Contract
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.
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No.
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USD
___________
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6%
CONVERTIBLE DEBENTURE DUE 31st December 2009
Section
1. Debenture.
1.1 CalciTech,
Ltd., a corporation organized under the laws of Bermuda at Par – le – Ville
Place, 14, Par – le – Ville Road, Hamilton, Bermuda (the "Company"), for value
received, promises to pay to __________________________ or its registered
assigns (the "Holder"), the
principal sum of ____________ (USD_________), on or prior to 31st
December 2009 or such earlier date as this Debenture (the “Debenture”) is
required to be repaid as provided hereunder (the “Maturity Date”) and
to pay interest to the Holder on the principal sum at the rate of 6% per annum
while this Debenture is outstanding.
1.2 Interest
shall be paid quarterly on March 31, June 30, September 30 and December
31. Interest shall accrue daily commencing on the Original Issue Date
(as defined in Section 2) 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 shall be calculated on the basis
of a 360-day year and for the actual number of days elapsed. Interest
hereunder will be paid to the Holder in whose name this Debenture (or one or
more predecessor Debentures) is registered on the records of the Company
regarding registration and transfers of this Debenture (the "Debenture
Register").
1.3 This
Debenture is one of the duly authorized issue of Convertible Debentures of the
Company due 28th
February 2005, limited to Four Million Six Hundred and Forty Two Thousand
Dollars (USD 4,642,000).
1.4 All
overdue, accrued, and unpaid interest and other amounts due hereunder shall bear
interest at the rate of 6% per annum (to accrue daily) from the date such
interest is due.
1.5 The
principal of, and interest on, this Debenture are payable in cash in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address of the Holder
last appearing on the Debenture Register.
1
1.6 This
Debenture is exchangeable for an equal aggregate principal amount of Debentures
of different authorized denominations, as requested by the Holder surrendering
the same but shall not be issuable in denominations of less than integral
multiplies of Fifty Thousand Dollars (USD 50,000) unless such amount represents
the full principal balance of Debentures outstanding to such
Holder.
1.7. This
Debenture has been issued subject to certain investment representations of the
original Holder and may be transferred or exchanged only in compliance with this
Debenture. 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.
Section
2. Definitions. For
the purposes hereof, the following terms shall have the following
meanings:
"Average Price" on any
date means the average Per Share Market Value for the ten (10) Trading Days
immediately preceding such date.
"Business Day" means
any day except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the Province of British Columbia are
authorized or required by law or other government action to close.
"Common Stock" means
the Company's common stock, $.001 par value per share, and stock of any other
class into which such shares may hereafter have been reclassified or
changed.
"Original Issue Date"
shall mean the date of the first issuance of any 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.
"Parties" means the
Company and the Holder of this Debenture.
"Per Share Market
Value" on any particular date means (a) the closing bid price per share
of the Common Stock on such date as quoted by TSX Venture Exchange ("TSX"), or
similar organizations or agencies succeeding to its functions of reporting
prices, or (b) if the Common Stock is no longer reported by TSX, or such similar
organizations or agencies, such closing bid price per share shall be determined
by reference to "Pink Sheet" quotes for the relevant conversion period as
determined in good faith by the Holder or (c) if the Common Stock is 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 Debentures.
“Debenture” means this
Convertible Debenture, dated as of the Original Issue Date, between the Company
and the original Holder of Debentures, as amended, modified or supplemented from
time to time in accordance with its terms.
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"Trading Day" means a
day on which the Common Stock is traded on the TSX market, as reported by
Exchange, or if the Common Stock is not quoted on the TSX, a day on which the
Common Stock is quoted on 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).
"Underlying Shares"
means the shares of Common Stock issuable upon conversion of Debentures or as
payment of interest in accordance with the terms hereof.
Section
3. Conversion.
3.1 Right to
Convert. The Holder of this Debenture has the right, but not
the obligation, upon thirty (30) days written notice, to convert the outstanding
principal and any accrued interest into shares of Common Stock on 31st
December 2009, (the “Maturity Date”). The number of shares of
Common Stock issuable upon a conversion shall be determined by dividing the
outstanding principal, plus all accrued but unpaid interest, by the Conversion
Price (as defined below).
3.2 Conversion
Price. Subject to adjustment pursuant to Section 3.3, the
Conversion Price of the Company’s Common Stock shall be one United States Dollar
and seventy five cents (USD 1.75) on the conversion date.
