Exhibit 10.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: December 30, 2014
Original Conversion Price (subject to adjustment herein): $0.125
$1,250,000
ORIGINAL ISSUE DISCOUNT SENIOR CONVERTIBLE DEBENTURE
DUE JUNE 30, 2016
THIS ORIGINAL ISSUE DISCOUNT SENIOR CONVERTIBLE DEBENTURE is one of a
series of duly authorized and validly issued Original Issue Discount Senior
Convertible Debentures of Stevia Corp., a Nevada corporation, (the "Company"),
having its principal place of business at 0000 XX 00 X, Xxxxxxxxxxxx, Xxxxxxx
00000, designated as its Original Issue Discount Senior Convertible Debenture
due June 30, 2016 (this debenture, the "Debenture" and, collectively with the
other debentures of such series, the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to ANSON INVESTMENTS MASTER
FUND LP or its registered assigns (the "Holder"), or shall have paid pursuant to
the terms hereunder, the principal sum of $1,250,000 on June 30, 2016 (the
"Maturity Date") or such earlier date as this Debenture is required or permitted
to be repaid as provided hereunder, and to pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Debenture is subject to the
following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the
following terms shall have the following meanings:
"Alternate Consideration" shall have the meaning set forth in Section 5(e).
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"Authorized Share Increase" means the amendment of the Company's Articles
of Incorporation to increase the number of authorized shares of Common Stock to
not less than 400,000,000.
"Bankruptcy Event" means any of the following events: (a) the Company or
any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Significant Subsidiary thereof, (b) there is
commenced against the Company or any Significant Subsidiary thereof any such
case or proceeding that is not dismissed within 60 days after commencement, (c)
the Company or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such case or
proceeding is entered, (d) the Company or any Significant Subsidiary thereof
suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days
after such appointment, (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) the Company or any
Significant Subsidiary thereof calls a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts or (g) the
Company or any Significant Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.
"Base Conversion Price" shall have the meaning set forth in Section 5(b).
"Beneficial Ownership Limitation" shall have the meaning set forth in
Section 4(d).
"Business Day" means any day except any Saturday, any Sunday, any day which
is a federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
"Buy-In" shall have the meaning set forth in Section 4(c)(v).
"Change of Control Transaction" means the occurrence after the date hereof
of any 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 Company, by contract or otherwise) of in
excess of 33% of the voting securities of the Company (other than by means of
conversion or exercise of the Debentures and the Securities issued together with
the Debentures), (b) the Company merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Company and, after
giving effect to such transaction, the stockholders of the Company immediately
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prior to such transaction own less than 66% of the aggregate voting power of the
Company or the successor entity of such transaction, (c) the Company sells or
transfers all or substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction own less than
66% of the aggregate voting power of the acquiring entity immediately after the
transaction, (d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not approved by
one or more of those individuals who are members of the Board of Directors on
the Original Issue Date (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 one or more of the members of the Board of Directors who are
members on the date hereof), or (e) the execution by the Company of an agreement
to which the Company is a party or by which it is bound, providing for any of
the events set forth in clauses (a) through (d) above.
"Conversion" shall have the meaning ascribed to such term in Section 4.
"Conversion Date" shall have the meaning set forth in Section 4(a).
"Conversion Price" shall have the meaning set forth in Section 4(b).
"Conversion Schedule" means the Conversion Schedule in the form of Schedule
1 attached hereto.
"Conversion Shares" means, collectively, the shares of Common Stock
issuable upon conversion of this Debenture in accordance with the terms hereof.
"Debenture Register" shall have the meaning set forth in Section 2(c).
"Dilutive Issuance" shall have the meaning set forth in Section 5(b).
"Dilutive Issuance Notice" shall have the meaning set forth in Section
5(b).
"Equity Conditions" means, during the period in question, (a) the Company
shall have duly honored all conversions and redemptions scheduled to occur or
occurring by virtue of one or more Notices of Conversion of the Holder, if any,
(b) the Company shall have paid all liquidated damages and other amounts owing
to the Holder in respect of this Debenture, (c)(i) there is an effective
Registration Statement pursuant to which the Holder is permitted to utilize the
prospectus thereunder to resell all of the Conversion Shares (and the Company
believes, in good faith, that such effectiveness will continue uninterrupted for
the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant
to the Transaction Documents (and shares issuable in lieu of cash payments of
interest) may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions as determined by the counsel to the Company as set forth in a
written opinion letter to such effect, addressed and acceptable to the Transfer
Agent and the Holder, (d) the Common Stock is trading on a Trading Market and
all of the shares issuable pursuant to the Transaction Documents are listed or
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quoted for trading on such Trading Market (and the Company believes, in good
faith, that trading of the Common Stock on a Trading Market will continue
uninterrupted for the foreseeable future), (e) there is a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock for the
issuance of all of the Conversion Shares, (f) there is no existing Event of
Default and no existing event which, with the passage of time or the giving of
notice, would constitute an Event of Default, (g) the issuance of the Conversion
Shares in question (or, in the case of an Optional Redemption or Monthly
Redemption, the shares issuable upon conversion in full of the Optional
Redemption Amount or Monthly Redemption Amount) to the Holder would not violate
the limitations set forth in Section 4(d) herein (excluding any Conversion
Sahres that may be issuable without violating the linitations set forth in
Section 4(d)), (h) there has been no public announcement of a pending or
proposed Fundamental Transaction or Change of Control Transaction that has not
been consummated, (i) the applicable Holder is not in possession of any
information provided by the Company that constitutes, or may constitute,
material non-public information, (j) for each Trading Day in a period of 20
consecutive Trading Days prior to the applicable date in question, the daily
trading volume for the Common Stock on the principal Trading Market exceeds
$20,000, and (k) the Conversion Shares are deliverable via DWAC and there is no
"chill" in effect at the Depository Trust Company.
