Exhibit 10.2
NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
$1,000,000
Date of Issuance: April 5, 2001
WORLD HOMES, INC.
6% CONVERTIBLE DEBENTURE
DUE APRIL 5, 2002
THIS DEBENTURE is one of a series of duly authorized and issued
debentures of World Homes, Inc., a Nevada corporation, having a principal
place of business at 0000 X. Xxxxxxxx Xxx, Xxxx X-0, Xxx Xxxxx, Xxxxxx 00000
(the "Company"), designated as its 6% Convertible Debentures, due April 5,
2002, in the aggregate principal amount of One Million Dollars ($1,000,000)
(the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to Xxxxxx Avenue LLC
or its registered assigns (the "Holder"), the principal sum of $1,000,000 on
April 5, 2002 or such earlier date as the Debentures are required or permitted
to be repaid as provided hereunder (the "Maturity Date") and to pay interest
to the Holder on the aggregate unconverted and then outstanding principal
amount of this Debenture at the rate of 6% per annum, payable on each
Conversion Date (as defined herein) and on the Maturity Date in cash or shares
of Common Stock (as defined in Section 6). Subject to the terms and
conditions herein, the decision whether to pay interest hereunder in shares of
Common Stock or cash shall be at the discretion of the Company. Not less than
ten Trading Days (as defined in Section 6) prior to each Conversion Date or
the Maturity Date, the Company shall provide the Holder with written notice of
its election to pay interest hereunder in cash or in shares of Common Stock
pursuant to the terms of Section4(a)(iii) (the Company may indicate in such
notice that the election contained in such notice shall continue for later
periods until revised). Failure to timely provide such written notice shall be
deemed an election by the Company to pay the interest on such Conversion Date
or Maturity Date in shares of Common Stock pursuant to the terms of Section
4(a)(iii). Interest shall be calculated on the basis on a 360-day year and
shall accrue daily commencing on the Original Issue Date (as defined in
Section 6) until payment in full of the principal sum, together with all
accrued and unpaid interest and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person (as defined in
Section 6) in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of Debentures (the "Debenture
Register"). All overdue accrued and unpaid interest to be paid hereunder
shall entail a late fee at the rate of 18% per annum (or such lower maximum
amount of interest permitted to be charged under applicable law) ("Late Fee")
which will accrue daily, from the date such interest is due hereunder through
and including the date of payment.
This Debenture is subject to the following additional provisions:
Section 1. This Debenture is exchangeable for an equal
aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same. No service
charge will be made for such registration of transfer or exchange.
Section 2. This Debenture has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement (as defined in Section 6) and may be transferred or exchanged only
in compliance with the Purchase Agreement. Prior to due presentment to the
Company for transfer of this Debenture, the Company and any agent of the
Company may treat the Person (as defined in Section 6) in whose name this
Debenture is duly registered on the Debenture Register as the owner hereof for
the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Debenture is overdue, and neither the Company
nor any such agent shall be affected by notice to the contrary.
Section 3. Events of Default.
(a) "Event of Default", wherever used herein, means any
one of the following events (whatever the reason and whether it shall be
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of
any administrative or governmental body):
(i) any default in the payment of the principal of,
interest (including any Late Fees) on or liquidated damages in respect of, any
Debentures, free of any claim of subordination, as and when the same shall
become due and payable (whether on a Conversion Date or the Maturity Date or
by acceleration or otherwise);
(ii) the Company shall fail to observe or perform any other
covenant, agreement or warranty contained in, or otherwise commit any breach
of any of the Transaction Documents (as defined in Section 6), and such
failure or breach shall not have been remedied within five days after the date
on which notice of such failure or breach shall have been given;
(iii) the Company or any of its subsidiaries shall
commence, or there shall be commenced against the Company or any such
subsidiary a case under any applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or the Company commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to the Company or
any subsidiary thereof or there is commenced against the Company or any
subsidiary thereof any such bankruptcy, insolvency or other proceeding which
remains undismissed for a period of 60 days; or the Company or any subsidiary
thereof is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Company or any
subsidiary thereof suffers any appointment of any custodian or the like for it
or any substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or the Company or any subsidiary thereof
makes a general assignment for the benefit of creditors; or the Company shall
fail to pay, or shall state that it is unable to pay, or shall be unable to
