Contract
Exhibit
4.1
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND IS BEING
OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF
THE SECURITIES ACT AND SUCH LAWS. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE
SECURITIES ACT OR SUCH OTHER LAWS.
Company:
TraceGuard Technologies, Inc.
Company
Address: 000
Xxxxxxx Xxxxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Closing
Date: April
18,
2008
Maturity
Date: April
18,
2012
Principal
Amount:
$1,500,000
TraceGuard
Technologies, Inc., a Nevada corporation, and any successor or resulting
corporation by way of merger, consolidation, sale or exchange of all or
substantially all of the assets or otherwise (the “Company”),
for
value received, hereby promises to pay to the Holder (as such term is
hereinafter defined), or such other Person (as such term is hereinafter defined)
upon order of the Holder, on the Maturity Date (as such term is hereinafter
defined), the Principal Amount (as such term is hereinafter defined), as such
sum may be adjusted pursuant to Article 3, and to pay interest thereon with
such
interest commencing to accrue as of the date hereof and payable on
a
monthly basis, commencing on the 15th
date of
the month following the month of issuance of this Debenture,
and on
the Maturity Date (except that, if any such date is not a Business Day, then
such payment shall be due on the next succeeding Business Day), at the rate
of
Seven Percent (7 %) per annum subject to adjustment as set forth in Section
7
hereof (the “Interest Rate”). All interest payable on the Principal Amount of
this Debenture shall be calculated on the basis of a year of 365 or 366 days,
as
the case may be, for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable. Payment of interest on this Debenture shall be in cash or, at the
option of the Holder, in shares of Common Stock of the Company valued at the
then applicable Conversion Price (as defined herein). This Debenture may not
be
prepaid without the written consent of the Holder, except as provided in the
Securities Purchase Agreement (as defined below).
ARTICLE
1
DEFINITIONS
SECTION
1.1 Definitions.
The
terms defined in this Article whenever used in this Debenture have the following
respective meanings:
(i) “Affiliate”
has the
meaning ascribed to such term in Rule 12b-2 under the Securities Exchange Act
of
1934, as amended.
(ii) “Bankruptcy
Code”
means
the United States Bankruptcy Code of 1986, as amended (11 U.S.C. §§ 101
et.
seq.).
(iii) “Business
Day”
means a
day other than Saturday, Sunday or any day on which banks located in the State
of California are authorized or obligated to close.
(iv) “Capital
Shares”
means
the Common Stock and any other shares of any other class or series of capital
stock, whether now or hereafter authorized and however designated, which have
the right to participate in the distribution of earnings and assets (upon
dissolution, liquidation or winding-up) of the Company.
(v) “Closing
Date”
means
the closing date set forth in the first paragraph of this
Debenture.
(vi) “Common
Shares”
or
“Common
Stock”
means
shares of the Company’s Common Stock.
(vii) “Common
Stock Issued at Conversion”,
when
used with reference to the securities deliverable upon conversion of this
Debenture, means all Common Shares now or hereafter Outstanding and securities
of any other class or series into which this Debenture hereafter shall have
been
changed or substituted, whether now or hereafter created and however
designated.
(viii) “Conversion”
or“conversion”
means
the repayment by the Company of the Principal Amount of this Debenture (and,
to
the extent the Holder elects as permitted by Section 3.1, accrued and unpaid
interest thereon) by the delivery of Common Stock on the terms provided in
Section 3.2, and “convert,” “converted,” “convertible”
and like
words shall have a corresponding meaning.
(ix) “Conversion
Date”
means
any day on which all or any portion of the Principal Amount of this Debenture
is
converted in accordance with the provisions hereof.
(x) “Conversion
Notice”
means a
written notice of conversion substantially in the form annexed hereto as
Exhibit
A.
(xi) “Conversion
Price”
on any
date of determination means the applicable price for the conversion of this
Debenture into Common Shares on such day as set forth in Section
3.1(a).
(xii) “Current
Market Price”
on any
date of determination means the closing price of a Common Share on such day
as
reported on the NASDAQ OTCBB Exchange; provided
further,
that,
if such security is not listed or admitted to trading on the NASDAQ OTCBB,
as
reported on the principal national security exchange or quotation system on
which such security is quoted or listed or admitted to trading, including
without limitation the “pink
sheets” through the Interdealer Trading Quotation System,
or, if
not quoted or listed or admitted to trading on any national securities exchange
or quotation system, the closing bid price of such security on the
over-the-counter market on the day in question as reported by Bloomberg LP
or a
similar generally accepted reporting service, as the case may be.
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(xiii) “Debenture”
or
“Debentures”
means
this Convertible Debenture of the Company or such other convertible debenture(s)
exchanged therefor as provided in Section 2.1.
(xiv) “Discount
Multiplier”
has
the
meaning set forth in Section 3.1(a).
(xv) “Event
of Default”
has the
meaning set forth in Section 6.1.
(xvi) “Holder”
means
Golden Gate Investors, Inc., any successor thereto, or any Person to whom this
Debenture is subsequently transferred in accordance with the provisions
hereof.
(xvii) “Interest
Payment Due Date”
means
any date upon which interest is due to be paid by the Company to the Holder,
as
set forth in the opening paragraph of this Debenture.
(xviii) “Market
Disruption Event”
means
any event that results in a material suspension or limitation of trading of
the
Common Shares.