"Event of Default" shall have the meaning set forth in Section 8(a).
"Forced Conversion" shall have the meaning set forth in Section 6(d).
"Forced Conversion Date" shall have the meaning set forth in Section 6(d).
"Forced Conversion Notice" shall have the meaning set forth in Section
6(d).
"Forced Conversion Notice Date" shall have the meaning set forth in Section
6(d).
"Fundamental Transaction" shall have the meaning set forth in Section 5(e).
"Interest Payment Date" shall have the meaning set forth in Section 2(a).
"Late Fees" shall have the meaning set forth in Section 2(d).
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"Mandatory Default Amount" means the sum of (a) the greater of (i) the
outstanding principal amount of this Debenture, plus all accrued and unpaid
interest hereon, divided by the Conversion Price on the date the Mandatory
Default Amount is either (A) demanded (if demand or notice is required to create
an Event of Default) or otherwise due or (B) paid in full, whichever has a lower
Conversion Price, multiplied by the VWAP on the date the Mandatory Default
Amount is either (x) demanded or otherwise due or (y) paid in full, whichever
has a higher VWAP, or (ii) 125% of the outstanding principal amount of this
Debenture, plus 100% of accrued and unpaid interest hereon, and (b) all other
amounts, costs, expenses and liquidated damages due in respect of this
Debenture.
"Monthly Conversion Period" shall have the meaning set forth in Section
6(b) hereof.
"Monthly Conversion Price" shall have the meaning set forth in Section 6(b)
hereof.
"Monthly Redemption" means the redemption of this Debenture pursuant to
Section 6(b) hereof.
"Monthly Redemption Amount" means, as to a Monthly Redemption, $104,167
multiplied by 1.015, plus accrued but unpaid interest, liquidated damages and
any other amounts then owing to the Holder in respect of this Debenture.
"Monthly Redemption Date" means the 1st of each month, commencing July 1,
2015, and terminating upon the full redemption of this Debenture.
"Monthly Redemption Notice" shall have the meaning set forth in Section
6(b) hereof.
"New York Courts" shall have the meaning set forth in Section 9(d).
"Notice of Conversion" shall have the meaning set forth in Section 4(a).
"Optional Redemption" shall have the meaning set forth in Section 6(a).
"Optional Redemption Amount" means the sum of (a) 100% of the then
outstanding principal amount of the Debenture, (b) accrued but unpaid interest
and (c) all liquidated damages and other amounts due in respect of the
Debenture.
"Optional Redemption Date" shall have the meaning set forth in Section
6(a).
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"Optional Redemption Notice" shall have the meaning set forth in Section
6(a).
"Optional Redemption Notice Date" shall have the meaning set forth in
Section 6(a).
"Optional Redemption Period" shall have the meaning set forth in Section
6(a).
"Original Issue Date" means the date of the first issuance of the
Debentures, regardless of any transfers of any Debenture and regardless of the
number of instruments which may be issued to evidence such Debentures.
"Permitted Indebtedness" means (a) the indebtedness evidenced by the
Debentures, (b) the Indebtedness existing on the Original Issue Date and set
forth on Schedule 3.1(aa) attached to the Purchase Agreement, and (c) lease
obligations and purchase money indebtedness of up to $5,000,000 in the
aggregate, incurred in connection with the acquisition of capital assets and
lease obligations with respect to newly acquired or leased assets, (d) trade
payables incurred in the ordinary course of business consistent with past
practice, (e) unsecured indebtedness incurred by the Company that is made
expressly subordinate in right of payment to the Indebtedness evidenced by this
Xxxxxxxxx, and (f) loans from a bank or similar financial institution
"Permitted Lien" means the individual and collective reference to the
following: (a) Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with GAAP, (b) Liens imposed by law
which were incurred in the ordinary course of the Company's business, such as
carriers', warehousemen's and mechanics' Liens, statutory landlords' Liens, and
other similar Liens arising in the ordinary course of the Company's business,
and which (x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien, (c) Liens
incurred in connection with Permitted Indebtedness under clauses (a), (b), (d)
and (f) thereunder, and (d) Liens incurred in connection with Permitted
Indebtedness under clause (c) or (e) thereunder, provided that such Liens are
not secured by assets of the Company or its Subsidiaries other than the assets
so acquired or leased, (e) leases or subleases and licenses and sublicenses
granted to others in the ordinary course of the Company's business, not
interfering in any material respect with the business of the Company and its
Subsidiaries taken as a whole, (f) Liens in favor of customs and revenue
6
authorities arising as a matter of law to secure payments of custom duties in
connection with the importation of goods, and (g) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default.
