Dated: December ___, 2005
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.
No. CCP-1 $250,000
ALFA INTERNATIONAL HOLDINGS CORP.
Secured Convertible Debenture Due December ___, 2008
This Secured Convertible Debenture (the "Debenture") is
issued by ALFA INTERNATIONAL HOLDINGS CORP., a Delaware
corporation (the "Obligor"), to CORNELL CAPITAL PARTNERS, LP
(the "Holder"), pursuant to that certain Securities Purchase
Agreement (the "Securities Purchase Agreement") of even date
herewith.
FOR VALUE RECEIVED, the Obligor hereby promises to pay to
the Holder or its successors and assigns the principal sum of
Two Hundred Fifty Thousand Dollars ($250,000) together with
accrued but unpaid interest on or before December ___, 2008 (the
"Maturity Date") in accordance with the following terms:
Interest. Interest shall accrue on the outstanding
principal balance hereof at an annual rate equal to ten percent
(10%). Interest shall be calculated on the basis of a 360-day
year and the actual number of days elapsed, to the extent
permitted by applicable law. Interest hereunder will be paid to
the Holder or its assignee (as defined in Section 4) in whose
name this Debenture is registered on the records of the Obligor
regarding registration and transfers of Debentures (the
"Debenture Register").
Right of Redemption. The Obligor at its option shall have
the right, with three (3) business days advance written notice
(the "Redemption Notice"), to redeem a portion or all amounts
outstanding under this Debenture prior to the Maturity Date.
The Obligor shall pay an amount equal to the principal amount
outstanding and accrued interest being redeemed, plus a
redemption premium of twenty percent (20%) ("Redemption
premium") of the amount redeemed (collectively referred to as
the "Redemption Amount"). The Obligor shall deliver to the
Holder the Redemption Amount on the third (3rd) business day
after the Redemption Notice.
Notwithstanding the foregoing in the event that the Obligor
has elected to redeem a portion of the outstanding principal
amount and accrued interest under this Debenture the Holder
shall still be entitled to effectuate Conversions as
contemplated hereunder.
Security Agreements. This Debenture is secured by a
Security Agreement (the "Security Agreement") of even date
herewith between the Obligor and the Holder, Subsidiary
Security Agreements by and among the Obligor, the Holder and
Contact Sports, Inc., a New York corporation, and Ty-Breakers
Corp., a New York corporation, each a wholly owned subsidiary of
the Obligor, and a Pledge and Escrow Agreement (the "Pledge
Agreement") of even date herewith among the Obligor, the Holder,
and the Escrow Agent.
Consent of Holder to Sell Capital Stock or Grant Security
interests. So long as any of the principal amount or interest
on this Debenture remains unpaid and unconverted, except for
shares of common stock issuable upon exercise of presently
outstanding warrants, set forth on the attached Schedule I or
upon conversion of presently outstanding Series B Preferred
Stock, set forth on the attached Schedule I, or any dividends
payable thereon, the Obligor shall not, without the prior
consent of the Holder, (i) issue or sell shares of Common
Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common
Stock, as quoted by Bloomberg, LP (the "Bid Price") determined
immediately prior to its issuance, (ii) issue any warrant,
option, right, contract, call, or other security instrument
granting the holder thereof, the right to acquire
Common Stock without consideration or for a consideration less
than such Common Stock's Bid Price value determined immediately
prior to it's issuance, (iii) enter into any security instrument
granting the holder a security interest in any and all assets of
the Obligor, or (iv) file any registration statement on Form S-8
except in connection with the Obligor's existing Stock Option
Plan (the "Plan") of no more than 10% of the Obligor's
outstanding shares of Common Stock as of the date hereof.
Rights of First Refusal. So long as any portion of this
Debenture is outstanding (including principal or accrued
interest), if the Obligor intends to raise additional capital by
the issuance or sale of capital stock of the Obligor, including
without limitation shares of any class of common stock, any
class of preferred stock, options, warrants or any other
securities convertible or exercisable into shares of common
stock (whether the offering is conducted by the Obligor,
underwriter, placement agent or any third party) the Obligor
shall be obligated to offer to the Holder such issuance or sale
of capital stock, by providing in writing the principal amount
of capital it intends to raise and outline of the material terms
of such capital raise, prior to the offering such issuance or
sale of capital stock to any third parties including, but not
limited to, current or former officers or directors, current or
former shareholders and/or investors of the obligor,
underwriters, brokers, agents or other third parties. The
Holder shall have ten (10) business days from receipt of
such notice of the sale or issuance of capital stock to accept
or reject all or a portion of such capital raising offer.