(xix) “Maturity
Date”
means
the maturity date set forth in the first paragraph of this
Debenture.
(xx) “Maximum
Rate”
has the
meaning set forth in Section 6.4.
(xxi) “Outstanding”
when
used with reference to Common Shares or Capital Shares (collectively,
“Shares”)
means,
on any date of determination, all issued and outstanding Shares, and includes
all such Shares issuable in respect of outstanding scrip or any certificates
representing fractional interests in such Shares; provided,
however,
that
any such Shares directly or indirectly owned or held by or for the account
of
the Company or any Subsidiary of the Company shall not be deemed “Outstanding”
for
purposes hereof.
(xxii) “Person”
means an
individual, a corporation, a partnership, an association, a limited liability
company, an unincorporated business organization, a trust or other entity or
organization, and any government or political subdivision or any agency or
instrumentality thereof.
(xxiii) “Principal
Amount”
means,
for any date of calculation, the principal sum set forth in the first paragraph
of this Debenture (including all amounts represented by (a) any cash advances
made by Holder to the Company and (b) the principal amount of the Promissory
Note delivered to the Company by the Holder) and for which Xxxxxx has not
theretofore furnished a Conversion Notice in compliance with Section
3.2.
(xxiv) “Promissory
Note”
means
that certain Secured Promissory Note in the principal amount of $1,275,000
of
even date herewith issued by Golden Gate Investors, Inc. to TraceGuard
Technologies, Inc., as the same may be amended from time to time.
(xxv) “SEC”
means
the United States Securities and Exchange Commission.
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(xxvi) “Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
SEC
thereunder, all as in effect at the time.
(xxvii) “Securities
Purchase Agreement”
means
that certain Securities Purchase Agreement of even date herewith by and among
the Company and Holder, as the same may be amended from time to
time.
(xxviii) “Subsidiary”
means
any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are owned directly or indirectly by the
Company.
(xxix) “Trading
Day”
means
any day on which (i) purchases and sales of securities on the principal national
security exchange or quotation system on which the Common Shares are traded
are
reported thereon, or, if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, as reported by Bloomberg
LP or
a similar generally accepted reporting service, as the case may be, (ii) at
least one bid for the trading of Common Shares is reported and (iii) no Market
Disruption Event occurs.
(xxx) “Volume
Weighted Average Price” per
Common Share means the volume weighted average price of the Common Shares during
any Trading Day as reported on the NASDAQ OTCBB; provided
further,
that,
if such security is not listed or admitted to trading on the NASDAQ OTCBB,
as
reported on the principal national security exchange or quotation system on
which such security is quoted or listed or admitted to trading, including
without limitation the “pink
sheets” through the Interdealer Trading Quotation System,
or, if
not quoted or listed or admitted to trading on any national securities exchange
or quotation system, the volume weighted average price of the Common Shares
during any Trading Day on the over-the-counter market as reported by Bloomberg
LP or a similar generally accepted reporting service, as the case may
be.
All
references to “cash” or “$” herein means currency of the United States of
America.
ARTICLE
2
EXCHANGES,
TRANSFER AND REPAYMENT
SECTION
2.1 Registration
of Transfer of Debentures.
This
Debenture, when presented for registration of transfer, shall (if so required
by
the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company duly executed, by the
Holder duly authorized in writing.
SECTION
2.2 Loss,
Theft, Destruction of Debenture.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Debenture and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory
to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Debenture, the Company shall make, issue and deliver,
in
lieu of such lost, stolen, destroyed or mutilated Debenture, a new Debenture
of
like tenor and unpaid Principal Xxxxxx dated as of the date hereof (which shall
accrue interest from the most recent Interest Payment Due Date on which an
interest payment was made in full). This Debenture shall be held and owned
upon
the express condition that the provisions of this Section 2.2 are exclusive
with
respect to the replacement of a mutilated, destroyed, lost or stolen Debenture
and shall preclude any and all other rights and remedies notwithstanding any
law
or statute existing or hereafter enacted to the contrary with respect to the
replacement of negotiable instruments or other securities without the surrender
thereof.
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SECTION
2.3 Who
Deemed Absolute Owner.
The
Company may deem the Person in whose name this Debenture shall be registered
upon the registry books of the Company to be, and may treat it as, the absolute
owner of this Debenture (whether or not this Debenture shall be overdue) for
the
purpose of receiving payment of or on account of the Principal Amount of this
Debenture, for the conversion of this Debenture and for all other purposes,
and
the Company shall not be affected by any notice to the contrary. All such
payments and such conversions shall be valid and effectual to satisfy and
discharge the liability upon this Debenture to the extent of the sum or sums
so
paid or the conversion or conversions so made.
SECTION
2.4 Repayment
at Maturity.
At the
Maturity Date, the Company shall repay the outstanding Principal Amount of
this
Debenture in whole in cash, together with all accrued and unpaid interest
thereon, in cash, to the Maturity Date.
ARTICLE
3
CONVERSION
OF DEBENTURE
SECTION
3.1 Conversion;
Conversion Price; Valuation Event.