"Purchase Agreement" means the Securities Purchase Agreement, dated as of
December 30, 2014 among the Company and the original Holders, as amended,
modified or supplemented from time to time in accordance with its terms.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Share Delivery Date" shall have the meaning set forth in Section 4(c)(ii).
"Successor Entity" shall have the meaning set forth in Section 5(e).
"Threshold Period" shall have the meaning set forth in Section 6(d).
"Trading Day" means a day on which the principal Trading Market is open for
trading.
"Trading Market" means any of the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the
NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board, OTCQB or
OTCQX (or any successors to any of the foregoing).
"VWAP" means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board, OTCQB or OTCQX and if prices for the Common Stock are then
reported in the "Pink Sheets" published by OTC Markets, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holders of a majority in
interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
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Section 2. Interest.
a) Payment of Interest in Cash. Upon the occurrence and during the
continuance of an Event of Default (and not otherwise), the Company shall pay
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture at the rate of 2% per month, payable monthly
on the first Business Day of each month (pro rated for any partial months) (each
such date, an "Interest Payment Date"), in cash.
b) Interest Calculations. Interest shall be calculated on the basis of a
360-day year, consisting of twelve 30 calendar day periods, and shall accrue
daily commencing on the date of the Event of Default until the earlier of
payment in full of the outstanding principal, together with all accrued and
unpaid interest, liquidated damages and other amounts which may become due
hereunder, has been made, or the cure of the Event of Default. Interest
hereunder will be paid to the Person in whose name this Debenture is registered
on the records of the Company regarding registration and transfers of this
Debenture (the "Debenture Register").
c) Late Fee. All overdue accrued and unpaid interest to be paid hereunder
shall entail a late fee at an interest rate equal to the lesser of 18% per annum
or the maximum rate permitted by applicable law (the "Late Fees") which shall
accrue daily from the date such interest 12hall be affected by notice to the
contrary.
Section 4. Conversion.
a) Voluntary Conversion. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be convertible, in
whole or in part, into shares of Common Stock at the option of the Holder, at
any time and from time to time (subject to the conversion limitations set forth
in Section 4(d) hereof). The Holder shall effect conversions by delivering to
the Company a Notice of Conversion, the form of which is attached hereto as
Annex A (each, a "Notice of Conversion"), specifying therein the principal
amount of this Debenture to be converted and the date on which such conversion
shall be effected (such date, the "Conversion Date"). If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be the date that
such Notice of Conversion is deemed delivered hereunder. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Conversion form be required.
To effect conversions hereunder, the Holder shall not be required to physically
surrender this Debenture to the Company unless the entire principal amount of
this Debenture, plus all accrued and unpaid interest thereon, has been so
converted. Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
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applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). The
Company may deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the Company shall issue to the Holder the number of
shares not in dispute and, if the Company and the Holder are unable to resolve
the dispute within three (3) Business days, shall refer the dispute to an
independent, outside accountant selected by the Company that is reasonably
acceptable to the Holder. The Company shall cause the accountant to perform the
calculations and notify the Company and the Holder of the results no later than
ten (10) Business Days from the time it receives the request. Such accountant's
determination shall be binding upon all parties absent demonstrable error. THE
HOLDER, AND ANY ASSIGNEE BY ACCEPTANCE OF THIS DEBENTURE, ACKNOWLEDGE AND AGREE
THAT, BY REASON OF THE PROVISIONS OF THIS PARAGRAPH, FOLLOWING CONVERSION OF A
PORTION OF THIS DEBENTURE, THE UNPAID AND UNCONVERTED PRINCIPAL AMOUNT OF THIS
DEBENTURE MAY BE LESS THAN THE AMOUNT STATED ON THE FACE HEREOF.
b) Conversion Price. The conversion price in effect on any Conversion Date
shall be equal to $0.125, subject to adjustment herein (the "Conversion Price").
c) Mechanics of Conversion.
i. Conversion Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding principal
amount of this Debenture to be converted by (y) the Conversion Price.
ii. Delivery of Shares Upon Conversion. Not later than three (3) Trading
Days after each Conversion Date (the "Share Delivery Date"), the Company shall
deliver, or cause to be delivered, to the Holder a certificate or certificates
representing the Conversion Shares which, on or after the six month anniversary
of the Original Issue Date shall be delivered electronically through the
Depository Trust Company DWAC system or another established clearing corporation
performing similar functions.
iii. Failure to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates (or shares via DWAC, as applicable)
are not delivered to or as directed by the applicable Holder by the Share
9
Delivery Date, the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or
certificates, to rescind such Conversion, in which event the Company shall
promptly return to the Holder any original Debenture delivered to the Company
and the Holder shall promptly return to the Company the Common Stock
certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation Absolute; Partial Liquidated Damages. The Company's
obligations to issue and deliver the Conversion Shares upon conversion of this
Debenture in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery shall not operate as a
waiver by the Company of any such action the Company may have against the
Holder. In the event the Holder of this Debenture shall elect to convert any or
all of the outstanding principal amount hereof, the Company may not refuse
conversion based on any claim that the Holder or anyone associated or affiliated
with the Holder has been engaged in any violation of law, agreement or for any
other reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Debenture shall
have been sought and obtained, and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the outstanding principal amount
of this Debenture, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to the Holder to the extent
it obtains judgment. In the absence of such injunction, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed conversion.