pay, its debts generally as they become due; or the Company or any subsidiary
thereof shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the Company or any
subsidiary thereof shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or any
corporate or other action is taken by the Company or any subsidiary thereof
for the purpose of effecting any of the foregoing;
(iv) the Company shall default in any of its obligations
under any other Debenture or any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there
may be issued, or by which there may be secured or evidenced any indebtedness
for borrowed money or money due under any long term leasing or factoring
arrangement of the Company in an amount exceeding $100,000, whether such
indebtedness now exists or shall hereafter be created and such default shall
result in such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise become due and payable;
(v) the Common Stock shall not be eligible for quotation
on or quoted for trading on the OTC Bulletin Board ("OTC') or listed for
trading on the Nasdaq SmallCap Market, New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market (each, a "Subsequent Market") and shall
not again be eligible for and quoted or listed for trading thereon within five
Trading Days;
(vi) the Company shall be a party to any Change of Control
Transaction (as defined in Section 6), shall agree to sell or dispose all or
in excess of 33% of its assets in one or more transactions (whether or not
such sale would constitute a Change of Control Transaction), or shall redeem
or repurchase more than a de minimis number of shares of Common Stock or other
equity securities of the Company (other than redemptions of Underlying Shares
(as defined in Section 6));
(vii) an Underlying Shares Registration Statement (as
defined in Section6) shall not have been declared effective by the Commission
(as defined in Section 6) on or prior to the 120th day after the Original
Issue Date;
(viii) if, during the Effectiveness Period (as defined in the
Registration Rights Agreement (as defined in Section 6)), the effectiveness of
the Underlying Shares Registration Statement lapses for any reason or the
Holder shall not be permitted to resell Registrable Securities (as defined in
the Registration Rights Agreement) under the Underlying Shares Registration
Statement, in either case, for more than ten consecutive Trading Days;
(ix) an Event (as defined in the Registration Rights
Agreement) shall not have been cured to the satisfaction of the Holder prior
to the expiration of thirty days from the Event Date (as defined in the
Registration Rights Agreement) relating thereto (other than an Event resulting
from a failure of an Underlying Shares Registration Statement to be declared
effective by the Commission on or prior to the 120th day after the Original
Issue Date, which shall be covered by Section 3(a)(vii));
(x) the Company shall fail for any reason to deliver
certificates to a Holder prior to the fifth Trading Day after a Conversion
Date pursuant to and in accordance with Section 4(b) or the Company shall
provide notice to the Holder, including by way of public announcement, at any
time, of its intention not to comply with requests for conversions of any
Debentures in accordance with the terms hereof; or
(xi) the Company shall fail for any reason to deliver the
payment in cash pursuant to a Buy-In (as defined herein) within five days
after notice thereof is delivered hereunder.
(b) If any Event of Default occurs and is continuing, the
full principal amount of this Debenture (and, at the Holder's option, all
other Debentures then held by such Holder), together with interest and other
amounts owing in respect thereof, to the date of acceleration shall become at
the Holder's election, immediately due and payable in cash. The aggregate
amount payable upon an Event of Default shall be equal to the sum of: (i) the
Mandatory Prepayment Amount (as defined in Section 6) plus (ii) the product of
(A) the number of Underlying Shares issued in respect of conversions hereunder
within thirty days of the date of a declaration of an Event of Default and
then held by the Holder and (B) the Closing Price (as defined in Section 6) on
the date prepayment is due or the date the full prepayment price is paid,
whichever is greater. Interest shall accrue on the prepayment amount
hereunder from the seventh day after such amount is due (being the date of an
Event of Default) through the date of prepayment in full thereof in an amount
equal to the Late Fee , to accrue daily from the date such payment is due
hereunder through and including the date of payment. All Debentures and
Underlying Shares for which the full prepayment price hereunder shall have
been paid in accordance herewith shall promptly be surrendered to or as
directed by the Company. The Holder need not provide and the Company hereby
waives any presentment, demand, protest or other notice of any kind, and the
Holder may immediately and without expiration of any grace period enforce any
and all of its rights and remedies hereunder and all other remedies available
to it under applicable law. Such declaration may be rescinded and annulled by
Xxxxxx at any time prior to payment hereunder and the Holder shall have all
rights as a Debenture holder until such time, if any, as the full payment
under this Section shall have been received by it. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.
Section 4. Conversion.