At
the
option of the Holder, this Debenture may be converted, either in whole or in
part, up to the full Principal Amount hereof into Common Shares (calculated
as
to each such conversion to the nearest 1/100th of a share), at any time and
from
time to time on any Business Day, subject to compliance with Section 3.2. The
number of Common Shares into which this Debenture may be converted is equal
to
the dollar amount of the Debenture being converted divided by the Conversion
Price. The “Conversion
Price”
shall be
equal to the lesser of (i) $0.50, or (ii) 70% of the average of the 3 lowest
Volume Weighted Average Prices during the 20 Trading Days prior to Holder’s
election to convert (the percentage figure being a “Discount
Multiplier”).
The
Company reserves the right to increase the number of Trading Days in clause
(ii)
above, as it deems appropriate. Notwithstanding the foregoing, only that portion
of the Principal Amount of this Debenture that has actually been paid in cash
by
the Holder at the Closing Date or has been repaid in cash by the Holder as
a
payment of principal under the Promissory Note may be converted by Holder into
Common Shares.
If
the
Holder elects to convert a portion of the Debenture and, on the day that the
election is made, the Volume Weighted Average Price per share of the Company’s
Common Stock is below $0.15 (as adjusted for any stock splits, stock dividends,
combinations, subdivisions, recapitalizations, or the like), the Company shall
have the right to prepay that portion of the Debenture that Holder elected
to
convert, plus any accrued and unpaid interest, at 135% of such amount. In the
event that the Company elects to prepay that portion of the Debenture, Holder
shall be deemed to have withdrawn its Conversion Notice.
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SECTION
3.2 Exercise
of Conversion Privilege.
(a)
Conversion of this Debenture may be exercised on any Business Day by the Holder
by telecopying an executed and completed Conversion Notice to the Company.
Each
date on which a Conversion Notice is telecopied to the Company in accordance
with the provisions of this Section 3.2 shall constitute a Conversion Date.
The
Company shall convert this Debenture and issue the Common Stock Issued at
Conversion in the manner provided below in this Section 3.2, and all voting
and
other rights associated with the beneficial ownership of the Common Stock Issued
at Conversion shall vest with the Holder, effective as of the Conversion Date
at
the time specified in the Conversion Notice. The Conversion Notice also shall
state the name or names (with addresses) of the persons who are to become the
holders of the Common Stock Issued at Conversion in connection with such
conversion. As promptly as practicable after the receipt of the Conversion
Notice as aforesaid, but in any event not more than two (2) Business Days after
the Company’s receipt of such Conversion Notice, the Company shall (i) issue the
Common Stock Issued at Conversion in accordance with the provisions of this
Article 3 and (ii) cause to be mailed for delivery by overnight courier (x)
a
certificate or certificate(s) representing the number of Common Shares to which
the Holder is entitled by virtue of such conversion and (y) cash, as provided
in
Section 3.3, in respect of any fraction of a Common Share deliverable upon
such
conversion. Such conversion shall be deemed to have been effected at the time
at
which the Conversion Notice indicates, and at such time the rights of the Holder
of this Debenture, as such (except if and to the extent that any Principal
Amount thereof remains unconverted), shall cease and the Person and Persons
in
whose name or names the Common Stock Issued at Conversion shall be issuable
shall be deemed to have become the holder or holders of record of the Common
Shares represented thereby, and all voting and other rights associated with
the
beneficial ownership of such Common Shares shall at such time vest with such
Person or Persons. The Conversion Notice shall constitute a contract between
the
Holder and the Company, whereby the Holder shall be deemed to subscribe for
the
number of Common Shares which it will be entitled to receive upon such
conversion and, in payment and satisfaction of such subscription (and for any
cash adjustment to which it is entitled pursuant to Section 3.4), to surrender
this Debenture and to release the Company from all liability thereon (except
if
and to the extent that any Principal Amount thereof remains unconverted). No
cash payment aggregating less than $1.00 shall be required to be given unless
specifically requested by the Holder.
(b) If,
at
any time after the date of this Debenture, (i) the Company challenges, disputes
or denies the right of the Holder hereof to effect the conversion of this
Debenture into Common Shares or otherwise dishonors or rejects any Conversion
Notice delivered in accordance with this Section 3.2 or (ii) any third party
who
is not and has never been an Affiliate of the Holder commences any lawsuit
or
legal proceeding or otherwise asserts any claim before any court or public
or
governmental authority which seeks to challenge, deny, enjoin, limit, modify,
delay or dispute the right of the Holder hereof to effect the conversion of
this
Debenture into Common Shares, then the Holder shall have the right, but not
the
obligation, by written notice to the Company, to require the Company to promptly
redeem this Debenture for cash at one hundred thirty-five percent (135%) of
the
Principal Amount thereof, together with all accrued and unpaid interest thereon
to the date of redemption. Under any of the circumstances set forth above,
the
Company shall be responsible for the payment of all costs and expenses of the
Holder, including reasonable legal fees and expenses, as and when incurred
in
defending itself in any such action or pursuing its rights hereunder (in
addition to any other rights of the Holder).
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(c) The
Holder shall be entitled to exercise its conversion privilege notwithstanding
the commencement of any case under the Bankruptcy Code. In the event the Company
is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
respect of the Holder’s conversion privilege. The Company hereby waives to the
fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362
in respect of the conversion of this Debenture. The Company agrees, without
cost
or expense to the Holder, to take or consent to any and all action necessary
to
effectuate relief under 11 U.S.C. § 362.
SECTION
3.3 Fractional
Shares.