3.3 Adjustment to the Conversion
Price. If at any time or from time to time the
Company:
(a) Pays
a dividend or makes a distribution on its Common Shares in additional Common
Shares;
(b) Subdivides
its outstanding Common Shares into a greater number of Common
Shares;
(c) Combines
its outstanding Common Shares into a smaller number of Common
Shares;
(d) Makes
a distribution on its Common Shares in shares of its capital stock other than
Common Shares;
(e) Issues
by reclassification of its Common Shares any shares of its capital
stock;
(f) Distributes
any rights or warrants to all holders of its Common Shares entitling them to
purchase Common Shares at a price per Common Share less than the current market
price per Common Share; or
(g) Distributes
to all holders of its Common Shares any of its assets or debt securities or any
rights or warrants to purchase securities of the Company (excluding cash
dividends or distributions from current or retained earnings),
3
then the
conversion right and the Conversion Price in effect immediately prior to such
action shall be adjusted so that the Holder of this Debenture may receive the
number of Common Shares of the Company which it would have owned immediately
following such action, if it had converted the Debenture immediately prior to
such action.
3.4 Conversion
Procedure. The Holder shall effect conversions by surrendering
this Debenture (or such portions thereof) to be converted, together with the
form of conversion notice attached hereto as Exhibit A (a "Conversion Notice")
to the Company. Each Conversion Notice shall specify the principal
amount of Debentures to be converted and the date on which such conversion is to
be effected, which date may not be prior to the date such Conversion Notice is
deemed to have been delivered hereunder (a "Conversion
Date"). If no Conversion Date is specified in a Conversion
Notice, the Conversion Date shall be the date that such Conversion Notice is
deemed delivered hereunder. Subject to Section hereof, each
Conversion Notice, once given, shall be irrevocable. If the Holder is
converting less than all of the principal amount represented by the Debenture(s)
tendered by the Holder with the Conversion Notice, or if a conversion hereunder
cannot be effected in full for any reason, the Company shall honor such
conversion to the extent permissible hereunder and shall promptly deliver to
such Holder (in the manner and within the time set forth in Section 4(b)) a new
Debenture for such principal amount as has not been converted.
3.5 Company’s Right to Convert
Shares. On the Maturity Date, the Company has the right but
not the obligation, to convert any or all of the amounts of principal and any
unpaid interest, into shares of Common Stock. The number of shares of
Common Stock to be issued upon conversion shall be determined by dividing the
outstanding principal plus all accrued but unpaid interest, by the Conversion
Price.
Section
4. Certain Conversion
Restrictions. The Holder agrees not to convert Debentures to
the extent such conversion would result in the Holder beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder) in excess of 19.99% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of the Debentures held
by such Holder after application of this Section. The Company shall
have the sole authority and obligation to determine whether the restriction
contained in this Section applies and, to the extent that the Company determines
that the limitation contained in this Section applies, the determination of
which Debentures are convertible shall be in the sole discretion of the
Company. The provisions of this Section may be waived by the Company
(but only as to the Holder and not to any other Holder). Other
Holders shall be unaffected by any such waiver.
Section
5. Optional Prepayment by
Company.
5.1 Right to Prepay by
Company. The Company shall have the right, exercisable at any
time upon ten (10) Business Days prior written notice to the Holders of the
Debentures to be prepaid (the "Optional Prepayment
Notice") given at any time after, and from time to time until the
Maturity Date, to prepay, from funds legally available therefore at the time of
such prepayment, all or any portion of the outstanding principal amount of the
Debentures at a price equal to the Optional Prepayment Price (as defined
below). Any such prepayment by the Company shall be in cash and shall
be free of any claim of subordination.
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5.2 Optional Prepayment
Price The "Optional Prepayment Price" for any Debentures shall
be One Hundred percent (100%) of the original purchase price of this Debenture
plus any accrued and unpaid interest due.
Section
6. "Events of
Default."
6.1 “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 on or
liquidated damages in respect of, this Debenture, free of any claim of
subordination, as and when the same shall become due and payable (whether on the
applicable quarterly interest payment date, 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 this Debenture and such
failure or breach shall not have been remedied within 20 days after the date on
which notice of such failure or breach shall have been given;
(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 shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
the Company shall by any act or failure to act indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is
taken by the Company for the purpose of effecting any of the
foregoing;
(iv) the
Common Stock shall fail to be Actively Traded or fail to be listed or quoted for
trading on any Subsequent Market, if after the Original Issue Date the Common
Stock shall be listed or quoted for trading on any such Subsequent Market, or if
the Common Stock shall be suspended from trading thereon without being actively
traded, relisted or having such suspension lifted, as the case may be, within
fifteen (15) days;
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(v) the
Company shall be a party to any merger or consolidation pursuant to which the
Company shall not be the surviving entity (or, if the Company is the surviving
entity, the Company shall issue or sell to another Person, or group thereof, in
excess of 50% of the Common Stock) or shall dispose of all or substantially all
of its assets in one or more transactions, or shall redeem more than a de
minimis number of shares of Common Stock (other than redemptions of Underlying
Shares);
(vi) an
Underlying Securities Registration Statement shall not have been declared
effective by the Securities and Exchange Commission (the "Commission") on or
prior to the 210th day after the Date of Conversion;
(vii) an
Event (as hereinafter defined) shall not have been cured to the satisfaction of
the Holder prior to the expiration of sixty (60) days from the Event Date (as
hereinafter defined) relating thereto (other than an Event resulting from a
failure of an Underlying Securities Registration Statement to be declared
effective by the Commission on or prior to the 210th day after the Date of
Conversion); or
(viii) the
Company shall fail to deliver certificates to the Holder prior to the 30th day
after the Conversion Date pursuant to Section 4(b).
