No cash payment aggregating less than $1.00 shall be
required to be given unless specifically requested by the Holder.
(b) If,
at
any time after the date of this Debenture, (i) the Company challenges, disputes
or denies the right of the Holder hereof to effect the conversion of this
Debenture into Common Shares or otherwise dishonors or rejects any Conversion
Notice delivered in accordance with this Section 3.2 or (ii) any third party
who
is not and has never been an Affiliate of the Holder commences any lawsuit
or
legal proceeding or otherwise asserts any claim before any court or public
or
governmental authority which seeks to challenge, deny, enjoin, limit, modify,
delay or dispute the right of the Holder hereof to effect the conversion
of this
Debenture into Common Shares, then the Holder shall have the right, but not
the
obligation, by written notice to the Company, to require the Company to promptly
redeem this Debenture for cash at one hundred and fifty (120%) of the Principal
Amount thereof, together with all accrued and unpaid interest thereon to
the
date of redemption. Under any of the circumstances set forth above,
the Company shall be responsible for the payment of all costs and expenses
of
the Holder, including reasonable legal fees and expenses, as and when incurred
in defending itself in any such action or pursuing its rights hereunder (in
addition to any other rights of the Holder).
(c) The
Holder shall be entitled to exercise its conversion privilege notwithstanding
the commencement of any case under the Bankruptcy Code. In the event
the Company is a debtor under the Bankruptcy Code, the Company hereby waives
to
the fullest extent permitted any rights to relief it may have under 11 U.S.C.
§
362 in respect of the Holder’s conversion privilege. The Company
hereby waives to the fullest extent permitted any rights to relief it may
have
under 11 U.S.C. § 362 in respect of the conversion of this
Debenture. The Company agrees, without cost or expense to the Holder,
to take or consent to any and all action necessary to effectuate relief under
11
U.S.C. § 362.
SECTION
3.3 Fractional
Shares. No fractional Common Shares or scrip representing
fractional Common Shares shall be delivered upon conversion of this
Debenture. Instead of any fractional Common Shares which otherwise
would be delivered upon conversion of this Debenture, the Company shall pay
a
cash adjustment in respect of such fraction in an amount equal to the same
fraction multiplied by the Current Market Price on the Conversion
Date. No cash payment of less than $1.00 shall be required to be
given unless specifically requested by the Holder.
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SECTION
3.4 Adjustments. The
Conversion Price and the number of shares deliverable upon conversion of
this
Debenture are subject to adjustment from time to time as follows:
(i) Reclassification,
Etc. In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another Person (where
the
Company is not the survivor or where there is a change in or distribution
with
respect to the Common Stock of the Company), sell, convey, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
Person, or effectuate a transaction or series of related transactions in
which
more than fifty percent (50%) of the voting power of the Company is disposed
of
(each, a “Fundamental Corporate Change”) and, pursuant to the
terms of such Fundamental Corporate Change, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock
of
the successor or acquiring corporation (“Other Property”) are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder of this Debenture shall have the right thereafter, at its
sole
option, to (x) require the Company to prepay this Debenture for cash at one
hundred and fifty percent (120%) of the Principal Amount thereof, together
with
all accrued and unpaid interest thereon to the date of prepayment,
(y) receive the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation,
and
Other Property as is receivable upon or as a result of such
Fundamental Corporate Change by a holder of the number of shares of Common
Stock
into which the outstanding portion of this Debenture may be converted at
the
Conversion Price applicable immediately prior to such Fundamental Corporate
Change or (z) require the Company, or such successor, resulting or
purchasing corporation, as the case may be, to, without benefit of any
additional consideration therefor, execute and deliver to the Holder a debenture
with substantial identical rights, privileges, powers, restrictions and other
terms as this Debenture in an amount equal to the amount outstanding under
this
Debenture immediately prior to such Fundamental Corporate Change. For
purposes hereof, “common stock of the successor or acquiring
corporation” shall include stock of such corporation of any class which
is not preferred as to dividends or assets over any other class of stock
of such
corporation and which is not subject to prepayment and shall also include
any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or
upon
the arrival of a specified date or the happening of a specified event and
any
warrants or other rights to subscribe for or purchase any such
stock. The foregoing provisions shall similarly apply to successive
Fundamental Corporate Changes.