No
fractional Common Shares or scrip representing fractional Common Shares shall
be
delivered upon conversion of this Debenture. Instead of any fractional Common
Shares which otherwise would be delivered upon conversion of this Debenture,
the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction multiplied by the Current Market Price on the
Conversion Date. No cash payment of less than $1.00 shall be required to be
given unless specifically requested by the Holder.
SECTION
3.4 Adjustments.
The
Conversion Price and the number of shares deliverable upon conversion of this
Debenture are subject to adjustment from time to time as follows:
(i) Reclassification,
Etc.
In case
the Company shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another Person (where the Company is not
the
survivor or where there is a change in or distribution with respect to the
Common Stock of the Company), sell, convey, transfer or otherwise dispose of
all
or substantially all its property, assets or business to another Person, or
effectuate a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of (each,
a
“Fundamental
Corporate Change”)
and,
pursuant to the terms of such Fundamental Corporate Change, shares of common
stock of the successor or acquiring corporation, or any cash, shares of stock
or
other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common
stock
of the successor or acquiring corporation (“Other
Property”)
are to
be received by or distributed to the holders of Common Stock of the Company,
then the Holder of this Debenture shall have the right thereafter, at its sole
option, to (x) require the Company to prepay this Debenture for cash at one
hundred thirty-five percent (135%) of the Principal Amount thereof, together
with all accrued and unpaid interest thereon to the date of prepayment, but
only
if the Fundamental Corporate Change is other than a stock split, a
reincorporation whose sole purpose is to change the state of incorporation
of
the Company, or a reorganization in which the Company’s stockholders continue to
own, in substantially the same proportion, the outstanding capital stock of
the
Company, (y) receive the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property as is receivable upon or as a result of such
Fundamental Corporate Change by a holder of the number of shares of Common
Stock
into which the outstanding portion of this Debenture may be converted at the
Conversion Price applicable immediately prior to such Fundamental Corporate
Change, or (z) require the Company, or such successor, resulting or
purchasing corporation, as the case may be, to, without benefit of any
additional consideration therefor, execute and deliver to the Holder a debenture
with substantial identical rights, privileges, powers, restrictions and other
terms as this Debenture in an amount equal to the amount outstanding under
this
Debenture immediately prior to such Fundamental Corporate Change. For purposes
hereof, “common
stock of the successor or acquiring corporation”
shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to prepayment and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into
or
exchangeable for any such stock, either immediately or upon the arrival of
a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions
shall similarly apply to successive Fundamental Corporate Changes.
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SECTION
3.5 Certain
Conversion Limits.
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, as set forth on the applicable Conversion
Notice, such Holder (together with such Holder’s Affiliates, and any other
person or entity acting as a group together with such Holder or any of such
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 such Holder and
its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Debenture with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which are issuable
upon (A) conversion of the remaining, unconverted principal amount of this
Debenture beneficially owned by such Holder or any of its Affiliates and (B)
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 warrants to purchase shares of the Company’s Common Stock)
beneficially owned by such Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 3.5, 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 3.5 applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by such
Holder together with any Affiliates) and of which principal amount of this
Debenture is convertible shall be in the sole discretion of such Holder, and
the
submission of a Conversion Notice shall be deemed to be such Holder’s
determination of whether this Debenture may be converted (in relation to other
securities owned by such Holder together with any Affiliates) and which
principal amount of this Debenture is convertible, in each case subject to
such
aggregate percentage limitations. To ensure compliance with this restriction,
each Holder will be deemed to represent to the Company each time it delivers
a
Conversion Notice that such Conversion Notice 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 3.5, in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock provided to the Holder in writing by the
Company after Holder makes such request or in the event that the Company files,
any of the following with the Securities and Exchange Commission, the most
recent of the following: (A) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (B) a more recent public announcement by the
Company; or (C) a more recent 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 such Holder the number of shares of Common
Stock then outstanding on the records of the Company as of the date of the
request. 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 such 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 Beneficial Ownership
Limitation provisions of this Section 3.5 may be waived by such Holder, at
the
election of such Holder, upon not less than 61 days’ prior notice to the
Company, to, at the sole discretion of the Holder, either change the Beneficial
Ownership Limitation to (i) 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 the Debenture held by the Holder and the provisions
of
this Section 3.5 shall continue to apply, or (ii) remove any Beneficial
Ownership Limitation under this Debenture. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 3.5 to correct this paragraph (or
any
portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
If any court of competent jurisdiction shall determine that the foregoing
limitation is ineffective to prevent a Holder from being deemed the beneficial
owner of more than 9.99% of the then outstanding shares of Common Stock, then
the Company shall prepay such portion of this Debenture as shall cause such
Holder not to be deemed the beneficial owner of more than 9.99% of the then
outstanding shares of Common Stock. Upon such determination by a court of
competent jurisdiction, the Holder shall have no interest in or rights under
such portion of the Debenture. Any and all interest paid on or prior to the
date
of such determination shall be deemed interest paid on the remaining portion
of
this Debenture held by the Holder. Such prepayment shall be for cash at a
prepayment price of one hundred fifty percent (150%) of the Principal Amount
thereof, together with all accrued and unpaid interest thereon to the date
of
prepayment. The limitations contained in this paragraph shall apply to a
successor holder of this Debenture.
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SECTION
3.6 Surrender
of Debentures.