If the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a
penalty, for each $1,000 of principal amount being converted, $10 per Trading
Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Share
Delivery Date until such certificates are delivered or Holder rescinds such
conversion. Nothing herein shall limit a Xxxxxx's right to pursue actual damages
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or declare an Event of Default pursuant to Section 8 hereof for the Company's
failure to deliver Conversion Shares within the period specified herein and the
Holder shall have the right to pursue all remedies available to it hereunder, at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other Section hereof or
under applicable law.
v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such certificate or
certificates (or shares via DWAC, as applicable) by the Share Delivery Date
pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder
is required by its brokerage firm to purchase (in an open market transaction or
otherwise), or the Holder's brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Conversion
Shares which the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a "Buy-In"), then the Company shall (A) pay in cash to
the Holder (in addition to any other remedies available to or elected by the
Holder) the amount, if any, by which (x) the Holder's total purchase price
(including any brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common Stock that the
Holder was entitled to receive from the conversion at issue multiplied by (2)
the actual sale price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Debenture in a
principal amount equal to the principal amount of the attempted conversion (in
which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company
had timely complied with its delivery requirements under Section 4(c)(ii). 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 this
Debenture with respect to which the actual sale price of the Conversion Shares
(including any brokerage commissions) giving rise to such purchase obligation
was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Xxxxxx's right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Debenture as required pursuant to
the terms hereof.
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vi. Reservation of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion
of this Debenture as herein provided, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holder (and the
other holders of the Debentures), not less than such aggregate number of shares
of the Common Stock as shall (subject to the terms and conditions set forth in
the Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the then outstanding principal
amount of this Debenture. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.
vii. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Debenture. As to
any fraction of a share which the Holder would otherwise be entitled to purchase
upon such conversion, the Company shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.
viii.Transfer Taxes and Expenses. The issuance of Conversion Shares shall
be made without charge to the Holder hereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such
certificates, provided that, the Company shall not be required to pay any tax
that may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate upon conversion in a name other than that of
the Holder of this Debenture so converted and the Company shall not be required
to issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Company shall pay all Transfer Agent fees required for
same-day processing of any Notice of Conversion and all fees to the Depository
Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Conversion Shares.
d) Xxxxxx's Conversion Limitations. The Company shall not effect any
conversion of this Debenture, and a Holder shall not have the right to convert
any portion of this Debenture, to the extent that after giving effect to the
conversion set forth on the applicable Notice of Conversion, the Holder
(together with the Holder's Affiliates, and any Persons acting as a group
together with the Holder or any of the Holder's Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of this Debenture with respect
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to which such determination is being made, but shall exclude the number of
shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Debenture beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Debentures or the Warrants)
beneficially owned by the Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 4(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. To the extent that the
limitation contained in this Section 4(d) applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by the
Holder together with any Affiliates) and of which principal amount of this
Debenture is convertible shall be in the sole discretion of the Holder, and the
submission of a Notice of Conversion shall be deemed to be the Holder's
determination of whether this Debenture may be converted (in relation to other
securities owned by the Holder together with any Affiliates) and which principal
amount of this Debenture is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder
will be deemed to represent to the Company each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the restrictions set
forth in this paragraph and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 4(d), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of the
following: (i) the Company's most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public announcement by
the Company, or (iii) a more recent written notice by the Company or the
Company's transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this
Debenture, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The "Beneficial
Ownership Limitation" shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of this Debenture held by the Holder. The Holder,
upon not less than 61 days' prior notice to the Company, may increase or
13
decrease the Beneficial Ownership Limitation provisions of this Section 4(d),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this
Debenture held by the Holder and the Beneficial Ownership Limitation provisions
of this Section 4(d) shall continue to apply. Any such increase or decrease will
not be effective until the 61st day after such notice is delivered to the
Company. The Beneficial Ownership Limitation provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 4(d) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial
Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of
this Debenture.