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SECTION
3.5 Certain
Conversion Limits.
The
Company shall not effect any conversion of this Debenture, and a Holder shall
not have the right to convert any portion of this Debenture, to the extent
that
after giving effect to the conversion, as set forth on the applicable Conversion
Notice, such Holder (together with such Holder’s Affiliates, and any other
person or entity acting as a group together with such Holder or any of such
Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned
by
such Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon conversion of this Debenture with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (A) conversion of the remaining, unconverted
principal amount of this Debenture beneficially owned by such Holder or any
of
its Affiliates and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject to
a limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Debentures or warrants to
purchase shares of the Company’s Common Stock) beneficially owned by such Holder
or any of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 3.5, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. To the extent that the
limitation contained in this Section 3.5 applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by such
Holder together with any Affiliates) and of which principal amount of this
Debenture is convertible shall be in the sole discretion of such Holder,
and the
submission of a Conversion Notice shall be deemed to be such Holder’s
determination of whether this Debenture may be converted (in relation to
other
securities owned by such Holder together with any Affiliates) and which
principal amount of this Debenture is convertible, in each case subject to
such
aggregate percentage limitations. To ensure compliance with this
restriction, each Holder will be deemed to represent to the Company each
time it
delivers a Conversion Notice that such Conversion Notice 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. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of
the
Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 3.5, in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number
of
outstanding shares of Common Stock provided to the Holder in writing by the
Company after Holder makes such request or in the event that the Company
files,
any of the following with the Securities and Exchange Commission, the most
recent of the following: (A) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (B) a more recent public announcement by the
Company; or (C) a more recent 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 a Holder, the
Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding on the records
of
the Company as of the date of the request.
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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 such Holder or its Affiliates since the date
as of
which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock
outstanding
immediately after giving effect to the issuance of shares of Common Stock
issuable upon conversion of this Debenture held by the Holder. The
Beneficial Ownership Limitation provisions of this Section 3.5 may be waived
by
such Holder, at the election of such Holder, upon not less than 61 days’ prior
notice to the Company, to, at the sole discretion of the Holder, either change
the Beneficial Ownership Limitation to (i) 9.99% of the number of shares
of the
Common Stock outstanding immediately after giving effect to the issuance
of
shares of Common Stock upon conversion of the Debenture held by the Holder
and
the provisions of this Section 3.5 shall continue to apply, or (ii) remove
any
Beneficial Ownership Limitation under this Debenture. The provisions
of this paragraph shall be construed and implemented in a manner otherwise
than
in strict conformity with the terms of this Section 3.5 to correct this
paragraph (or any portion hereof) which may be defective or inconsistent
with
the intended Beneficial Ownership Limitation herein contained or to make
changes
or supplements necessary or desirable to properly give effect to such
limitation. If any court of competent jurisdiction shall determine
that the foregoing limitation is ineffective to prevent a Holder from being
deemed the beneficial owner of more than 9.99% of the then outstanding shares
of
Common Stock, then the Company shall prepay such portion of this Debenture
as
shall cause such Holder not to be deemed the beneficial owner of more than
9.99%
of the then outstanding shares of Common Stock. Upon such
determination by a court of competent jurisdiction, the Holder shall have
no
interest in or rights under such portion of the Debenture. Any and
all interest paid on or prior to the date of such determination shall be
deemed
interest paid on the remaining portion of this Debenture held by the
Holder. Such prepayment shall be for cash at a prepayment price of
one hundred and fifty percent (120%) of the Principal Amount thereof, together
with all accrued and unpaid interest thereon to the date of
prepayment. The limitations contained in this paragraph shall apply
to a successor holder of this Debenture.