Upon
any redemption of this Debenture pursuant to Sections 3.2, 3.5 or 6.2, or upon
maturity pursuant to Section 2.4, the Holder shall either deliver this Debenture
by hand to the Company at its principal executive offices or surrender the same
to the Company at such address by nationally recognized overnight courier.
Payment of the redemption price or the amount due on maturity specified in
Section 2.4, shall be made by the Company to the Holder against receipt of
this
Debenture (as provided in this Section 3.5) by wire transfer of immediately
available funds to such account(s) as the Holder shall specify by written notice
to the Company. If payment of such redemption price is not made in full by
the
redemption date, or the amount due on maturity is not paid in full by the
Maturity Date, the Holder shall again have the right to convert this Debenture
as provided in Article 3 hereof or to declare an Event of Default.
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ARTICLE
4
STATUS;
RESTRICTIONS ON TRANSFER
SECTION
4.1 Status
of Debenture.
This
Debenture constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms subject, as to enforceability, to
general principles of equity and to principles of bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating to
or
affecting creditors’ rights and remedies generally.
SECTION
4.2 Restrictions
on Transfer.
This
Debenture, and any Common Shares deliverable upon the conversion hereof, have
not been registered under the Securities Act. The Holder by accepting this
Debenture agrees that this Debenture and the shares of Common Stock to be
acquired as interest on and upon conversion of this Debenture may not be
assigned or otherwise transferred unless and until (i) the Company has received
the opinion of counsel for the Holder that this Debenture or such shares may
be
sold pursuant to an exemption from registration under the Securities Act,
provided that the Company will not require opinions of counsel for transactions
involving transfers to Affiliates of the Holder or pursuant to Rule 144
promulgated by the SEC under the Securities Act, except in unusual
circumstances, or when the Company’s transfer agent requires such opinion; or
(ii) a registration statement relating to this Debenture or such shares has
been
filed by the Company and declared effective by the SEC.
Each
certificate for shares of Common Stock deliverable hereunder shall bear a legend
as follows unless and until such securities have been sold pursuant to an
effective registration statement under the Securities Act:
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”). The securities may
not be offered for sale, sold or otherwise transferred except (i) pursuant
to an
effective registration statement under the Securities Act or (ii) pursuant
to an
exemption from registration under the Securities Act in respect of which the
issuer of this certificate has received an opinion of counsel reasonably
satisfactory to the issuer of this certificate to such effect. Copies of the
agreement covering both the purchase of the securities and restrictions on
their
transfer may be obtained at no cost by written request made by the holder of
record of this certificate to the Secretary of the issuer of this certificate
at
the principal executive offices of the issuer of this certificate.”
ARTICLE
5
COVENANTS
SECTION
5.1 Conversion.
The
Company shall cause the transfer agent, not later than two (2) Business Days
after the Company’s receipt of a Conversion Notice, to issue and deliver to the
Holder the requisite shares of Common Stock Issued at Conversion.
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SECTION
5.2 Notice
of Default.
If any
one or more events occur which constitute or which, with notice, lapse of time,
or both, would constitute an Event of Default, the Company shall forthwith
give
notice to the Holder, specifying the nature and status of the Event of Default
or such other event(s), as the case may be.
SECTION
5.3 Payment
of Obligations.
So long
as this Debenture shall be outstanding, the Company shall pay, extend, or
discharge at or before maturity, all its respective material obligations and
liabilities, including, without limitation, tax liabilities, except where the
same may be contested in good faith by appropriate proceedings.
SECTION
5.4 Compliance
with Laws.
So long
as this Debenture shall be outstanding, the Company shall comply with all
applicable laws, ordinances, rules, regulations and requirements of governmental
authorities, except for such noncompliance which would not have a material
adverse effect on the business, properties, prospects, condition (financial
or
otherwise) or results of operations of the Company and the
Subsidiaries.
SECTION
5.5 Inspection
of Property, Books and Records.
So long
as this Debenture shall be outstanding, the Company shall keep proper books
of
record and account in which full, true and correct entries shall be made of
all
material dealings and transactions in relation to its business and activities
and shall permit representatives of the Holder at the Holder’s expense to visit
and inspect any of its respective properties, to examine and make abstracts
from
any of its respective books and records, not reasonably deemed confidential
by
the Company, and to discuss its respective affairs, finances and accounts with
its respective officers and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION
5.6 Reservation
of Stock Issuable Upon Conversion.
The
Company shall at all times reserve and keep available out of its authorized
but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of this Debenture, such number of its shares of Common Stock as
shall
from time to time be sufficient to effect the conversion of this Debenture;
and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of this Debenture, in addition
to such other remedies as shall be available to the holder of this Debenture,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval to file an amendment to the charter of the
Company.
ARTICLE
6
EVENTS
OF DEFAULT; REMEDIES
SECTION
6.1 Events
of Default.
