10% SENIOR DEBENTURE
THESE
SECURITIES HAVE NOT 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. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION
OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original
Issue Date: September 3,
2008
$100,000
10%
SENIOR DEBENTURE
THIS DEBENTURE of Sahara Media, Inc. a
Delaware corporation, having a principal place of business at 00 Xxxxxxxx
Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx (the “Company”), designated
as its 10% Debenture, due September 30, 2008 (the “Debenture”).
FOR VALUE
RECEIVED, the Company promises to pay to Xxxxxx Xxxxxxx or its registered
assigns (the “Holder”), the
principal sum of $100,000 on the earlier of (i) September 30, 2008, or (ii) upon
the closing of the sale of Units for an aggregate purchase price of at least
$5,000,000 pursuant to the PPM and the Subscription Agreements (the “Maturity Date”), and
to pay accrued interest to the Holder at the Maturity Date (or such earlier date
as this Debenture is pre-paid in accordance with the terms hereof) on the then
outstanding principal amount of this Debenture at the rate of 10% per annum. The
Company may pre-pay this Debenture at any time without penalty.
This
Debenture is subject to the terms and conditions set forth in the Purchase
Agreement, as well as 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 and may be transferred or
exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations. Prior to due presentment
to the Company for transfer of this Debenture, the Company and any agent of the
Company may treat the Person 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.
1
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 amount of, or interest on, the
Debenture;
(ii) the
Company shall fail to observe or perform any other covenant or agreement
contained in this Debenture or the Purchase Agreement which failure is not
cured, if possible to cure, within 10 Business Days after notice of such default
is sent by the Holder or by any other holder to the Company; or
(iii) the
Company shall commence, or there shall be commenced against the Company 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 there
is commenced against the Company any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 60 days; or the Company is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the
Company 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 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 corporate or other action is taken by the Company or
any subsidiary thereof for the purpose of effecting any of the
foregoing.
(b) If
any Event of Default occurs, the full principal amount of this Debenture,
together with interest, and other amounts owing in respect thereof, to the date
of acceleration shall become immediately due and payable. Commencing
5 days after the occurrence of any Event of Default that results in the eventual
acceleration of this Debenture, the interest rate on this Debenture shall accrue
at the rate of 18% per annum, or such lower maximum amount of interest permitted
to be charged under applicable law. 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.
2
Section
4. Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in this
Debenture: (a) capitalized terms not otherwise defined herein have the meanings
given to such terms in the Purchase Agreement, and (b) 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 are authorized or required by law or other government action to
close.
“MFI” means Mac
Filmworks, Inc, a Delaware corporation.
“Person” means a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
“PPM” means the
private placement memorandum of MFI (including all exhibits and supplements
thereto), dated August 11, 2008;
“Purchase Agreement”
means the Purchase Agreement, dated as of the date hereof, to which the Company
and the original Holder are parties, as amended, modified or supplemented from
time to time in accordance with its terms.
“Subscription
Agreements” means the series of subscription agreements between MFI and a
group of investors, pursuant to the PPM, pursuant to which the investors will
subscribe for shares of MFI’s common stock;
“Transaction
Documents” shall have the meaning set forth in the Purchase
Agreement.
Section
5. 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, and interest on, this Debenture at the time, place, and
rate, and in the coin or currency, herein prescribed. This Debenture
is a direct debt obligation of the Company. As long as this Debenture
is outstanding, the Company shall not and shall cause it subsidiaries not to,
without the consent of the Holder, amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holder; or enter into any agreement with respect to any of the
foregoing.
Section
6. 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.
3
Section
7. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by any
of the Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City of New
York, New York County (the “New York
Courts”). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), 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 such New York Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Debenture
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.
Each party hereto hereby 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 Debenture or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Debenture, 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
8. 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.
4
Section
9. 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
violates 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 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 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
10. 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.
*********************
5
IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a
duly authorized officer as of the date first above indicated.
| SAHARA MEDIA, INC. | |||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxxxx XX | |
| Name: Xxxxxxxx Xxxxxxxx XX | |||
| Title: Chief Executive Officer | |||
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