SECTION
3.6 Surrender
of Debentures. Upon any redemption of this Debenture pursuant to
Sections 2,5, 3.2, 3.5 or 6.2, or upon maturity pursuant to Section 2.4,
the
Holder shall either deliver this Debenture by hand to the Company at its
principal executive offices or surrender the same to the Company at such
address
by nationally recognized overnight courier. Payment of the redemption
price or the amount due on maturity specified in Section 2.4, shall be made
by
the Company to the Holder against receipt of this Debenture (as provided
in this
Section 3.5) by wire transfer of immediately available funds to such account(s)
as the Holder shall specify by written notice to the Company. If
payment of such redemption price is not made in full by the redemption date,
or
the amount due on maturity is not paid in full by the Maturity Date, the
Holder
shall again have the right to convert this Debenture as provided in Article
3
hereof or to declare an Event of Default.
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ARTICLE
4
STATUS;
RESTRICTIONS ON TRANSFER
SECTION
4.1 Status
of Debenture. This Debenture constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
subject, as to enforceability, to general principles of equity and to principles
of bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors’ rights and remedies
generally.
SECTION
4.2 Restrictions
on Transfer. This Debenture, and any Common Shares deliverable
upon the conversion hereof, have not been registered under the Securities
Act. The Holder by accepting this Debenture agrees that this
Debenture and the shares of Common Stock to be acquired as interest on and
upon
conversion of this Debenture may not be assigned or otherwise transferred
unless
and until (i) the Company has received the opinion of counsel for the Holder
that this Debenture or such shares may be sold pursuant to an exemption from
registration under the Securities Act or (ii) a registration statement relating
to this Debenture or such shares has been filed by the Company and declared
effective by the SEC.
Each
certificate for shares of Common Stock deliverable hereunder shall bear a
legend
as follows unless and until such securities have been sold pursuant to an
effective registration statement under the Securities Act:
“The
securities represented by this certificate have not been registered under
the
Securities Act of 1933, as amended (the “Securities Act”). The
securities may not be offered for sale, sold or otherwise transferred except
(i)
pursuant to an effective registration statement under the Securities Act
or (ii)
pursuant to an exemption from registration under the Securities Act in respect
of which the issuer of this certificate has received an opinion of counsel
satisfactory to the issuer of this certificate to such effect. Copies
of the agreement covering both the purchase of the securities and restrictions
on their transfer may be obtained at no cost by written request made by the
holder of record of this certificate to the Secretary of the issuer of this
certificate at the principal executive offices of the issuer of this
certificate.”
ARTICLE
5
COVENANTS
SECTION
5.1 Conversion. The
Company shall cause the transfer agent, not later than three (3) Business
Days
after the Company’s receipt of a Conversion Notice, to issue and deliver to the
Holder the requisite shares of Common Stock Issued at
Conversion.
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SECTION
5.2 Notice
of Default. If any one or more events occur which constitute or
which, with notice, lapse of time, or both, would constitute an Event of
Default, the Company shall forthwith give notice to the Holder, specifying
the
nature and status of the Event of Default or such other event(s), as the
case
may be.
SECTION
5.3 Payment
of Obligations. So long as this Debenture shall be outstanding,
the Company shall pay, extend, or discharge at or before maturity, all its
respective material obligations and liabilities, including, without limitation,
tax liabilities, except where the same may be contested in good faith by
appropriate proceedings.
SECTION
5.4 Compliance
with Laws. So long as this Debenture shall be outstanding, the
Company shall comply with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities, except for such noncompliance
which would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise) or results of operations of
the
Company and the Subsidiaries.