“Event
of Default”
wherever
used herein means any one of the following events:
(i) the
Company shall default in the payment of principal of or interest on this
Debenture as and when the same shall be due and payable and, in the case of
an
interest payment default, such default shall continue for five (5) Business
Days
after the date such interest payment was due, or the Company shall fail to
perform or observe any other material covenant, agreement, term, provision,
undertaking or commitment under this Debenture or the Securities Purchase
Agreement and such default shall continue for a period of ten (10) Business
Days
after the delivery to the Company of written notice that the Company is in
default hereunder or thereunder;
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(ii) any
of
the representations, warranties, or covenants made by the Company herein, in
the
Securities Purchase Agreement or in any certificate or financial or other
written statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Debenture or
the
Securities Purchase Agreement shall be false or misleading in a material respect
on the Closing Date;
(iii) under
the
laws of any jurisdiction not otherwise covered by clauses (iv) and (v) below,
the Company or any Subsidiary (A) becomes insolvent or generally not able to
pay
its debts as they become due, (B) admits in writing its inability to pay its
debts generally or makes a general assignment for the benefit of creditors,
(C)
institutes or has instituted against it any proceeding seeking (x) to adjudicate
it a bankrupt or insolvent, (y) liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief
of
debtors including any plan of compromise or arrangement or other corporate
proceeding involving or affecting its creditors or (z) the entry of an order
for
relief or the appointment of a receiver, trustee or other similar person for
it
or for any substantial part of its properties and assets, and in the case of
any
such official proceeding instituted against it (but not instituted by it),
either the proceeding remains undismissed or unstayed for a period of sixty
(60)
calendar days, or any of the actions sought in such proceeding (including the
entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial
part
of its properties and assets) occurs or (D) takes any corporate action to
authorize any of the above actions;
(iv) the
entry
of a decree or order by a court having jurisdiction in the premises adjudging
the Company or any Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under the Bankruptcy Code or any other
applicable Federal or state law, or appointing a receiver, liquidator, assignee,
trustee or sequestrator (or other similar official) of the Company or of any
substantial part of its property, or ordering the winding-up or liquidation
of
its affairs, and any such decree or order continues and is unstayed and in
effect for a period of sixty (60) calendar days;
(v) the
institution by the Company or any Subsidiary of proceedings to be adjudicated
a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy
or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under the Bankruptcy Code or any
other applicable federal or state law, or the consent by it to the filing of
any
such petition or to the appointment of a receiver, liquidator, assignee, trustee
or sequestrator (or other similar official) of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit
of
creditors, or the admission by it in writing of its inability to pay its debts
generally as and when they become due, or the taking of corporate action by
the
Company in furtherance of any such action;
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(vi) a
final
judgment or final judgments for the payment of money shall have been entered
by
any court or courts of competent jurisdiction against the Company and remains
undischarged for a period (during which execution shall be effectively stayed)
of thirty (30) days, provided
that the
aggregate amount of all such judgments at any time outstanding (to the extent
not paid or to be paid, as evidenced by a written communication to that effect
from the applicable insurer, by insurance) exceeds One Hundred Thousand Dollars
($100,000);
(vii) it
becomes unlawful for the Company to perform or comply with its obligations
under
this Debenture or the Securities Purchase Agreement in any respect;
(viii) the
Common Shares shall no longer be traded in the over the counter market via
the
NASDAQ OTCBB (the “Trading
Market”
or, to
the extent the Company becomes eligible to list its Common Stock on any other
national security exchange or quotation system, upon official notice of listing
on any such exchange or system, as the case may be, it shall be the “Trading
Market”) or suspended from trading on the Trading Market, and shall not be
reinstated, relisted or such suspension lifted, as the case may be, within
five
(5) days;
(ix) the
Company shall fail to timely file all reports required to be filed by it with
the Commission (as defined in the Securities Purchase Agreement) pursuant to
Section 13 or 15(d) of the Exchange Act (as defined in the Securities Purchase
Agreement), or otherwise required by the Exchange Act; or
(x) the
Company shall default (giving effect to any applicable grace period) in the
payment of principal or interest as and when the same shall become due and
payable, under any indebtedness, individually or in the aggregate, of more
than
Fifty Thousand Dollars ($50,000) (which, for purposes of clarity, shall not
include any of the obligations set forth on Schedule 6.1(x) or any trade
payables or operating expenses arising in the ordinary course of business
hereafter).
SECTION
6.2 Acceleration
of Maturity; Rescission and Annulment.
If an
Event of Default occurs and is continuing, then and in every such case the
Holder may, in Holder’s sole and absolute discretion, by a notice in writing to
the Company, rescind any outstanding Conversion Notice and declare that any
or
all amounts owing or otherwise outstanding under this Debenture are immediately
due and payable and upon any such declaration this Debenture or such portion
thereof, as applicable, shall become immediately due and payable in cash at
a
price of one hundred thirty-five percent (135%) of the Principal Amount thereof,
together with all accrued and unpaid interest thereon to the date of payment;
provided,
however,
in the
case of any Event of Default described in clauses (iii), (iv), (v) or (vii)
of
Section 6.1, all amounts owing or otherwise outstanding under this Debenture
automatically shall become immediately due and payable without the necessity
of
any notice or declaration as aforesaid. In the event that the Company is
obligated to pay any amount to the Holder in connection with an acceleration
of
the maturity of this Debenture as set forth herein, the Company shall first
apply against such amount an amount equal to the outstanding amount owed by
the
Holder to the Company under the Promissory Note, if any, and the amount
otherwise owed by the Company to the Holder in connection with an acceleration
of the maturity of this Debenture shall be reduced by the outstanding amount
owed by the Holder to the Company under the Promissory Note, with the Promissory
Note deemed paid by Holder to the extent of and with respect to such amount,
and
if the amount due from the Company to the Holder in connection with an
acceleration of the maturity of this Debenture is equal to or greater than
the
outstanding amount owed under the Promissory Note, the Company shall cancel
and
deem the Promissory Note as paid in full in connection with the application
of
the amount owed by the Holder to the Company under Promissory Note against
the
amount otherwise owed by the Company to the Holder hereunder. The Company shall
immediately pay in cash to the Holder any remaining amount owed by the Company
to the Holder in connection with the acceleration of the maturity of this
Debenture as described herein, after the application of the outstanding amount
owed under the Promissory Note, if any, to such obligation.