(a) (i) Commencing on the 31st day after the Closing Date,
this Debenture shall be convertible into shares of Common Stock at the option
of the Holder, in whole or in part at any time and from time to time (subject
to the limitations on conversion set forth in Section4(a)(ii) hereof). The
Holder shall effect conversions by delivering to the Company the form of
conversion notice attached hereto as Exhibit A (a "Conversion Notice"),
specifying therein the principal amount of Debentures to be converted and the
date on which such conversion is to be effected (a "Conversion Date") and
shall contain a completed schedule in the form of Schedule 1 to the Conversion
Notice (as amended on each Conversion Date, the "Conversion Schedule")
reflecting the remaining principal amount of this Debenture and all accrued
and unpaid interest thereon subsequent to the conversion at issue. If no
Conversion Date is specified in a Conversion Notice, the Conversion Date shall
be the date that such Conversion Notice is provided hereunder. To effect
conversions hereunder, the Holder shall not be required to physically
surrender Debentures to the Company unless the entire principal amount of this
Debenture has been so converted. Conversions hereunder shall have the effect
of lowering the outstanding principal amount of this Debenture plus all
accrued and unpaid interest thereon in an amount equal to the applicable
conversion, which shall be evidenced by entries set forth in the Conversion
Schedule. The Holder and the Company shall maintain records showing the
principal amount converted and the date of such conversions. In the event of
any dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder and any assignee,
by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this
Debenture, the unpaid and unconverted principal amount of this Debenture may
be less than the amount stated on the face hereof.
(ii) Certain Conversion Restrictions. A Holder may not
convert Debentures or receive shares of Common Stock as payment of interest
hereunder to the extent such conversion or receipt of such interest payment
would result in the Holder, together with its affiliates, beneficially owning
(as determined in accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 9.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon conversion
of, and payment of interest on, the Debentures held by such Holder after
application of this Section. To ensure compliance with this restriction, the
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. If the Holder has delivered a
Conversion Notice for a principal amount of Debentures that, without regard to
any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the
Company shall notify the Holder of this fact and shall honor the conversion
for the maximum principal amount permitted to be converted on such Conversion
Date in accordance with the periods described in Section 4(b) and, at the
option of the Holder, either retain any principal amount tendered for
conversion in excess of the permitted amount hereunder for future conversions
or return such excess principal amount to the Holder. In the event of a
merger or consolidation of the Company with or into another Person, this
paragraph shall not apply with respect to a determination of the number of
shares of common stock issuable upon conversion in full of the Debentures if
such determination is necessary to establish the Securities or other assets
which the holder of Common Stock shall be entitled to receive upon the
effectiveness of such merger or consolidation.
(iii) Underlying Shares Issuable Upon Conversion and
Pursuant to Interest. (A) The number of shares of Common Stock issuable upon
a conversion hereunder shall be determined by adding the sum of: (i) the
quotient obtained by dividing (x) the outstanding principal amount of this
Debenture to be converted and (y) the Conversion Price, and (ii) the amount
equal to (I) the product of (x) the outstanding principal amount of this
Debenture to be converted and (y) the product of (1) the quotient obtained by
dividing .06 by 360 and (2) the number of days for which such principal amount
was outstanding, divided by (II) the Conversion Price on the Conversion Date,
provided, that if the Company shall have elected to pay the interest due on a
Conversion Date in cash pursuant to the terms hereof, subsection (ii) shall
not be used in the calculation of the number of shares of Common Stock
issuable upon a conversion hereunder.
(B) Notwithstanding anything to the contrary
contained herein, if on any Conversion Date:
(1) the number of shares of Common Stock at the time
authorized, unissued and unreserved for all purposes, or held as treasury
stock, is insufficient to pay interest hereunder in shares of Common Stock;
(2) such shares of Common Stock: (x) are not registered
for resale pursuant to an effective Underlying Shares Registration Statement
and (y) may not be sold without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act;
(3) the Common Stock shall fail to be listed or quoted for
trading on the OTC or a Subsequent Market;
(4) the Company has failed to timely satisfy its
conversion obligations hereunder; or
(5) the issuance of such shares of Common Stock would
result in a violation of Sections 4(a)(ii),
then, at the option of the Holder, the Company, in
lieu of delivering shares of Common Stock pursuant to Section 4(a)(iii)(A)
(ii), shall deliver, within three Trading Days of each applicable Conversion
Date, an amount in cash equal to the product of: (a) the outstanding principal
amount of the Debentures to be converted on such Conversion Date and (b) the
product of (x) the quotient obtained by dividing .06 by 360 and (y) the number
of days for which such principal amount was outstanding.