SECTION
5.5 Inspection
of Property, Books and Records. So long as this Debenture shall
be outstanding, the Company shall keep proper books of record and account
in
which full, true and correct entries shall be made of all material dealings
and
transactions in relation to its business and activities and shall permit
representatives of the Holder at the Holder’s expense to visit and inspect any
of its respective properties, to examine and make abstracts from any of its
respective books and records, not reasonably deemed confidential by the Company,
and to discuss its respective affairs, finances and accounts with its respective
officers and independent public accountants, all at such reasonable times
and as
often as may reasonably be desired.
SECTION
5.6 Reservation
of Stock Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of this Debenture,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of this Debenture; and if at any time
the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Debenture, in addition to such other remedies
as shall be available to the holder of this Debenture, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary
to
increase its authorized but unissued shares of Common Stock to such number
of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite shareholder approval to
file an
amendment to the charter of the Company.
SECTION
5.7 Right
of First Refusal on Other
Financing. In
the event that the Company obtains a commitment for any other financing (either
debt, equity, or a combination thereof) which is to close during the term
of
this Debenture, Holder shall be entitled to a right of first refusal to enable
it to, at Xxxxxx’s option, match the terms of the other financing. The Company
shall deliver to Holder, at least 10 days prior to the proposed closing date
of
such transaction, written notice describing the proposed transaction, including
the terms and conditions thereof, and providing Holder an option during the
10
day period following delivery
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of
such
notice to provide the financing being offered in such transaction on the
same
terms as contemplated by such transaction. Notwithstanding the
foregoing, if the Company seeks to consummate such financing for an amount
less
than the amount originally disclosed in writing to the Holder, or on terms
less
favorable to the Company than those terms that were provided to Holder, such
financing shall be subject to Xxxxxx’s right of first refusal set forth in this
Section 5.7.
ARTICLE
6
EVENTS
OF DEFAULT; REMEDIES
SECTION
6.1 Events
of Default. “Event of Default” wherever used
herein means any one of the following events:
(i) the
Company shall default in the payment of principal of or interest on this
Debenture as and when the same shall be due and payable and, in the case
of an
interest payment default, such default shall continue for five (5) Business
Days
after the date such interest payment was due, or the Company shall fail to
perform or observe any other covenant, agreement, term, provision, undertaking
or commitment under this Debenture, the Securities Purchase Agreement, or
the
Warrant and such default shall continue for a period of ten (10) Business
Days
after the delivery to the Company of written notice that the Company is in
default hereunder or thereunder;
(ii) any
of
the representations, warranties or covenants made by the Company herein,
in the
Securities Purchase Agreement or in any certificate or financial or other
written statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Debenture,
the
Warrant or the Securities Purchase Agreement shall be false or misleading
in a
material respect on the Closing Date;
(iii) under
the
laws of any jurisdiction not otherwise covered by clauses (iv) and (v) below,
the Company or any Subsidiary (A) becomes insolvent or generally not able
to pay
its debts as they become due, (B) admits in writing its inability to pay
its
debts generally or makes a general assignment for the benefit of creditors,
(C)
institutes or has instituted against it any proceeding seeking (x) to adjudicate
it a bankrupt or insolvent, (y) liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief
of
debtors including any plan of compromise or arrangement or other corporate
proceeding involving or affecting its creditors or (z) the entry of an order
for
relief or the appointment of a receiver, trustee or other similar person
for it
or for any substantial part of its properties and assets, and in the case
of any
such official proceeding instituted against it (but not instituted by it),
either the proceeding remains undismissed or unstayed for a period of sixty
(60)
calendar days, or any of the actions sought in such proceeding (including
the
entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial
part
of its properties and assets) occurs or (D) takes any corporate action to
authorize any of the above actions;
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(iv) the
entry
of a decree or order by a court having jurisdiction in the premises adjudging