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SECTION
6.3 Late
Payment Penalty.
If any
portion of the principal of or interest on this Debenture shall not be paid
within ten (10) days of when it is due, the Discount Multiplier under this
Debenture shall decrease by one percentage point (1%) for each period of ten
(10) Business Days that any portion of such amount remains unpaid by the Company
for all conversions of this Debenture thereafter.
SECTION
6.4 Maximum
Interest Rate. Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate
as
provided for herein shall exceed the maximum lawful rate which may be contracted
for, charged, taken or received by the Holder in accordance with any applicable
law (the “Maximum
Rate”),
the
rate of interest applicable to this Debenture shall be limited to the Maximum
Rate. To the greatest extent permitted under applicable law, the Company hereby
waives and agrees not to allege or claim that any provisions of this Debenture
could give rise to or result in any actual or potential violation of any
applicable usury laws.
SECTION
6.5 Remedies
Not Waived.
No
course of dealing between the Company and the Holder or any delay in exercising
any rights hereunder shall operate as a waiver by the Holder.
SECTION
6.6 Remedies. The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Debenture will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Debenture, that the Holder shall be entitled
to all other available remedies at law or in equity, and in addition to the
penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Debenture and to enforce specifically
the terms and provisions thereof, without the necessity of showing economic
loss
and without any bond or other security being required.
SECTION
6.7 Payment
of Certain Amounts. Whenever
pursuant to this Debenture the Company is required to pay an amount in excess
of
the Principal Amount plus accrued and unpaid interest, the Company and the
Holder agree that the actual damages to the Holder from the receipt of cash
payment on this Debenture may be difficult to determine and the amount to be
so
paid by the Company represents stipulated damages and not a penalty and is
intended to compensate the Holder in part for loss of the opportunity to convert
this Debenture and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Debenture at a price in excess of that price
paid for such shares pursuant to this Debenture. The Company and the Holder
hereby agree that such amount of stipulated damages is not disproportionate
to
the possible loss to the Holder from the receipt of a cash payment without
the
opportunity to convert this Debenture into shares of Common Stock.
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SECTION
6.8 Filing
of Form 8-K. On
or
before the fourth Business Day following the date hereof, the Company shall
file
a Current Report on Form 8-K describing the terms of the transactions
contemplated by the Documents (as defined in the Securities Purchase Agreement),
as required by the terms of the Securities Purchase Agreement, in the form
required by the Exchange Act and attaching the material Documents (including,
without limitation, the Securities Purchase Agreement and this Debenture) as
exhibits to such filing (the “8-K
Filing”).
In
the alternative, the Company may include the information that would have been
required in the 8-K Filing in the Company’s Form 10-KSB filing (the
“10-KSB
Filing”),
if
such form is filed within four Business Days following the date hereof. In
the
event that the Company does not file the 8-K Filing or the 10-KSB Filing within
four Business Days following the date hereof, the Discount Multiplier under
this
Debenture shall decrease by one percentage point (1%) for each period of five
Business Days that the 8-K Filing or the 10-KSB Filing is not filed by the
Company following the date hereof for all conversions of this Debenture
thereafter.
ARTICLE
7
INTEREST
RATE ADJUSTMENT
SECTION
7.1 Interest
Rate Adjustment.
In the
event that the Common Stock shall trade on the Trading Market at a price per
share that is $0.065 per share or lower at any time during the six month period
commencing on the date hereof and ending on the six month anniversary of the
date hereof (as
adjusted for any stock splits, stock dividends, combinations, subdivisions,
recapitalizations or the like),
then
(i) the Interest Rate shall immediately be increased to Nine and Three-Quarters
Percent (9 ¾ %) and shall remain at such level for the duration of this
Debenture; and (ii) the Company shall, within three Business Days of the written
request of the Holder prepay to the Holder the amount of interest that would
be
otherwise paid under this Debenture from the date of such written request
through the Maturity Date (such amount referred to herein as the “Interest
Prepayment”).
In
the event that after the payment by the Company of the Interest Prepayment
all
or any of the Principal Amount of this Debenture is converted by Holder or
redeemed pursuant to the terms of this Debenture prior to the Maturity Date,
then the Holder shall repay the corresponding pro rata portion of the Interest
Prepayment equal to the amount of the Interest Prepayment that is represented
by
such portion of the Principal Amount at such time that that is so converted
or
redeemed (taking into account both the amount of the Principal Amount so
converted or redeemed and the date upon which such amount is so converted or
redeemed).
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ARTICLE
8
MISCELLANEOUS
SECTION
8.1 Notice
of Certain Events.
