Exhibit 10.1
ADDENDUM TO CONVERTIBLE DEBENTURE AND
WARRANT TO PURCHASE COMMON STOCK
This Addendum to Convertible Debenture and Warrant to Purchase Common Stock
("Addendum") is entered into as of the _____day of June 2004 by and between
Direct Response Financial Services, Inc., a Colorado corporation ("Direct"), and
La Jolla Cove Investors, Inc., a California corporation ("LJCI").
WHEREAS, Direct and LJCI are parties to that certain 8 % Convertible Debenture
dated as of January 9, 2003 ("Debenture"); and
WHEREAS, Direct and LJCI are parties to that certain Warrant to Purchase Common
Stock dated as of January 9, 2003 ("Warrant"); and
WHEREAS, the parties desire to amend the Debenture and Warrant in certain
respects.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Direct and LJCI agree as follows:
1. All terms used herein and not otherwise defined herein shall have the
definitions set forth in the Debenture.
2. Immediately upon execution of this Addendum by both parties, Direct
shall deliver 2,000,000 registered shares of Direct's Common Stock to
LJCI. Such shares shall be used by LJCI to fulfill Direct's obligation
to deliver shares for Debenture conversions and Warrant exercises that
are associated with the Warrant prepayment amount set forth in section
3 below. In the event that the 2,000,000 registered shares are not
sufficient to satisfy such Debenture conversions and Warrant exercises,
Direct shall deliver additional registered shares to LJCI at the time
they are needed. In the event that excess shares remain after LJCI has
fully used the Warrant prepayment amount set forth in section 3 below,
LJCI shall use the excess shares to fulfill Direct's obligation to
deliver shares for the next Debenture conversions and Warrant
exercises, until the excess shares are fully used.
3. Upon receipt of the 2,000,000 registered shares of Direct Common Stock
set forth in section 2 above, LJCI shall wire: (a) $40,000 to Direct,
and (b) $20,000, in whole or in part, to an investor awareness company
or companies on behalf of Direct. Such funds shall represent a
prepayment towards the future exercise of Warrant Shares under the
Warrant. The timing of the application of the prepaid funds shall be at
LJCI's sole discretion. Direct shall not be able to prevent LJCI from
converting the Debenture and shall not be able to prepay the Debenture,
regardless of the price of the Stock, in connection with the Debenture
conversions associated with such Warrant prepayment.
4. Effective immediately, and until the Debenture conversions that are
associated with the Warrant prepayment amount set forth in section 3
above are completed, the minimum monthly Debenture conversion and
Warrant exercise requirements contained in section 3.1(a) of the
Debenture and section 1.1 of the Warrant are waived.
5. Except as specifically amended herein, all other terms and conditions
of the Debenture and Warrant shall remain in full force and effect.
IN WINESS WHEREOF, Direct and LJCI have caused this Addendum to be signed by its
duly authorized officers on the date first set forth above.
Direct Response Financial Services, Inc. La Jolla Cove Investors, Inc.
By: ___________________________ By: ____________________________
Name: _________________________ Name: __________________________
Title: ________________________ Title: _________________________
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