(b) (i) Not later than three Trading Days after any
Conversion Date, the Company will deliver to the Holder (i) a certificate or
certificates which shall be free of restrictive legends and trading
restrictions (other than those required by the Purchase Agreement)
representing the number of shares of Common Stock being acquired upon the
conversion of Debentures and (ii) a bank check in the amount of accrued and
unpaid interest (if the Company has timely elected or is required to pay
accrued interest in cash). The Company shall, upon request of the Holder, if
available, use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions. If in the case of any Conversion
Notice such certificate or certificates are not delivered to or as directed by
the applicable Holder by the third Trading Day after a Conversion Date, the
Holder shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return the
certificates representing the principal amount of Debentures tendered for
conversion.
(ii) If the Company fails for any reason to
deliver to the Holder such certificate or certificates pursuant to Section
4(b)(i) by the third Trading Day after the Conversion Date, the Company shall
pay to such Holder, in cash, as liquidated damages and not as a penalty,
$5,000 for each Trading Day after such third Trading Day until such
certificates are delivered. Nothing herein shall limit a Xxxxxx's right to
pursue actual damages or declare an Event of Default pursuant to Section 3
herein for the Company's failure to deliver certificates representing shares
of Common Stock upon conversion within the period specified herein and such
Holder shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit
the Holders from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.
(iii) In addition to any other rights available to
the Holder, if the Company fails for any reason to deliver to the Holder such
certificate or certificates pursuant to Section 4(b)(i) by the third Trading
Day after the Conversion Date, and if after such third Trading Day the Holder
purchases (in an open market transaction or otherwise) Common Stock to deliver
in satisfaction of a sale by such Holder of the Underlying Shares which the
Holder anticipated receiving upon such conversion (a "Buy-In"), then the
Company shall (A) pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder anticipated receiving from the
conversion at issue multiplied by (2) the market price of the Common Stock at
the time of the sale giving rise to such purchase obligation and (B) at the
option of the Holder, either reissue Debentures in principal amount equal to
the principal amount of the attempted conversion or deliver to the Holder the
number of shares of Common Stock that would have been issued had the Company
timely complied with its delivery requirements under Section 4(b)(i). For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of
Debentures with respect to which the market price of the Underlying Shares on
the date of conversion was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In. Notwithstanding
anything contained herein to the contrary, if a Holder requires the Company to
make payment in respect of a Buy-In for the failure to timely deliver
certificates hereunder and the Company timely pays in full such payment, the
Company shall not be required to pay such Holder liquidated damages under
Section 4(b)(ii) in respect of the certificates resulting in such Buy-In.
(c) (i) The conversion price (the "Conversion Price")
in effect on any Conversion Date shall be the lesser of (1) $1.5375 (the
"Initial Conversion Price"), and (2) 77.5% of the average of the lowest three
Per Share Market Values (which need not occur on consecutive Trading Days)
during the twenty Trading Days immediately preceding the applicable Conversion
Date (which may include Trading Days prior to the date on which the Holder is
first entitled to tender a Conversion Notice), provided, that such twenty
Trading Day period shall be extended for the number of Trading Days during
such period in which: (A) trading in the Common Stock is suspended by, or not
traded on, the OTC or a Subsequent Market on which the Common Stock is then
listed, or (B) after the date declared effective by the Commission, the
Underlying Shares Registration Statement is either not effective or the
Prospectus included in the Underlying Shares Registration Statement may not be
used by the Holder for the resale of Underlying Shares.
(ii) If the Company, at any time while the
Debentures are outstanding: (a) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock, (b)
subdivide outstanding shares of Common Stock into a larger number of shares,
(c) combine (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then
the Initial Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator
shall be the number of shares of Common Stock outstanding after such event.
Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or re-classification.
(iii) If the Company, at any time while Debentures
are outstanding, shall issue rights, options or warrants to all holders of
Common Stock (and not to Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Per Share Market
Value at the record date mentioned below, then the Conversion Price shall be
multiplied by a fraction, of which the denominator shall be the number of
shares of the Common Stock (excluding treasury shares, if any) outstanding on
the date of issuance of such rights or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of the Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Per Share Market
Value. Such adjustment shall be made whenever such rights or warrants are
issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants. However, upon the expiration of any such right, option or warrant
to purchase shares of the Common Stock the issuance of which resulted in an
adjustment in the Conversion Price pursuant to this Section, if any such
right, option or warrant shall expire and shall not have been exercised, the
Conversion Price shall immediately upon such expiration be recomputed and
effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Conversion Price
made pursuant to the provisions of this Section after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights, options or warrants been made on the basis of
offering for subscription or purchase only that number of shares of the Common
Stock actually purchased upon the exercise of such rights, options or warrants
actually exercised.