Section 5. Certain Adjustments.
a) Stock Dividends and Stock Splits. If the Company, at any time while this
Debenture is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company upon
conversion of, or payment of interest on, the Debentures), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii)
combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Company) outstanding immediately before such event, and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately 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.
b) Subsequent Equity Sales. If, at any time while this Debenture is
outstanding, the Company or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or otherwise
disposes of or issues (or announces any sale, grant or any option to purchase or
other disposition), any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock at an effective price per share that is
lower than the then Conversion Price (such lower price, the "Base Conversion
Price" and such issuances, collectively, a "Dilutive Issuance") (if the holder
of the Common Stock or Common Stock Equivalents 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 are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share
that is lower than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base
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Conversion Price. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued. Notwithstanding the foregoing, no
adjustment will be made under this Section 5(b) in respect of an Exempt
Issuance. If the Company enters into a Variable Rate Transaction, despite the
prohibition set forth in the Purchase Agreement, the Company shall be deemed to
have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion price at which such securities may be converted or exercised. The
Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalents subject
to this Section 5(b), indicating therein the applicable issuance price, or
applicable reset price, exchange price, conversion price and other pricing terms
(such notice, the "Dilutive Issuance Notice"). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice pursuant to this
Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is
entitled to receive the then current number of Conversion Shares based upon the
Base Conversion Price on or after the date of such Dilutive Issuance, regardless
of whether the Holder accurately refers to the Base Conversion Price in the
Notice of Conversion.
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 5(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Debenture (without
regard to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder's right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this Debenture is
outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
"Distribution"), at any time after the issuance of this Debenture, then, in each
such case, the Holder shall be entitled to participate in such Distribution to
15
the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Debenture (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately
before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that the Holder's right to participate in any such
Distribution would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of
Common Stock as a result of such Distribution to such extent) and the portion of
such Distribution shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at any time while this Debenture is
outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into
another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a "Fundamental
Transaction"), then, upon any subsequent conversion of this Debenture, the
Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction (without regard to any limitation in Section 4(d)
on the conversion of this Debenture), the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the "Alternate Consideration")
receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Debenture is convertible immediately
16
prior to such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture). For purposes of any such
conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one (1) share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the Conversion
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration.
Notwithstanding the foregoing, the following shall not be considered a
Fundamental Transaction: (i) any merger of the Company or any of its direct or
indirect wholly-owned Subsidiaries with or into any of the foregoing Persons, or
any reorganization, recapitalization or reclassification of the Common Stock, in
which holders of the Company's voting power immediately prior to such merger,
reorganization, recapitalization or reclassification continue after such merger,
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities or (ii) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of this
Debenture following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the
survivor (the "Successor Entity") to assume in writing all of the obligations of
the Company under this Debenture and the other Transaction Documents (as defined
in the Purchase Agreement) in accordance with the provisions of this Section
5(e) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
holder of this Debenture, deliver to the Holder in exchange for this Debenture a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Debenture which is convertible for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon conversion of this Debenture (without regard to any limitations
on the conversion of this Debenture) at the closing of such Fundamental
Transaction, and with a conversion price which applies the conversion price
hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting the economic
value of this Debenture immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Debenture and the other Transaction Documents referring to the "Company"
shall refer instead to the Successor Entity), and may exercise every right and
17
power of the Company and shall assume all of the obligations of the Company
under this Debenture and the other Transaction Documents with the same effect as
if such Successor Entity had been named as the Company herein.
f) Adjustment for Failure of Authorized Share Increase. If the Company does
not effect the Authorized Share Increase by April 30, 2015, the Conversion Price
shall be reduced to $0.08 (subject to any other adjustments made pursuant to
Section 5(a)).
g) Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Company) issued and
outstanding.
h) Notice to the Holder.
i. Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
ii. Notice to Allow Conversion by Xxxxxx. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock of rights or
warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company,
or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of
this Debenture, and shall cause to be delivered to the Holder at its last
address as it shall appear upon the Debenture Register, 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,
18
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Holder shall remain entitled to convert this
Debenture during the 20-day period commencing on the date of such notice
through the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.
Section 6. Redemption and Forced Conversion.
a) Optional Redemption at Election of Company. Subject to the provisions of
this Section 6(a), at any time after Original Issue Date, the Company may
deliver a notice to the Holder (an "Optional Redemption Notice" and the date
such notice is deemed delivered hereunder, the "Optional Redemption Notice
Date") of its irrevocable election to redeem some or all of the then outstanding
principal amount of this Debenture for cash in an amount equal to the Optional
Redemption Amount on a specified Trading Day which shall be no earlier than the
10th Trading Day following the Optional Redemption Notice Date (such date, the
"Optional Redemption Date", such 10 (or greater) Trading Day period, the
"Optional Redemption Period" and such redemption, the "Optional Redemption").
The Optional Redemption Amount is payable in full on the Optional Redemption
Date. The Company may only effect an Optional Redemption if each of the Equity
Conditions shall have been met (unless waived in writing by the Holder) on each
Trading Day during the period commencing on the Optional Redemption Notice Date
through to the Optional Redemption Date and through and including the date
payment of the Optional Redemption Amount is actually made in full. If any of
the Equity Conditions shall cease to be satisfied at any time during the
Optional Redemption Period, then the Holder may elect to nullify the Optional
Redemption Notice by notice to the Company within 3 Trading Days after the first
day on which any such Equity Condition has not been met (provided that if, by a
provision of the Transaction Documents, the Company is obligated to notify the
Holder of the non-existence of an Equity Condition, such notice period shall be
extended to the third Trading Day after proper notice from the Company) in which
case the Optional Redemption Notice shall be null and void, ab initio. The
Company covenants and agrees that it will honor all Notices of Conversion
tendered from the time of delivery of the Optional Redemption Notice through the
date all amounts owing thereon are due and paid in full. The Company's
determination to pay an Optional Redemption in cash shall be applied ratably to
19
all of the holders of the then outstanding Debentures based on their (or their
predecessor's) initial purchases of Debentures pursuant to the Purchase
Agreement.