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. Events of Default.
(a) An "Event of Default", wherever used herein, means any
one of the following events (whatever the reason and whether
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 on or other charges in respect of this Debenture, 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 Obligor shall fail to observe or perform any
other covenant, agreement or warranty contained in, or otherwise
commit any breach or default of any provision of this Debenture
(except as may be covered by Section 2(a)(i) hereof) or any
Transaction Document (as defined in Section 4) which is not
cured with in the time prescribed;
(iii) The Obligor or any subsidiary of the Obligor
shall commence, or there shall be commenced against the Obligor
or any subsidiary of the Obligor under any applicable bankruptcy
or insolvency laws as now or hereafter in effect or any
successor thereto, or the Obligor or any subsidiary of the
Obligor 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 Obligor or
any subsidiary of the Obligor or there is commenced against the
Obligor or any subsidiary of the Obligor any such bankruptcy,
insolvency or other proceeding which remains undismissed for a
period of 61 days; or the Obligor or any subsidiary of the
Obligor is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is
entered; or the Obligor or any subsidiary of the Obligor suffers
any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period
of sixty one (61) days; or the Obligor or any subsidiary of
the Obligor makes a general assignment for the benefit of
creditors; or the Obligor or any subsidiary of the Obligor
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 Obligor or any subsidiary of the Obligor shall
call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the
Obligor or any subsidiary of the Obligor 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 Obligor or any subsidiary of the
Obligor for the purpose of effecting any of the foregoing;
(iv) The Obligor or any subsidiary of the Obligor 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 Obligor or
any subsidiary of the Obligor 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 cease to be quoted for
trading or listed for trading on either the Nasdaq OTC Bulletin
Board ("OTC"), Nasdaq SmallCap Market, New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market (each, a
"Subsequent Market") and shall not again be quoted or listed for
trading thereon within five (5) Trading Days of such delisting;
(vi) The Obligor or any subsidiary of the Obligor
shall be a party to any Change of Control Transaction (as
defined .in Section 4);
(vii) The Obligor shall fail to file the Underlying
Shares Registration Statement (as defined in Section 4) with
the Commission (as defined in Section 4), or the Underlying
Shares Registration Statement shall not have been declared
effective by the Commission, in each case within the time
periods set forth in the Registration Rights Agreement of even
date herewith between the Obligor and the Holder;
(viii) If the effectiveness of the Underlying Shares
Registration Statement lapses for any reason or the Holder shall
not be permitted to resell the shares of Common Stock
underlying this Debenture under the Underlying Shares
Registration Statement, in either case, for more than five (5)
consecutive Trading Days or an aggregate of eight Trading Days
(which need not be consecutive Trading Days);
(ix) The Obligor shall fail for any reason to deliver
Common Stock certificates to a Holder prior to the fifth (5th)
Trading Day after a Conversion Date or the Obligor 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 this Debenture in accordance
with the terms hereof;
(x) The Obligor shall fail for any reason to deliver
the payment in cash pursuant to a Buy-In (as defined herein)
within three (3) days after notice is claimed delivered
hereunder;
(b) During the time that any portion of this Debenture is
outstanding, if any Event of Default has occurred and has not
been cured by the Obligor within fifteen (15) calendar days of
written notice of such default, the full principal amount of
this Debenture, together with interest and other amounts owing
in respect thereof, to the date of acceleration shall become at
the Holder's election, immediately due and payable in cash,
provided however, the Holder may request (but shall have no
obligation to request) payment of such amounts in Common Stock
of the Obligor. In addition to any other remedies, the Holder
shall have the right (but not the obligation) to convert this
Debenture at any time after (x) an Event of Default or (y) the
Maturity Date at the Conversion Price then in-effect. The
Holder need not provide and the Obligor 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. No such rescission or
annulment shall affect any subsequent Event of Default or impair
any right consequent thereon. Upon an Event of Default,
notwithstanding any other provision of this Debenture or any
Transaction Document, the Holder shall have no obligation to
comply with or adhere to any limitations, if any, on the
conversion of this Debenture or the sale of the Underlying
Shares.
