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EXHIBIT 4.1
DEBENTURE AGREEMENT
WITH
CONVERSION PRIVILEGES
DUE: August 18, 2001
BRADY, TEXAS Date: August 18, 1999
After date and for value received, XXXX.XXX, INC. Promises to pay to the order
of _______ whose address is _____________ the sum of $_______ pursuant to the
terms hereinafter set forth:
1. SECURITIES PURCHASED. The Holder hereof has purchased as an investment a
$______ convertible debenture. The debenture may be converted to shares of the
common stock of XXXX.XXX, INC. as further described in the Debenture Agreement.
2. PUBLIC COMPANY. Xxxxxx understands that XXXX.XXX, INC. is presently a
privately owned Corporation that has full intentions of becoming a publicly
traded company within a period of Ninety (90) days from the date of this
Agreement through a reverse merger. Holder understands this Agreement is
structured as if the reverse merger has been completed and XXXX.XXX, INC. will
be a publicly traded company, quoted and listed on the NASDAQ BULLETIN BOARD.
3. SENIOR DEBT. The debenture shall have a preference in liquidation to all
obligations except bank debt or secured leases. Upon a liquidation, dissolution,
bankruptcy or reorganization, or similar transaction by the company, the holders
of the "senior debt" would be paid full before payment would be made on the
debentures.
4. SECURITY. The convertible debenture is not secured by any assets of XXXX.XXX,
INC.
5. CONVERSION. The convertible debenture holder may convert the debenture into
Common Stock of the corporation by exercising his right to conversion after six
(6) months from the date of this debenture or at any time thereafter.
Should the Holder elect to exercise his right to conversion, the Corporation
shall pay any accrued interest on said debenture and issue it's Common Stock at
a price of $2.00 per share or Sixty percent (60%) of bid price whichever is
greater at the date of conversion in the amount of shares necessary to satisfy
the debenture.
When the debenture expires the debenture Holder may elect to take cash only,
cash and stock, or all stock. The debenture Holder will advise the Corporation
ninety (90) days prior, to the due date of the debenture as to the payment
method desired.
6. INTEREST. This debenture shall be subject to an annual interest rate of 12%
per annum payable monthly during the one year period. XXXX.XXX, INC. shall be
obligated to make interest only payments. The Debenture is due in full including
all principal and accrued interest on or before August 18, 2000.
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Any payments of principal and interest not paid when due shall bear Interest at
a default rate of 15% per annum until paid.
7. CONVERSION RIGHTS. In addition to the Conversion Rights discussed in
paragraph 4 above, the holder shall have the following rights:
a) Should the Holder elect to exercise his right to conversion, the
corporation shall pay in cash upon delivery of the Stock Certificate any
accrued interest on said debenture less any value of a dividend which has been
declared but not paid on the date of the election to convert.
b) Should XXXX.XXX, INC. at any time during the conversion period have
a capital reorganization, merger, consolidation, stock swap or sell
substantially all of its assets to any person or corporation, then as part of
such merger, consolidation or sale, provision shall be made for the Conversion
Rights to be adjusted in such a manner as to provide for the protection of said
rights so as to permit the conversion in as nearly equivalent a manner as set
forth herein as is possible. XXXX.XXX, INC. shall reserve for issuance upon
conversion sufficient, equivalent recapitalized equity to meet its obligations
hereunder during the entire conversion period.
c) Upon presentation to XXXX.XXX, INC. at the notice address of (1) a
letter requesting conversion, (2) the Conversion Form, which is Exhibit "A"
attached hereto and which provides for the cancellation of the Debenture upon
issuance of the Common Stock, and (3) the original Debenture Agreement all duly
executed; XXXX.XXX, INC. shall within 5 business days issue a certificate for
the appropriate number of shares and send said certificate to the holder postage
prepaid, registered mail, return receipt or any other manner agreed to by the
holder and XXXX.XXX, INC.
d) All shares of Common Stock or other securities delivered upon the
exercise of the rights of conversion shall be validly issued, fully paid and
non-assessable.
e) Irrespective of the date of issuance and delivery of a certificate
or certificates for any shares of Common Stock issuable upon the exercise of
conversion rights, each person (including a corporation) in whose name any such
certificate or certificates is to be issued will for all purposes be deemed to
have become the holder of record of the Common Stock, the securities, and/or
property represented thereby on the date on which a duly executed notice of
exercise of conversion rights and the canceled underlying Debenture is
delivered to the Company.
f) The Holder is not, by virtue of ownership of the convertible
debenture, entitled to any rights whatsoever of a stockholder of the Company.
8. NOTICES. All notices and communications to any party to this debenture shall
be in writing and sent to XXXX.XXX, INC., Attn: Xxx Xxxx, Chairman and CEO, at
000 Xxxx Xxxx, Xxxxx, Xxxxx 00000, and to the Holder at the address set forth
below the Holder's signature or at such other place as may be designated in
writing by either party hereto. All notices to overseas addresses shall be by
telex or FedEx overnight with confirmation of receipt required.
9. GENERAL.
a) This debenture is being delivered and is intended to be performed in
the State of Texas and shall be construed and enforced in accordance with and
governed by the laws of such State. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto whether so expressed or not, and in
particular shall inure to the benefit of and be enforceable by any holder or
holders at the time of the debentures. This Agreement embodies the entire
convertible debenture agreement and understanding between the
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undersigned Holder and the company and supersedes all prior agreements and
understandings relating to the subject matter hereof.
b) XXXX.XXX, INC. may not consolidate or merge, or transfer or lease
all or substantially all of its assets to another corporation unless the other
entity assumes in writing all of the obligations of the Company under the
debentures, and that in the case of a transfer or lease of assets, although the
successor assumes the obligations in writing, the Company shall not be released
from its obligations to pay principal or interest on the debentures.
c) Should the holder lose the Debenture or should it be stolen or
destroyed, the Company will issue a replacement upon receipt of such assurances
as may be reasonably requested by the Company.
d) Interest is payable on the Debenture from the date of acceptance by
XXXX.XXX, INC. which date shall not exceed 2 business days from receipt of the
Subscription Agreement with funds.
If you agree to the foregoing terms of the Convertible Debenture,
please sign the form in the place provided for the "Holder" and print or type
your full name, address, telephone number and social security number and
execute the attached subscription agreement. No debenture will be accepted
without an executed subscription agreement and payment in full which shall not
be refundable.
DATED this 18th day of August, 1999
ATTEST:
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Xxxxxx Xxxxxx Xxxx Chairman and CEO
The foregoing debenture with attached warrant is hereby agreed to as of
the date hereof
HOLDER: Date:
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SS NUMBER:
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Xxxx.xxx, Inc. Debenture Agreement
EXHIBIT "A"
(Attached to the Convertible Debenture
Dated_____)
EXERCISE AGREEMENT
To: Dated:
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The undersigned, pursuant to the Conversion Rights set forth in the
attached Debenture hereby agrees to subscribe for and purchase * _______ shares
of the Common Stock covered by such Debenture and makes payment herewith in full
therefor by assigning the attached Debenture to Xxxx.xxx, Inc. thereby canceling
said debt.
Signature:
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Address:
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