b) Monthly Redemption. On each Monthly Redemption Date, the Company shall
redeem the Monthly Redemption Amount (the "Monthly Redemption"). The Monthly
Redemption Amount payable on each Monthly Redemption Date shall be paid in cash;
provided, however, as to any Monthly Redemption and upon not less than 5 Trading
Days' prior written notice (the "Monthly Redemption Notice"), in lieu of a cash
redemption payment the Holder may elect to receive all or part of a Monthly
Redemption Amount in Conversion Shares based on a conversion price equal to the
lesser of (i) the then Conversion Price and (ii) 80% of the average of the 5
lowest VWAPs for the 20 consecutive Trading Days ending on the Trading Day that
is immediately prior to the applicable Monthly Redemption Date (subject to
adjustment for any stock dividend, stock split, stock combination or other
similar event affecting the Common Stock during such 20 Trading Day period) (the
price calculated during the 20 Trading Day period immediately prior to the
Monthly Redemption Date, the "Monthly Conversion Price" and such 20 Trading Day
period, the "Monthly Conversion Period"); provided, that if the reported closing
price on the principal Trading Market is equal to or less than $0.05 (adjusted
for any stock dividend, stock split, stock combination or other similar event)
on the Trading Day immediately prior to the Monthly Redemption Date, then the
Holder must accept payment in cash if so requested by the Company. The Holder
may convert, pursuant to Section 4(a), any principal amount of this Debenture
subject to a Monthly Redemption at any time prior to the date that the Monthly
Redemption Amount, plus accrued but unpaid interest, liquidated damages and any
other amounts then owing to the Holder are due and paid in full. Unless
otherwise indicated by the Holder in the applicable Notice of Conversion, any
principal amount of this Debenture converted during the applicable Monthly
Conversion Period until the date the Monthly Redemption Amount is paid in full
shall be first applied to the principal amount subject to the Monthly Redemption
Amount payable in cash and then to the Monthly Redemption Amount payable in
Conversion Shares. Any principal amount of this Debenture converted during the
applicable Monthly Conversion Period in excess of the Monthly Redemption Amount
shall be applied against the last principal amount of this Debenture scheduled
to be redeemed hereunder, in reverse time order from the Maturity Date. The
Company covenants and agrees that it will honor all Notices of Conversion
tendered up until such amounts are paid in full. The Company's determination to
pay a Monthly Redemption in cash, shares of Common Stock or a combination
thereof shall be applied ratably to all of the holders of the then outstanding
Debentures based on their (or their predecessor's) initial purchases of
Debentures pursuant to the Purchase Agreement.
c) Redemption Procedure. The payment of cash or issuance of Common Stock,
as applicable, pursuant to an Optional Redemption or a Monthly Redemption shall
be payable on the Optional Redemption Date or the Monthly Redemption Date, as
applicable. If any portion of the payment pursuant to an Optional Redemption or
Monthly Redemption shall not be paid by the Company by the applicable due date,
interest shall accrue thereon at an interest rate equal to the lesser of 18% per
21
annum or the maximum rate permitted by applicable law until such amount is paid
in full. Notwithstanding anything herein contained to the contrary, if any
portion of the Optional Redemption Amount or Monthly Redemption Amount, as
applicable, remains unpaid after such date, the Holder may elect, by written
notice to the Company given at any time thereafter, to invalidate such Optional
Redemption or Monthly Redemption, ab initio, and, with respect to the Company's
failure to honor the Optional Redemption, the Company shall have no further
right to exercise such Optional Redemption. Notwithstanding anything to the
contrary in this Section 6, the Company's determination to redeem in cash or its
elections under Section 6(b) shall be applied ratably among the Holders of
Debentures. The Holder may elect to convert the outstanding principal amount of
the Debenture pursuant to Section 4 prior to actual payment in cash for any
redemption under this Section 6 by the delivery of a Notice of Conversion to the
Company.