Section 3. Conversion.
(a) (i) Conversion at Option of Holder.
(A) 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, after the Original Issue Date
(as defined in Section 4) (subject to the limitations on
conversion set forth in Section 3(a)(ii) hereof). The number
of shares of Common Stock issuable upon a conversion
hereunder equals the quotient obtained by dividing (x) the
outstanding amount of this Debenture to be converted by (y) the
Conversion Price (as defined in Section 3(c)(i)). The
Obligor shall deliver Common Stock certificates to the Holder
prior to the Fifth (5th) Trading Day after a Conversion Date.
(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 principal and interest hereunder in shares
of Common Stock; (2) the Common Stock is not listed or quoted
for trading on the OTC or on a Subsequent Market; (3) the
Obligor has failed to timely satisfy its conversion; or (4)
the issuance of such shares of Common Stock would result in
a violation of Section 3(a)(ii), then, at the option of
the Holder, the Obligor, in lieu of delivering shares of
Common Stock pursuant to Section 3(a)(i)(A), shall deliver,
within three (3) Trading Days of each applicable Conversion
Date, an amount in cash equal to the product of the
outstanding principal amount to be converted plus any interest
due therein divided by the Conversion Price and multiplied by
the highest closing price of the stock from date of the
conversion notice till the date that such cash payment is made.
Further, if the Obligor shall not have delivered any cash
due in respect of conversion of this Debenture or as payment of
interest thereon by the fifth (5th) Trading Day after the
Conversion Date, the Holder may, by notice to the Obligor,
require the Obligor to issue shares of Common Stock pursuant to
Section 3(c), except that for such purpose the Conversion Price
applicable thereto shall be the lesser of the Conversion Price
on the Conversion Date and the Conversion Price on the date of
such Holder demand. Any such shares will be subject to the
provisions of this Section.
(C) The Holder shall effect conversions by
delivering to the Obligor a completed notice in the form
attached hereto as Exhibit A (a "Conversion Notice"). The
date on which a Conversion Notice is delivered is the
"Conversion Date." Unless the Holder is converting the entire
principal amount outstanding under this Debenture, the Holder is
not required to physically surrender this Debenture to the
Obligor in order to effect conversions.
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. The Holder and the Obligor 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.
(ii) Certain Conversion Restrictions.
(A) A Holder may not convert this Debenture 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 any affiliate
thereof, beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.9% of the then issued and
outstanding shares of Common Stock, including shares issuable
upon conversion of, and payment of interest on, this Debenture
held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Obligor
the number of shares of Common Stock it may hold at the time of
a conversion hereunder, unless the conversion at issue would
result in the issuance of shares of Common Stock in excess of
4.9% of the then outstanding shares of Common Stock without
regard to any other shares which may be beneficially owned
by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the
restriction contained in this Section will limit any particular
conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section
applies, the determination of which portion of the principal
amount of this Debenture is convertible shall be the
responsibility and obligation of the Holder. If the
Holder has delivered a Conversion Notice for a principal
amount of this Debenture 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 Obligor 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 3(a)(i)(A)
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. The provisions of
this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 65 days prior
notice to the Obligor. Other Holders shall be unaffected by
any such waiver.
(b) (i) Nothing herein shall limit a Holder's right to
pursue actual damages or declare an Event of Default pursuant to
Section 2 herein for the Obligor'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, in each case without the
need to post a bond or provide other security. The exercise of
any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under
applicable law.
(ii) In addition to any other rights available to the
holder, if the Obligor fails to deliver to the Holder such
certificate or certificates pursuant to Section 3(a)(i)(A) by
the fifth (5th) Trading Day after the Conversion Date, and if
after such fifth (5th) 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 Obligor 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 a
Debenture in the 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 Obligor timely complied with its delivery
requirements under Section 3(a)(i)(A). 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 Obligor shall be required to pay the
Holder $1,000. The Holder shall provide the Obligor written
notice indicating the amounts payable to the Holder in respect
of the Buy-In.