(iv) If the Company or any subsidiary thereof, as
applicable, at any time while Debentures are outstanding, shall offer, sell,
grant any option to purchase or offer, sell or grant any right to reprice its
securities, or otherwise dispose of or issue (or announce any offer, sale,
grant or any option to purchase or other disposition) any Common Stock or any
equity or equity equivalent securities (including any equity, debt or other
instrument that is at any time over the life thereof convertible into or
exchangeable for Common Stock) (collectively, "Common Stock Equivalents")
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Conversion Price (if the holder of the Common Stock or Common
Stock Equivalent so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of
Common Stock at a price per share which is less than the Conversion Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price), then, at the sole option of the Holder, the Conversion Price shall be
adjusted for such conversions as Holders shall indicate in its Conversion
Notices to equal the conversion, exchange or purchase price for such Common
Stock or Common Stock Equivalents (including any reset provisions thereof) at
issue. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. The Company shall notify the Holder in writing,
no later than the business day following the issuance of any Common Stock or
Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustments under this paragraph
shall be made as a result of (i)the granting of options or warrants to
employees, officers and directors of the Company, and the issuance of Common
Stock upon exercise of such options or warrants granted under any stock option
plan or employee benefit plan (as defined in Rule 405 of Regulation C)
heretofore or hereinafter duly adopted by the Company and (ii) shares of
Common Stock issuable upon exercise of any currently outstanding warrants and
other outstanding convertible securities of the Company, in each case as and
to the extent disclosed in Schedule 2.1(c) to the Purchase Agreement (but not
as to any amendments or modifications of the terms of such securities after
the date of this Agreement, including "back-dated" agreements).
(v) If the Company, at any time while Debentures
are outstanding, shall distribute to all holders of Common Stock (and not to
Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price at which Debentures shall thereafter be convertible shall be determined
by multiplying the Conversion Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Per Share
Market Value determined as of the record date mentioned above, and of which
the numerator shall be such Per Share Market Value on such record date less
the then fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one outstanding share
of the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the
Holders of the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(vi) In case of any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, the Holders shall have the
right thereafter to, at their option, (A) convert the then outstanding
principal amount, together with all accrued but unpaid interest and any other
amounts then owing hereunder in respect of this Debenture only into the shares
of stock and other securities, cash and property receivable upon or deemed to
be held by holders of the Common Stock following such reclassification or
share exchange, and the Holders of the Debentures shall be entitled upon such
event to receive such amount of securities, cash or property as the shares of
the Common Stock of the Company into which the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts
then owing hereunder in respect of this Debenture could have been converted
immediately prior to such reclassification or share exchange would have been
entitled or (B) require the Company to prepay the aggregate of its outstanding
principal amount of Debentures, plus all interest and other amounts due and
payable thereon, at a price determined in accordance with Section 3(b). The
entire prepayment price shall be paid in cash. This provision shall similarly
apply to successive reclassifications or share exchanges.
(vii) All calculations under this Section 4 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may
be. No adjustments in either the Conversion Price or the Initial Conversion
Price shall be required if such adjustment is less than $0.01; provided,
however, that any adjustments which by reason of this Section are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
(viii) Whenever either the Initial Conversion Price
or the Conversion Price is adjusted pursuant to any of Section 4(c)(ii) - (v),
the Company shall promptly mail to each Holder a notice setting forth the
Initial Conversion Price or Conversion Price (as applicable) after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(ix) If (A) the Company shall declare a dividend
(or any other distribution) on the Common Stock; (B) the Company shall declare
a special nonrecurring cash dividend on or a redemption of the Common Stock;
(C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of
the Company shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, of
any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each
office or agency maintained for the purpose of conversion of the Debentures,
and shall cause to be mailed to the Holders at their last addresses as they
shall appear upon the stock books of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of
the Common Stock of record shall be entitled to exchange their shares of the
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange;
provided, that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice. Holders are entitled to convert Debentures
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.
(x) In case of any (1) merger or consolidation of
the Company with or into another Person, or (2) sale by the Company of more
than one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right to (A) exercise any rights under
Section 3(b), (B) convert its aggregate principal amount of Debentures then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such
event or series of related events to receive such amount of securities, cash
and property as the shares of Common Stock into which such aggregate principal
amount of Debentures could have been converted immediately prior to such
merger, consolidation or sales would have been entitled, or (C) in the case of
a merger or consolidation, require the surviving entity to issue to the Holder
convertible debentures with a principal amount equal to the aggregate
principal amount of Debentures then held by such Holder, plus all accrued and
unpaid interest and other amounts owing thereon, which newly issued
convertible debentures shall have terms identical (including with respect to
conversion) to the terms of this Debenture, and shall be entitled to all of
the rights and privileges of a Holder of Debentures set forth herein and the
agreements pursuant to which the Debentures were issued. In the case of
clause (C), the conversion price applicable for the newly issued shares of
convertible preferred stock or convertible debentures shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately
prior to the effectiveness or closing date for such transaction. The terms of
any such merger, sale or consolidation shall include such terms so as to
continue to give the Holders the right to receive the securities, cash and
property set forth in this Section upon any conversion or redemption following
such event. This provision shall similarly apply to successive such events.