d) Forced Conversion. Notwithstanding anything herein to the contrary, if
after the first Monthly Redemption Date, the closing bid price on the principal
Trading Market for each of any 30 consecutive Trading Days, which period shall
have commenced only after the first Monthly Redemption Date (such period the
"Threshold Period"), exceeds $0.30 (subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the Original Issue Date), the
Company may, within 1 Trading Day after the end of any such Threshold Period,
deliver a written notice to the Holder (a "Forced Conversion Notice" and the
date such notice is delivered to the Holder, the "Forced Conversion Notice
Date") to cause the Holder to convert all or part of the then outstanding
principal amount of this Debenture plus, if so specified in the Forced
Conversion Notice, accrued but unpaid interest, liquidated damages and other
amounts owing to the Holder under this Debenture, it being agreed that the
"Conversion Date" for purposes of Section 4 shall be deemed to occur on the
third Trading Day following the Forced Conversion Notice Date (such third
Trading Day, the "Forced Conversion Date"). The Company may not deliver a Forced
Conversion Notice, and any Forced Conversion Notice delivered by the Company
shall not be effective, unless all of the Equity Conditions are met (unless
waived in writing by the Holder) on each Trading Day occurring during the
applicable Threshold Period through and including the later of the Forced
Conversion Date and the Trading Day after the date such Conversion Shares
pursuant to such conversion are delivered to the Holder. Any Forced Conversion
shall be applied ratably to all Holders based on their initial purchases of
Debentures pursuant to the Purchase Agreement, provided that any voluntary
conversions by a Holder shall be applied against the Holder's pro rata
allocation, thereby decreasing the aggregate amount forcibly converted hereunder
if only a portion of this Debenture is forcibly converted. For purposes of
clarification, a Forced Conversion shall be subject to all of the provisions of
Section 4, including, without limitation, the provision requiring payment of
liquidated damages and limitations on conversions.
22
Section 7. Negative Covenants. Except for Exempt Issuances, as long as any
portion of this Debenture remains outstanding, unless the holders of at least
67% in principal amount of the then outstanding Debentures shall have otherwise
given prior written consent, the Company shall not, and shall not permit any of
the Subsidiaries to, directly or indirectly:
a) other than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of any kind,
including, but not limited to, a guarantee, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom;
b) other than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom;
c) amend its charter documents, including, without limitation, its
certificate of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder, except for an increase in the number
of authorized shares of Common Stock of the Company;
d) repay, repurchase or offer to repay, repurchase or otherwise acquire
more than a de minimis number of shares of its Common Stock or Common Stock
Equivalents other than as to (i) the Conversion Shares or Warrant Shares as
permitted or required under the Transaction Documents and (ii) repurchases of
Common Stock or Common Stock Equivalents of departing officers and directors of
the Company, provided that such repurchases shall not exceed an aggregate of
$100,000 for all officers and directors during the term of this Debenture;
e) repay, repurchase or offer to repay, repurchase or otherwise acquire any
Indebtedness, other than the Debentures if on a pro-rata basis, other than
regularly scheduled principal and interest payments as such terms are in effect
as of the Original Issue Date, or trade payables in the ordinary course of
business, provided that such payments shall not be permitted if, at such time,
or after giving effect to such payment, any Event of Default exist or occur;
f) pay cash dividends or distributions on any equity securities of the
Company;
g) enter into any transaction with any Affiliate of the Company which would
be required to be disclosed in any public filing with the Commission, unless
such transaction is made on an arm's-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or
h) enter into any agreement with respect to any of the foregoing.
23
Section 8. Events of Default.
a) "Event of Default" means, wherever used herein, any of the following
events (whatever the reason for such event and whether such event 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 (A) the principal amount of any
Debenture or (B) interest, liquidated damages and other amounts owing to a
Holder on any Debenture, as and when the same shall become due and payable
(whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default, solely in the case of an interest payment or
other default under clause (B) above, is not cured within 3 Trading Days;
ii. the Company shall fail to observe or perform any other covenant or
agreement contained in the Debentures which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5 Trading Days after
notice of such failure sent by the Holder or by any other Holder to the
Company and (B) 10 Trading Days after the Company has become or should have
become aware of such failure;
iii. a default or event of default (subject to any grace or cure
period provided in the applicable agreement, document or instrument) shall
occur under (A) any of the Transaction Documents or (B) any other material
agreement, lease, document or instrument to which the Company or any
Subsidiary is obligated (and not covered by clause (vi) below);
iv. any representation or warranty made by the Company in this
Debenture, any other Transaction Documents, any written statement pursuant
hereto or thereto or any other report, financial statement or certificate
made or delivered to the Holder or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;
v. the Company or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. the Company or any Subsidiary shall default on any of its
obligations under 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 that (a) involves an obligation greater than
$150,000, whether such indebtedness now exists or shall hereafter be
created, and (b) results in such indebtedness becoming or being declared
24
due and payable prior to the date on which it would otherwise become due
and payable (unless waived in writing by the applicable creditor or
lender);
vii. the Common Stock shall not be eligible for listing or quotation
for trading on a Trading Market and shall not be eligible to resume listing
or quotation for trading thereon within five Trading Days;
viii. the Company shall be a party to any Change of Control
Transaction or Fundamental Transaction or shall agree to sell or dispose of
all or in excess of 33% of its assets in one transaction or a series of
related transactions (whether or not such sale would constitute a Change of
Control Transaction); provided, however, such transactions shall not be
considered an Event of Default (i) in the event that the Surviving Entity
in such transaction is listed for trading on a national securities exchange
and for each Trading Day in a period of 60 consecutive Trading Days
immediately prior to such transaction, the daily trading volume for the
Common Stock on the principal Trading Market exceeds 20% of the then
outstanding principal amount of this Debenture on the date of such