(c) (i) The Holder is entitled, at its option, to
convert, and sell on the same day, at any time, until payment
in full of this Debenture, all or any part of the principal
amount of the Debenture, plus accrued interest, into shares
of the Obligor's common stock, par value $0.001 per share, at
the price per share equal to ninety percent (90%) of the
lowest volume weighted average prices of the Common Stock, as
quoted by Bloomberg, LP, for the fifteen (15) trading days
immediately preceding the Conversion Date (the "Conversion
Price"), which may be adjusted pursuant to the other terms of
this Debenture.
(ii) If the Obligor, at any time while this
Debenture is outstanding, shall (a) 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, other than on its Series B
Preferred Stock, set forth on the attached Schedule I, issued
prior to, and outstanding on the date of this Debenture, (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 Obligor, then
the Conversion Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding 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 Obligor, at any time while this Debenture
is outstanding, shall issue rights, options or warrants to all
holders of Common Stock (and not to the Holder) entitling them
to subscribe for or purchase shares of Common Stock at a
price per share less than the Conversion Price, 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 the Conversion Price. 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 Obligor or any subsidiary thereof, as
applicable, at any time while this Debenture is outstanding,
shall issue shares of Common Stock or rights, warrants,
options or other securities or debt that are convertible
into or exchangeable for shares of Common Stock ("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 to mirror 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 Obligor shall notify
the Holder in writing, no later than one (1) 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
adjustment under this Section shall be made as a result of
issuances and exercises of options to purchase shares of Common
Stock issued for compensatory purposes pursuant to any of the
Obligor's stock option or stock purchase plans.
(v) If the Obligor, at any time while this Debenture
is outstanding, shall distribute to all holders of Common Stock
(and not to the Holder) 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 this
Debenture 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 Closing Bid Price determined as of the
record date mentioned above, and of which the numerator shall be
such Closing Bid Price on such record date less the then fair
market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the
Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the
Holder of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one
share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective
immediately after the record date mentioned above.
(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 Holder shall have the right thereafter to, at its
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
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 Holder of this Debenture shall be entitled upon such
event to receive such amount of securities, cash or property as
the shares of the Common Stock of the Obligor 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 Obligor
to prepay the outstanding principal amount of this Debenture,
plus all interest and other amounts due and payable thereon.
The entire prepayment price shall be paid in cash. This
provision shall similarly apply to successive reclassifications
or share exchanges.
(vii) The Obligor shall maintain a share reserve
of not less than one hundred percent (100%) of the shares of
Common Stock issuable upon conversion of this Debenture; and
within three (3) Business Days following the receipt by the
Obligor of a Holder's notice that such minimum number of
Underlying Shares is not so reserved, the Obligor shall
promptly reserve a sufficient number of shares of Common Stock
to comply with such requirement.
(viii) All calculations under this Section 3
shall be rounded up to the nearest $0.001 of a share.
(ix) Whenever the Conversion Price is adjusted
pursuant to Section 3 hereof, the Obligor shall promptly
mail to the Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
(x) If (A) the Obligor shall declare a dividend
(or any other distribution) on the Common Stock; (B) the
Obligor shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Obligor 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 Obligor shall be required
in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Obligor is a party,
any sale or transfer of all or substantially all of the
assets of the Obligor, of any compulsory share exchange
whereby the Common Stock is converted into other securities,
cash or property; or (E) the Obligor shall authorize the
voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Obligor; then, in each case, the
Obligor shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Debenture,
and shall cause to be mailed to the Holder at its last address
as it shall appear upon the stock books of the Obligor, at
least twenty (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. The Holder is entitled to convert
this Debenture during the 20-day calendar period commencing
the date of such notice to the effective date of the event
triggering such notice.