(d) The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of the Debentures and
payment of interest on the Debentures, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holders, not less than such number of shares of the Common
Stock as shall (subject to any additional requirements of the Company as to
reservation of such shares set forth in the Purchase Agreement) be issuable
(taking into account the adjustments and restrictions of Section 4(b)) upon
the conversion of the outstanding principal amount of the Debentures and
payment of interest hereunder. The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and, if the Underlying Shares
Registration Statement has been declared effective under the Securities Act,
registered for public sale in accordance with such Underlying Shares
Registration Statement.
(e) Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect
of any final fraction of a share based on the Closing Price at such time. If
the Company elects not, or is unable, to make such a cash payment, the Holder
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.
(f) The issuance of certificates for shares of the Common
Stock on conversion of the Debentures shall be made without charge to the
Holders thereof for any documentary stamp or similar taxes that may be payable
in respect of the issue or delivery of such certificate, provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the Holder of such Debentures so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
(g) Any and all notices or other communications or
deliveries to be provided by the Holders hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service or sent by certified or registered mail, postage prepaid, addressed to
the Company, at 0000 X. Xxxxxxxx Xxxxxx, Xxxx X-0, Xxx Xxxxx, Xxxxxx
00000, Facsimile No.: (000) 000-0000, Attn: Xxxx Xxxxxxxxxx, or such other
address or facsimile number as the Company may specify for such purposes by
notice to the Holders delivered in accordance with this Section. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, sent by
a nationally recognized overnight courier service or sent by certified or
registered mail, postage prepaid, addressed to each Holder at the facsimile
telephone number or address of such Holder appearing on the books of the
Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York City time), (ii) the date after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such
date, (iii) four days after deposit in the United States mail, (iv) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (v) upon actual receipt by the party to whom
such notice is required to be given.
Section 5. Optional Prepayment. (a) The Company shall have
the right, exercisable at any time and from time to time after the Original
Issue Date and upon seven Trading Days' prior written notice to the affected
Holders (an "Optional Prepayment Notice"), to prepay all or any portion of the
outstanding principal amount of the Debentures for which Conversion Notices
have not previously been delivered or for which an Event of Default shall not
have been declared. The prepayment price applicable to prepayments under this
Section 5(a) shall equal the Optional Prepayment Amount and shall be paid in
cash on the seventh Trading Day following the date that the Company first
delivered the Optional Prepayment Notice (the "Optional Prepayment Date").
Any such prepayment shall be free of any claim of subordination. The Holders
shall have the right to tender, and the Company shall honor, Conversion
Notices delivered prior to the expiration of the fifth Trading Day after
delivery of an Optional Prepayment Notice for such Debentures.
(b) If any portion of the Optional Prepayment Amount shall
not be paid by the Company by the expiration of the Optional Prepayment Date,
the Company may not again exercise any right of prepayment under this Section.
In addition, the Optional Prepayment Amount shall be increased by an amount
equal to the Late Fee, to accrue daily from the date such interest is due
hereunder through and including the date of payment (which amount shall be
paid as liquidated damages and not as a penalty). In addition, if any portion
of the Optional Prepayment Amount remains unpaid through the expiration of the
Optional Prepayment Date, the Holder subject to such prepayment may elect by
written notice to the Company to either (x) demand conversion in accordance
with the formula and the time period therefor set forth in Section 4 of any
portion of the principal amount of Debentures for which the Optional
Prepayment Amount, plus accrued liquidated damages and accrued interest
thereon, has not been paid in full (the "Unpaid Prepayment Principal Amount"),
in which event the applicable Per Share Market Value shall be the lower of the
Per Share Market Value calculated on the Optional Prepayment Date and the Per
Share Market Value as of the Holder's written demand for conversion, or (y)
invalidate ab initio such optional prepayment, notwithstanding anything herein
contained to the contrary. If the Holder elects option (x)above, the Company
shall, within three Trading Days after such election is deemed delivered
hereunder, deliver to the Holder the shares of Common Stock issuable upon
conversion of the Unpaid Prepayment Principal Amount subject to such
conversion demand and otherwise perform its obligations hereunder with
respect thereto.