transaction or (ii) in the event that the Holder elects to be prepaid at
the Optional Redemption Amount if such transaction is a "Rule 13e-3
transaction" as defined in Rule 13e-3 under the Exchange Act;
ix. the Company does not meet the current public information
requirements under Rule 144(c) on or after the first Monthly Redemption
Date, provided, however, that if (A) the Company files a Form 12b-25 within
the applicable deadline imposed by Rule 12b-25 (or any successor thereto)
with respect to any Quarterly Report on Form 10-Q or any Annual Report on
Form 10-K and (ii) the Company subsequently files such Quarterly Report on
Form 10-Q or Annual Report on Form 10-K, as applicable, with the SEC within
the applicable period provided in Rule 12b-25, then the late filing of such
report shall not be considered an Event of Default hereunder;
x. the Company shall fail for any reason to deliver certificates to a
Holder prior to the fifth Trading Day after a Conversion Date pursuant to
Section 4(c) or any Forced Conversion Date pursuant to Section 6(d) or the
Company shall provide at any time notice to the Holder, including by way of
public announcement, of the Company's intention to not honor requests for
conversions of any Debentures in accordance with the terms hereof;
xi. the electronic transfer by the Company of shares of Common Stock
through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a "chill" and such
unavailability or chill is not cured within five Trading Days; or
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xii. any monetary judgment, writ or similar final process shall be
entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $200,000, and such
judgment, writ or similar final process shall remain unvacated, unbonded or
unstayed for a period of 45 calendar days provided, however, that any
judgment which is covered by insurance or an indemnity from a credit worthy
party shall not be included in calculating the $200,000 amount set forth
above so long as the Company provides the Holder a written statement from
such insurer or indemnity provider (which written statement shall be
reasonably satisfactory to the Holder) to the effect that such judgment is
covered by insurance or an indemnity and the Company will receive the
proceeds of such insurance or indemnity within thirty (30) days of the
issuance of such judgment.
b) Remedies Upon Event of Default. If any Event of Default occurs, (A) the
Conversion Price shall be adjusted to 52% of the lowest VWAP during the 30
Trading Days prior to the Holder's Notice of Conversion, and (B) the outstanding
principal amount of this Debenture, plus accrued but unpaid interest, liquidated
damages and other amounts owing in respect thereof through the date of
acceleration, shall become, at the Holder's election, immediately due and
payable in cash at the Mandatory Default Amount. 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 an interest
rate equal to the lesser of 2% per month or the maximum rate permitted under
applicable law. Upon the payment in full of the Mandatory Default Amount, the
Holder shall promptly surrender this Debenture to or as directed by the Company.
In connection with such acceleration described herein, 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 acceleration may
be rescinded and annulled by Xxxxxx at any time prior to payment hereunder and
the Holder shall have all rights as a holder of the Debenture until such time,
if any, as the Holder receives full payment pursuant to this Section 8(b). No
such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 9. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, by email
attachment, or sent by a nationally recognized overnight courier service,
addressed to the Company, at the address set forth above, or such other
facsimile number, email address, or address as the Company may specify for such
purposes by notice to the Holder delivered in accordance with this Section 9(a).
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, by
26
email attachment, or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or email address or address of
the Holder appearing on the books of the Company, or if no such facsimile number
or email attachment or address appears on the books of the Company, at the
principal place of business of such Holder, as set forth in the Purchase
Agreement. 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 number
or email attachment to the email address set forth on the signature pages
attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or email attachment to the
email address set forth on the signature pages attached hereto on a day that is
not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (iv) upon actual receipt by
the party to whom such notice is required to be given.
b) Absolute Obligation. 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, liquidated damages and
accrued interest, as applicable, 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. This Debenture ranks pari passu with all other
Debentures now or hereafter issued under the terms set forth12he other party for
its attorneys fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.
c) Waiver. 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 on any other
occasion. Any waiver by the Company or the Holder must be in writing.
d) Severability. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of 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 the applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate of interest
permitted under applicable law. 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
27
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 Debenture, 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 impede 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.
e) Remedies, Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Debenture shall be cumulative and in
addition to all other remedies available under this Debenture and any of the
other Transaction Documents at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
Holder's right to pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Debenture. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required.
The Company shall provide all information and documentation to the Holder that
is reasonably requested by the Holder to enable the Holder to confirm the
Company's compliance with the terms and conditions of this Debenture.
f) Next Business Day. 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.
i) Cancellation. After all principal, interest and other amounts at any
time owed on this Debenture have been indefeasibly paid in full, this Debenture
shall automatically be deemed cancelled, shall be surrendered to the Company for
cancellation and shall not be reissued.
j) Voting Rights. The Holder shall have no voting rights as the holder of
this Debenture, except as required by law (including, without limitation,
Chapter 78 of the Nevada Revised Statutes).
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g) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Debenture and shall not be deemed to limit or affect
any of the provisions hereof.
*********************
(SIGNATURE PAGES FOLLOW)
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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.
STEVIA CORP.
By:__________________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Facsimile No. for delivery of Notices: _______________
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