(xi) In case of any (1) merger or consolidation of
the Obligor or any subsidiary of the Obligor with or into
another Person, or (2) sale by the Obligor or any subsidiary
of the Obligor of more than one-half of the assets of the
Obligor in one or a series of related transactions, a Holder
shall have the right to (A) exercise any rights under Section
2(b), (B) convert the aggregate amount of this Debenture 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 this Debenture
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 a convertible
Debenture with a principal amount equal to the aggregate
principal amount of this Debenture then held by such Holder,
plus all accrued and unpaid interest and other amounts owing
thereon, which such newly issued convertible Debenture 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 the Holder of this Debenture
set forth herein and the agreements pursuant to which this
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 Holder 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 Obligor 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 this Debenture and payment of interest on this
Debenture, each as herein provided, free from preemptive
rights or any other actual contingent purchase rights of
persons other than the Holder, not less than such number of
shares of the Common Stock as shall (subject to any additional
requirements of the Obligor as to reservation of such shares
set forth in this Debenture) be issuable (taking into account
the adjustments and restrictions of Sections 2(b) and 3(c))
upon the conversion of the outstanding principal amount of
this Debenture and payment of interest hereunder. The
Obligor 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 Obligor 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 Bid Price at such time. If the Obligor
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 this Debenture shall be made
without charge to the Holder 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 Obligor 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 Debenture so converted and the Obligor
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 Obligor the amount of such tax
or shall have established to the satisfaction of the Obligor
that such tax has been paid.
(g) Any notices, consents, waivers or other communications
required or permitted to be given under the terms hereof must
be in writing and will be deemed to have been delivered: (i)
upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by
the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same.
The addresses and facsimile numbers for such communications
shall be:
If to the Obligor, to: Alfa International Holdings Corp.
Empire State Building - Suite 0000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxx Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx -
00xx Xxxxx Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
With a copy to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address and/or facsimile number and/or to
the attention of such other person as the recipient party
has specified by written notice given to each other party three
(3) business days prior to the effectiveness of such change.
Written confirmation of receipt (i) given by the recipient
of such notice, consent, waiver or other communication, (ii)
mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
Section 4. 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 are authorized or
required by law or other government action to close.
"Change of Control Transaction" means the occurrence of
(a) 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 Obligor, by contract or otherwise) of in excess of fifty
percent (50%) of the voting securities of the Obligor (except
that the acquisition of voting securities by the Holder shall
not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more
than one-half of the members of the board of directors of the
Obligor 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 thereof), (c) the
merger, consolidation or sale of fifty percent (50%) or more
of the assets of the Obligor or any subsidiary of the Obligor in
one or a series of related transactions with or into another
entity, or (d) the execution by the Obligor of an agreement to
which the Obligor is a party or by which it is bound,
providing for any of the events set forth above in (a), (b) or
(c).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.001,
of the Obligor and stock of any other class into which such
shares may hereafter be changed or reclassified.
"Conversion Date" shall mean the date upon which the Holder
gives the Obligor notice of their intention to effectuate a
conversion of this Debenture into shares of the Obligor's
Common Stock as outlined herein.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Original Issue Date" shall mean the date of the first
issuance of this Debenture regardless of the number of transfers
and regardless of the number of instruments, which may be
issued to evidence such Debenture.
"Closing Bid Price" means the price per share in the last
reported trade of the Common Stock on the OTC or on the
exchange which the Common Stock is then listed as quoted by
Bloomberg, LP.
"Person" means a corporation, an association, a
partnership, organization, a business, an individual, a
government or political subdivision thereof or a governmental
agency.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Trading Day" means a day on which the shares of Common
Stock are quoted on the OTC or quoted or traded on such
Subsequent Market on which the shares of Common Stock are then
quoted or listed; provided, that in the event that the shares of
Common Stock are not listed or quoted, then Trading Day shall
mean a Business Day.
"Transaction Documents" means the Securities Purchase
Agreement or any other agreement delivered in connection with
the Securities Purchase Agreement, including, without
limitation, the Security Agreement, the Subsidiary Agreements,
the Pledge Agreement, the Irrevocable Transfer Agent
instructions, the Investor Registration Rights Agreement and the
Warrant of even date herewith.