Section 6. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Business Day" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday in the United States or a day on
which banking institutions in the State of New York or the State of Nevada are
authorized or required by law or other government action to close.
"Change of Control Transaction" means the occurrence of any
of (i) an acquisition after the date hereof by an individual or legal entity
or "group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through legal or beneficial ownership of
capital stock of the Company, by contract or otherwise) of in excess of 33% of
the voting securities of the Company, (ii) a replacement at one time or over
time of more than one-half of the members of the Company's board of directors
which is not approved by a majority of those individuals who are members of
the board of directors on the date hereof (or by those individuals who are
serving as members of the board of directors on any date whose nomination to
the board of directors was approved by a majority of the members of the board
of directors who are members on the date hereof), (iii) the merger of the
Company with or into another entity that is not wholly-owned by the Company,
consolidation or sale of 50% or more of the assets of the Company in one or a
series of related transactions, or (iv) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (i), (ii) or (iii).
"Closing Price" means on any particular date (a)the closing sales
price per share of Common Stock on such date on the Subsequent Market on which
the shares of Common Stock are then listed or quoted (as reported by Bloomberg
L.P. at 4:15 PM (New York time) for the closing sales price for regular
session trading on such day), or if there is no such price on such date, then
the closing sales price on the Subsequent Market on the date nearest preceding
such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the
closing sales price for regular session trading on such day), or (b)if the
shares of Common Stock are not then listed or quoted on a Subsequent Market,
the closing sales price for a share of Common Stock in the OTC, as reported by
the National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c)if the shares of Common Stock are not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the
"Pink Sheet" quotes for the relevant conversion period, as determined in good
faith by the Holder, or (d)if the shares of Common Stock are not then publicly
traded the fair market value of a share of Common Stock as determined by an
Appraiser selected in good faith by the Holders of a majority in interest of
the principal amount of Debentures then outstanding.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $.001 par value per
share, of the Company and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Mandatory Prepayment Amount" for any Debentures shall equal
the sum of (i) the greater of: (A) 130% of the principal amount of Debentures
to be prepaid, plus all accrued and unpaid interest thereon, plus all other
accrued and unpaid amounts due hereunder, and (B) the principal amount of
Debentures to be prepaid, plus all accrued and unpaid interest thereon, plus
all other accrued and unpaid amounts due hereunder, divided by the Conversion
Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise
due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever
is less, multiplied by the Per Share Market Value on (x) the date the
Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the
Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii)
all other amounts, costs, expenses and liquidated damages due in respect of
such Debentures.
"Optional Prepayment Amount" for any Debentures shall equal
the sum of (i) the greater of (A) 100% of the principal amount of Debentures
to be prepaid, plus all accrued and unpaid interest thereon, and (B) the
principal amount of Debentures to be prepaid, plus all accrued and unpaid
interest thereon, divided by the Conversion Price on (x) the date the Optional
Prepayment Amount is due or (y) the date the Optional Prepayment Amount is
paid in full, whichever is less, multiplied by the Per Share Market Value on
(x) the date the Optional Prepayment Amount is due or (y) the date the
Optional Prepayment Amount is paid in full, whichever is greater, and (ii) all
other amounts, costs, expenses and liquidated damages due in respect of such
Debentures.
"Original Issue Date" shall mean the date of the first
issuance of the Debentures regardless of the number of transfers of any
Debenture and regardless of the number of instruments which may be issued to
evidence such Debenture.
"Per Share Market Value" means on any particular date (a)the
closing bid price per share of Common Stock on such date on the Subsequent
Market on which the shares of Common Stock are then listed or quoted (as
reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing sales
price for regular session trading on such day), or if there is no such price
on such date, then the closing bid price on the Subsequent Market on the date
nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New
York time) for the closing sales price for regular session trading on such
day), or (b)if the shares of Common Stock are not then listed or quoted on a
Subsequent Market, the closing bid price for a share of Common Stock in the
OTC, as reported by the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c)if the shares of Common Stock are not
then reported by the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices), then
the average of the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the Holder, or (d)if the shares of Common Stock
are not then publicly traded the fair market value of a share of Common Stock
as determined by an Appraiser selected in good faith by the Holders of a
majority in interest of the principal amount of Debentures then outstanding.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Purchase Agreement" means the Convertible Debenture Purchase
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Trading Day" means (a)a day on which the shares of Common
Stock are traded on the OTC or on such Subsequent Market on which the shares
of Common Stock are then listed or quoted, or (b)if the shares of Common Stock
are not listed on a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC, or
(c)if the shares of Common Stock are not quoted on the OTC, a day on which the
shares of Common Stock are quoted in the over-the-counter market as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, that in the
event that the shares of Common Stock are not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except a Business
Day.