the Company or any Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under the Bankruptcy Code or any other
applicable Federal or state law, or appointing a receiver, liquidator, assignee,
trustee or sequestrator (or other similar official) of the Company or of
any
substantial part of its property, or ordering the winding-up or liquidation
of
its affairs, and any such decree or order continues and is unstayed and in
effect for a period of sixty (60) calendar days;
(v) the
institution by the Company or any Subsidiary of proceedings to be adjudicated
a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy
or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under the Bankruptcy Code or
any
other applicable federal or state law, or the consent by it to the filing
of any
such petition or to the appointment of a receiver, liquidator, assignee,
trustee
or sequestrator (or other similar official) of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit
of
creditors, or the admission by it in writing of its inability to pay its
debts
generally as and when they become due, or the taking of corporate action
by the
Company in furtherance of any such action;
(vi) a
final
judgment or final judgments for the payment of money shall have been entered
by
any court or courts of competent jurisdiction against the Company and remains
undischarged for a period (during which execution shall be effectively stayed)
of thirty (30) days, provided that the aggregate amount of all such
judgments at any time outstanding (to the extent not paid or to be paid,
as
evidenced by a written communication to that effect from the applicable insurer,
by insurance) exceeds One Hundred Thousand Dollars ($100,000);
(vii) it
becomes unlawful for the Company to perform or comply with its obligations
under
this Debenture, the Warrant or the Securities Purchase Agreement in any
respect;
(viii) the
Common Shares shall no longer be traded in the over the counter market via
the
“pink sheets” or not otherwise be listed for trading on the NASDAQ
OTCBB (the “Trading Market” or, to the extent the Company
becomes eligible to list its Common Stock on any other national security
exchange or quotation system, upon official notice of listing on any such
exchange or system, as the case may be, it shall be the “Trading
Market”) or suspended from trading on the Trading Market, and shall not
be reinstated, relisted or such suspension lifted, as the case may be, within
five (5) days;
(ix) the
Company shall fail to timely file all reports required to be filed by it
with
the Commission (as defined in the Securities Purchase Agreement) pursuant
to
Section 13 or 15(d) of the Exchange Act (as defined in the Securities Purchase
Agreement), or otherwise required by the Exchange Act; or
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(x) the
Company shall default (giving effect to any applicable grace period) in the
payment of principal or interest as and when the same shall become due and
payable, under any indebtedness, individually or in the aggregate, of more
than
One Hundred Thousand Dollars ($100,000);
SECTION
6.2 Acceleration
of Maturity; Rescission and Annulment. If an Event of Default
occurs and is continuing, then and in every such case the Holder may, by
a
notice in writing to the Company, rescind any outstanding Conversion Notice
and
declare that all amounts owing or otherwise outstanding under this Debenture
are
immediately due and payable and upon any such declaration this Debenture
shall
become immediately due and payable in cash at a price of one hundred and
fifty
percent (120%) of the Principal Amount thereof, together with all accrued
and
unpaid interest thereon to the date of payment; provided, however,
in the case of any Event of Default described in clauses (iii), (iv), (v)
or
(vii) of Section 6.1, such amount automatically shall become immediately
due and
payable without the necessity of any notice or declaration as
aforesaid.
SECTION
6.3 Late
Payment Penalty. If any portion of the principal of or interest
on this Debenture shall not be paid within ten (10) days of when it is due,
the
Discount Multiplier under this Debenture shall decrease by one percentage
point
(1%) for all conversions of this Debenture thereafter.
SECTION
6.4 Maximum
Interest
Rate. Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate
as
provided for herein shall exceed the maximum lawful rate which may be contracted
for, charged, taken or received by the Holder in accordance with any applicable
law (the “Maximum Rate”), the rate of interest applicable to
this Debenture shall be limited to the Maximum Rate. To the greatest
extent permitted under applicable law, the Company hereby waives and agrees
not
to allege or claim that any provisions of this Note could give rise to or
result
in any actual or potential violation of any applicable usury laws.
SECTION
6.5 Remedies
Not Waived. No course of dealing between the Company and the
Holder or any delay in exercising any rights hereunder shall operate as a
waiver
by the Holder.