6.2 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, to be, shall become, immediately due and payable in
cash. The aggregate amount payable upon an Event of Default in
respect of the Debentures shall be One Hundred Fifteen Percent (115%) of the
purchase price of this Debenture.
Section
7. Reservation of Common
Shares. The Company shall at all times reserve and keep
available out of its authorized and unissued shares of the Common Stock solely
for the purpose of issuance upon conversion of the Debentures and payment of
interest on the Debentures, the full number of whole Common Stock then
deliverable upon the conversion of the outstanding principal amount of the
Debentures and payment of interest. The Company shall take all
corporate action necessary in order that all shares of the Common Stock, upon
issue, are duly and validly authorized, issued and fully paid, nonassessable
and, if the Underlying Securities Registration Statement has been declared
effective under the Securities Act, freely tradable
Section
8. Fractional Shares.
The Company is not required to issue fractional shares of the Common Stock, but
may make a cash payment in respect of any final fraction of a share based on the
Per Share Market Value 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.
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Section
9. Notices. Notices
or other communications or deliveries to be provided by the Holders of the
Debentures 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 C/O CalciTech Group Services SA,
CP 261, 10 route de x’xxxxxxxx, 0000 Xxxxxx 00, Xxxxxxxxxxx, facsimile number
(x00) 00 000 00 00, attention Chief Financial Officer, 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 of the Debentures
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. The first
such address shall be __________________, ___________. 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 5:00 p.m. (Geneva 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 5:00 p.m.
(Geneva time) on any date and earlier than 11:59 p.m. (Geneva time) on such
date, (iii) four days after deposit in the mail, (iv) the Business Day following
the date of mailing, if send by nationally recognized overnight courier service,
or (v) upon actual receipt by the party to whom such notice is required to be
given.
Section
10. Obligations of the
Corporation. Except as expressly provided, no provision of
this Debenture shall alter or impair the obligation of the Company 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. The Company may only voluntarily prepay the outstanding
principal amount on the Debentures in accordance with Section 5.
Section
11. Rights of
Shareholder. 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, receive dividends or other distributions, receive any notice
of or attend meetings of stockholders or other proceedings of the Company, until
converted into shares of Common Stock in accordance with the terms of this
Debenture.
Section
12. Lost, Stolen or Destroyed
Debenture. 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
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
13. Governing
Law. This Debenture shall be governed by and construed in
accordance with the laws of the Island of Bermuda, without giving effect to
conflicts of laws thereof. The Company hereby irrevocably submits to
the exclusive jurisdiction of the Island of Bermuda courts sitting in Bermuda
for the adjudication of any dispute hereunder or in connection with any
transaction contemplated or discussed by the Parties, 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 in this
jurisdiction.
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Section
14. Waivers. 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 to insist upon
strict adherence to that term or any other term of this
Debenture. Any waiver must be in writing.
Section
15. Severability. 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.
Section
16. Date of
Payment. 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
17. Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Debenture.
Section
18. Confidentiality. The
Company will not disclose or include in any public announcement, the name of the
holder, unless the Holder expressly agrees to such disclosure or disclosure is
required by law or regulation and such disclosure shall only be to the extent of
such requirement.
8
IN WITNESS WHEREOF, the Company has
caused this 6% Convertible Debenture to be duly executed by a duly authorized
officer as of the date first above indicated.
| CALCITECH, LTD. | |
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By:
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Name: R.A.
Leopard
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Title: President
& C.E.O.
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Attest:
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By:
Name: X.
Xxxxxxxx
Title: Chief Accountant
9
EXHIBIT
A
CALCITECH,
LTD.
NOTICE OF
CONVERSION
AT THE
ELECTION OF THE HOLDER
(To be
executed by the Registered Holder in order to Convert the
Debenture)
The
undersigned hereby elects to convert Debenture No. 21 into shares of Common
Stock, $.001 par value per share (the "Common Stock"), of CALCITECH, LTD. (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
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.
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Conversion
calculations:
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_____________________________
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Date to
Effect Conversion: _____________________________
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Principal
Amount of Debentures to be Converted:
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_______________________
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Number
of shares of Common Stock to be Issued:
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_____________________________
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Applicable
Conversion Price:
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_____________________________
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Signature:
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_____________________________
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Name:
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__________________________
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Address:
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__________________________
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_________________________________
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A-1