"Transaction Documents" shall have the meaning set forth in
the Purchase Agreement.
"Underlying Shares" means the shares of Common Stock issuable
upon conversion of Debentures or as payment of interest in accordance with the
terms hereof.
"Underlying Shares Registration Statement" means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement, covering among other things the resale of the Underlying
Shares and naming the Holder as a "selling stockholder" thereunder.
Section 7. Except as expressly provided herein, no provision of
this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, interest and liquidated
damages (if any) on, this Debenture at the time, place, and rate, and in the
coin or currency, herein prescribed. This Debenture is a direct obligation of
the Company. This Debenture ranks pari passu with all other Debentures now or
hereafter issued under the terms set forth herein. As long as there are
Debentures outstanding, the Company shall not and shall cause it subsidiaries
not to, without the consent of the Holders, (i) amend its certificate of
incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Holders; (ii) repay, repurchase or offer to repay, repurchase or
otherwise acquire shares of its Common Stock or other equity securities other
than as to the Underlying Shares to the extent permitted or required under the
Transaction Documents; or (iii) enter into any agreement with respect to any
of the foregoing. The Company may only voluntarily prepay the outstanding
principal amount on the Debentures in accordance with Section 5 hereof.
Section 8. 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 9. If this Debenture shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested,
all reasonably satisfactory to the Company.
Section 10. No indebtedness of the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or
upon liquidation or dissolution or otherwise. The Company will not and will
not permit any of its subsidiaries to, directly or indirectly, enter into,
create, incur, assume or suffer to exist any indebtedness of any kind, on or
with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom that is senior in
any respect to the Company's obligations under the Debentures.
Section 11. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws thereof. The Company and the Holder hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, or that such
suit, action or proceeding is improper. Each of the Company and the Holder
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by receiving a copy
thereof sent to the Company at the address in effect for notices to it under
this instrument and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Each party
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby. If either party
shall commence an action or proceeding to enforce any provisions of a
Transaction Document, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its' attorneys fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
Section 12. Any waiver by the Company or the Holder of a breach of
any provision of this Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Debenture. The failure of the Company or the Holder to
insist upon strict adherence to any term of this Debenture on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Debenture. Any waiver must be in writing.
Section 13. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder
shall violate applicable laws governing usury, the applicable rate of interest
due hereunder shall automatically be lowered to equal the maximum permitted
rate of interest. The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Debentures as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this indenture, and
the Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impeded the execution of any power
herein granted to the Holder, but will suffer and permit the execution of
every such as though no such law has been enacted.
Section 14. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has caused this Convertible
Debenture to be duly executed by a duly authorized officer as of the date
first above indicated.
WORLD HOMES, INC.
By:_____________________________________
Name: Xxxx Xxxxxxxxxx
Title: President
EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal and, if specified, interest
under the 6% Convertible Debenture of World Homes, Inc., (the "Company") due
twelve months from issuance into shares of common stock, $.001 par value per
share (the "Common Stock"), of the Company according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. No
fee will be charged to the holder for any conversion, except for such transfer
taxes, if any.
Conversion calculations:
Date to Effect Conversion
Principal Amount of Debentures tobeConverted
Payment of Interest in Kind * Yes * No
If yes, $ _______ of Interest Accrued on Account of Conversion at Issue
Number of shares of Common Stock tobeIssued
Applicable Conversion Price
Signature
Name
Address
Schedule 1
CONVERSION SCHEDULE
World Homes, Inc.
6% Convertible Debentures due twelve months from issuance, in the aggregate
principal amount of $1,000,000 issued by World Homes, Inc. This Conversion
Schedule reflects conversions made under Section 4(a)(i) of the above
referenced Debentures.
Dated:
-------------- ----------------- ----------------- -----------------
Date of Amount of Aggregate Company
Conversion Conversion Principal Attest
(or for first Amount
entry, Original Remaining
Issue Date) Subsequent to
Conversion
(or original
Principal
Amount)
-------------- ----------------- ----------------- -----------------
-------------- ----------------- ----------------- -----------------
-------------- ----------------- ----------------- -----------------
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