SECTION
6.6 Remedies. The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Debenture will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Debenture, that the Holder shall be entitled
to all other available remedies at law or in equity, and in addition to the
penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Debenture and to enforce specifically
the terms and provisions thereof, without the necessity of showing economic
loss
and without any bond or other security being required.
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SECTION
6.7 Payment
of Certain
Amounts. Whenever
pursuant to this Debenture the Company is required to pay an amount in excess
of
the Principal Amount plus accrued and unpaid interest, the Company and the
Holder agree that the actual damages to the Holder from the receipt of cash
payment on this Debenture may be difficult to determine and the amount to
be so
paid by the Company represents stipulated damages and not a penalty and is
intended to compensate the Holder in part for loss of the opportunity to
convert
this Debenture and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Debenture at a price in excess of that price
paid for such shares pursuant to this Debenture. The Company and the Holder
hereby agree that such amount of stipulated damages is not disproportionate
to
the possible loss to the Holder from the receipt of a cash payment without
the
opportunity to convert this Debenture into shares of Common Stock.
ARTICLE
7
MISCELLANEOUS
SECTION
7.1 Notice
of Certain Events. In the case of the occurrence of any event
described in Section 3.4 of this Debenture, the Company shall cause to be
mailed
to the Holder of this Debenture at its last address as it appears in the
Company’s security registry, at least twenty (20) days prior to the applicable
record, effective or expiration date hereinafter specified (or, if such twenty
(20) days’ notice is not possible, at the earliest possible date prior to any
such record, effective or expiration date), a notice thereof, including,
if
applicable, a statement of (y) the date on which a record is to be taken
for the
purpose of such dividend, distribution, issuance or granting of rights, options
or warrants, or if a record is not to be taken, the date as of which the
holders
of record of Common Stock to be entitled to such dividend, distribution,
issuance or granting of rights, options or warrants are to be determined
or (z)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective, and
the
date as of which it is expected that holders of record of Common Stock will
be
entitled to exchange their shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale transfer,
dissolution, liquidation or winding-up.
SECTION
7.2 Register. The
Company shall keep at its principal office a register in which the Company
shall
provide for the registration of this Debenture. Upon any transfer of
this Debenture in accordance with Articles 2 and 4 hereof, the Company shall
register such transfer on the Debenture register.
SECTION
7.3 Withholding. To
the extent required by applicable law, the Company may withhold amounts for
or
on account of any taxes imposed or levied by or on behalf of any taxing
authority in the United States having jurisdiction over the Company from
any
payments made pursuant to this Debenture.
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SECTION
7.4 Transmittal
of Notices. Except as may be otherwise provided herein, any
notice or other communication or delivery required or permitted hereunder
shall
be in writing and shall be delivered personally, or sent by telecopier machine
or by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
1. If
to the
Company, to:
0000 Xxxxxxx Xxxxxx, Xxxxx 000-X
Xxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
2.
If
to
Holder, to:
La Jolla Cove Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each
of
the Holder or the Company may change the foregoing address by notice given
pursuant to this Section 7.4.
SECTION
7.5 Attorneys’
Fees. Should any party hereto employ an attorney for the purpose
of enforcing or construing this Debenture, or any judgment based on this
Debenture, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party
shall
be entitled to receive from the other party or parties thereto reimbursement
for
all reasonable attorneys' fees and all reasonable costs, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds, whether
taxable or not, and that such reimbursement shall be included in any judgment
or
final order issued in that proceeding. The "prevailing party" means
the party determined by the court to most nearly prevail and not necessarily
the
one in whose favor a judgment is rendered.