"Underlying Shares" means the shares of Common Stock
issuable upon conversion of this Debenture 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 5. Except as expressly provided herein,
no provision of this Debenture shall alter or impair the
obligations of the Obligor, which are absolute and
unconditional, to pay the principal of, interest and other
charges (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 Obligor. This Debenture
ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. As long as this
Debenture is outstanding, the Obligor shall not and shall cause
their subsidiaries not to, without the consent of the Holder,
(i) amend its certificate of incorporation, bylaws or other
charter documents so as to adversely affect any rights of the
Holder; (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.
Section 6. This Debenture shall not entitle the Holder
to any of the rights of a stockholder of the Obligor, 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
Obligor, unless and to the extent converted into shares of
Common Stock in accordance with the terms hereof.
Section 7. If this Debenture is mutilated, lost, stolen
or destroyed, the Obligor shall execute and deliver, in
exchange and substitution for and upon cancellation of the
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 Obligor.
Section 8. No indebtedness of the Obligor is senior to
this Debenture in right of payment, whether with respect to
interest, damages or upon liquidation or dissolution or
otherwise. Without the Holder's consent, except for security
interest by Contact Sports, Inc. to its factor, the Obligor 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 there from
that is senior in any respect to the obligations of the
Obligor under this Debenture.
Section 9. This Debenture shall be governed by and
construed in accordance with the laws of the State of New
Jersey, without giving effect to conflicts of laws thereof.
Each of the parties consents to the jurisdiction of the Superior
Courts of the State of New Jersey sitting in Xxxxxx County, New
Jersey and the U.S. District Court for the District of New
Jersey sitting in Newark, New Jersey in connection with any
dispute arising under this Debenture and hereby waives, to the
maximum extent permitted by law, any objection, including any
objection based on forum non conveniens to the bringing of any
such proceeding in such jurisdictions.
Section 10. If the Obligor fails to strictly comply with
the terms of this Debenture, then the Obligor shall reimburse
the Holder promptly for all fees, costs and expenses, including,
without limitation, attorneys' fees and expenses incurred by the
Holder in any action in connection with this Debenture,
including, without limitation, those incurred: (i) during any
workout, attempted workout, and/or in connection with the
rendering of legal advice as to the Holder's rights, remedies
and obligations, (ii) collecting any sums which become due to
the Holder, (iii) defending or prosecuting any proceeding or
any counterclaim to any proceeding or appeal; or (iv) the
protection, preservation or enforcement of any rights or
remedies of the Holder.
Section 11. Any waiver by 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 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 12. 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
Obligor 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 Obligor from paying all or any portion
of the principal of or interest on this Debenture as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Obligor (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 13. 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.
Section 14. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]
IN WITNESS WHEREOF, the Obligor has caused this Secured
Convertible Debenture to be duly executed by a duly authorized
officer as of the date set forth above.
ALFA INTERNATIONAL HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: President & CEO
EXHIBIT "A"
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert the Debenture)
TO:
The undersigned hereby irrevocably elects to convert $ of
the principal amount of the above Debenture into Shares of
Common Stock of Alfa International Holdings Corp., according to
the conditions stated therein, as of the Conversion Date written
below.
Conversion Date: ______________________________
Applicable Conversion Price: ______________________________
Signature: ______________________________
Name: ______________________________
Address: ______________________________
Amount to be converted: $______________________________
Amount of Debenture
unconverted: $______________________________
Conversion Price per share: $______________________________
Number of shares of Common
Stock to be issued: ______________________________
Please issue the shares of
Common Stock in the following
name and to the following
address: ______________________________
Issue to: ______________________________
Authorized Signature: ______________________________
Name: ______________________________
Title: ______________________________
Phone Number: ______________________________
Broker DTC Participant Code: ______________________________
Account Number: ______________________________
SCHEDULE I
OUTSTANDING WARRANTS
Number Exercise Price Expiration Date
4,100,500 $0.75 9/30/06
500,000 $0.14 4/29/06
250,000 $0.14 5/31/06
20,000 $0.20 12/19/07
62,235 $1.00 6/8/07
922,000 $8.00 **
** Various dates ranging from 3/21/06 through 12/2/06
PREFERRED STOCK
There are 108,350 shares of Series B Preferred Stock
outstanding. Each share of Series B Preferred Stock is
convertible into forty (40) shares of Common Stock.