SECTION
7.6 Governing
Law. This Debenture shall be governed by, and construed in
accordance with, the laws of the State of California (without giving effect
to
conflicts of laws principles). With respect to any suit, action or
proceedings relating to this Debenture, the Company irrevocably submits to
the
exclusive jurisdiction of the courts of the State of California sitting in
San
Diego and the United States District Court located in the City of San Diego
and
hereby waives, to the fullest extent permitted by applicable law, any claim
that
any such suit, action or proceeding has been brought in an inconvenient
forum. Subject to applicable law, the
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Company
agrees that final judgment against it in any legal action or proceeding arising
out of or relating to this Debenture shall be conclusive and may be enforced
in
any other jurisdiction within or outside the United States by suit on the
judgment, a certified copy of which judgment shall be conclusive evidence
thereof and the amount of its indebtedness, or by such other means provided
by
law.
SECTION
7.7 Waiver
of Jury Trial. To the fullest extent permitted by law, each of the parties
hereto hereby knowingly, voluntarily and intentionally waives its respective
rights to a jury trial of any claim or cause of action based upon or arising
out
of this Debenture or any other document or any dealings between them relating
to
the subject matter of this Debenture and other documents. Each party
hereto (i) certifies that neither of their respective representatives, agents
or
attorneys has represented, expressly or otherwise, that such party would
not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Debenture by, among
other things, the mutual waivers and certifications herein.
SECTION
7.8 Headings. The
headings of the Articles and Sections of this Debenture are inserted for
convenience only and do not constitute a part of this Debenture.
SECTION
7.9 Payment
Dates. Whenever any payment hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
SECTION
7.10 Binding
Effect. Each Holder by accepting this Xxxxxxxxx agrees to be
bound by and comply with the terms and provisions of this
Debenture.
SECTION
7.11 No
Stockholder Rights. Except as otherwise provided herein, this
Debenture shall not entitle the Holder to any of the rights of a stockholder
of
the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company, unless
and to
the extent converted into shares of Common Stock in accordance with the terms
hereof.
SECTION
7.12 Facsimile
Execution. Facsimile execution of this Debenture shall be deemed
originals.
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IN
WITNESS WHEREOF, the Company has caused this Debenture to be signed by its
duly
authorized officer on the date of this Debenture.
Platina
Energy Group, Inc.
By: /s/
Xxxxx Xxxxxxx
Xxxxx Xxxxxxx, Pres. & CEO
Xxxxx Xxxxxxx, Pres. & CEO
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EXHIBIT A
DEBENTURE
CONVERSION NOTICE
TO: Platina
Energy Group, Inc.
The
undersigned owner of this Convertible Debenture due August 30, 2010 (the
“Debenture”) issued by Platina Energy Group, Inc. (the
“Company”) hereby irrevocably exercises its option
to convert
$__________ Principal Amount of the Debenture into shares of Common Stock
in
accordance with the terms of the Debenture. The undersigned hereby
instructs the Company to convert the portion of the Debenture specified above
into shares of Common Stock Issued at Conversion in accordance with the
provisions of Article 3 of the Debenture. The undersigned directs
that the Common Stock and certificates therefor deliverable upon conversion,
the
Debenture reissued in the Principal Amount not being surrendered for conversion
hereby, [the check or shares of Common Stock in payment of the accrued and
unpaid interest thereon to the date of this Notice,] together with any check
in
payment for fractional Common Stock, be registered in the name of and/or
delivered to the undersigned unless a different name has been indicated
below. All capitalized terms used and not defined herein have the
respective meanings assigned to them in the Debenture. The conversion
pursuant hereto shall be deemed to have been effected at the date and time
specified below, and at such time the rights of the undersigned as a Holder
of
the Principal Amount of the Debenture set forth above shall cease and the
Person
or Persons in whose name or names the Common Stock Issued at Conversion shall
be
registered shall be deemed to have become the holder or holders of record
of the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest
with
such Person or Persons.
Date
and
time: __________________
______________________________
By:
___________________________
Title:
_________________________
Fill
in
for registration of Debenture:
Please
print name and address
(including
ZIP code number):
|
A-1 |