In the
case of the occurrence of any event described in Section 3.4 of this Debenture,
the Company shall cause to be mailed to the Holder of this Debenture at its
last
address as it appears in the Company’s security registry, at least twenty (20)
days prior to the applicable record, effective or expiration date hereinafter
specified (or, if such twenty (20) days’ notice is not possible, at the earliest
possible date prior to any such record, effective or expiration date), a notice
thereof, including, if applicable, a statement of (y) the date on which a record
is to be taken for the purpose of such dividend, distribution, issuance or
granting of rights, options or warrants, or if a record is not to be taken,
the
date as of which the holders of record of Common Stock to be entitled to such
dividend, distribution, issuance or granting of rights, options or warrants
are
to be determined or (z) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected
to
become effective, and the date as of which it is expected that holders of record
of Common Stock will be entitled to exchange their shares for securities, cash
or other property deliverable upon such reclassification, consolidation, merger,
sale transfer, dissolution, liquidation or winding-up. Failure or delay in
delivering such notice shall not affect the validity of such action
taken.
SECTION
8.2 Register.
The
Company shall keep at its principal office a register in which the Company
shall
provide for the registration of this Debenture. Upon any transfer of this
Debenture in accordance with Articles 2 and 4 hereof, the Company shall register
such transfer on the Debenture register.
SECTION
8.3 Withholding.
To the
extent required by applicable law, the Company may withhold amounts for or
on
account of any taxes imposed or levied by or on behalf of any taxing authority
in the United States having jurisdiction over the Company from any payments
made
pursuant to this Debenture.
SECTION
8.4 Transmittal
of Notices.
Except
as may be otherwise provided herein, any notice or other communication or
delivery required or permitted hereunder shall be in writing and shall be
delivered personally, or sent by telecopier machine or by a nationally
recognized overnight courier service, and shall be deemed given when so
delivered personally, or by telecopier machine or overnight courier service
as
follows:
(1) If
to the
Company, to:
000
Xxxxxxx Xxxxxx, 0xx
Xxxxx
New
York,
New York 10017
Telephone: 000-000-0000
Facsimile: 011-972-57-797-5364
(2) With
a
copy to:
Moses
& Singer LLP.
000
Xxxxxxxxx Xxxxxx, 00xx
Floor
New
York,
New York 10474-1299
Attention:
Xxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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(3) If
to the
Holder, to:
Golden
Gate Investors, Inc.
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
La
Jolla,
California 92037
Telephone: 000-000-0000
Facsimile: 000-000-0000
Each
of
the Holder or the Company may change the foregoing address by notice given
pursuant to this Section 8.4.
SECTION
8.5 Attorneys’
Fees.
Should
any party hereto employ an attorney for the purpose of enforcing or construing
this Debenture, or any judgment based on this Debenture, in any legal proceeding
whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief
or
other litigation, the prevailing party shall be entitled to receive from the
other party or parties thereto reimbursement for all reasonable attorneys'
fees
and all reasonable costs, including but not limited to service of process,
filing fees, court and court reporter costs, investigative costs, expert witness
fees, and the cost of any bonds, whether taxable or not, and that such
reimbursement shall be included in any judgment or final order issued in that
proceeding. The "prevailing party" means the party determined by the court
to
most nearly prevail and not necessarily the one in whose favor a judgment is
rendered.
SECTION
8.6 Governing
Law.
This
Debenture shall be governed by, and construed in accordance with, the laws
of
the State of California (without giving effect to conflicts of laws principles).
With respect to any suit, action or proceedings relating to this Debenture,
the
Company irrevocably submits to the exclusive jurisdiction of the courts of
the
State of California sitting in San Diego and the United States District Court
located in the City of San Diego and hereby waives, to the fullest extent
permitted by applicable law, any claim that any such suit, action or proceeding
has been brought in an inconvenient forum. Subject to applicable law, the
Company agrees that final judgment against it in any legal action or proceeding
arising out of or relating to this Debenture shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified copy of which judgment shall be conclusive evidence
thereof and the amount of its indebtedness, or by such other means provided
by
law.
SECTION
8.7 Waiver
of Jury Trial.
To the
fullest extent permitted by law, each of the parties hereto hereby knowingly,
voluntarily and intentionally waives its respective rights to a jury trial
of
any claim or cause of action based upon or arising out of this Debenture or
any
other document or any dealings between them relating to the subject matter
of
this Debenture and other documents. Each party hereto (i) certifies that neither
of their respective representatives, agents or attorneys has represented,
expressly or otherwise, that such party would not, in the event of litigation,
seek to enforce the foregoing waivers and (ii) acknowledges that it has been
induced to enter into this Debenture by, among other things, the mutual waivers
and certifications herein.
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SECTION
8.8 Headings.
The
headings of the Articles and Sections of this Debenture are inserted for
convenience only and do not constitute a part of this Debenture.
SECTION
8.9 Payment
Dates.
Whenever any payment hereunder shall be due on a day other than a Business
Day,
such payment shall be made on the next succeeding Business Day.
SECTION
8.10 Binding
Effect.
Each
Holder by accepting this Xxxxxxxxx agrees to be bound by and comply with the
terms and provisions of this Debenture.
SECTION
8.11 No
Stockholder Rights.
Except
as otherwise provided herein, 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, to receive dividends and other distributions, or to receive
any notice of, or to attend, meetings of stockholders or any other proceedings
of the Company, unless and to the extent converted into shares of Common Stock
in accordance with the terms hereof.
SECTION
8.12 Facsimile
Execution.
Facsimile execution of this Debenture shall be deemed original.
IN
WITNESS WHEREOF, the Company has caused this Debenture to be signed by its
duly
authorized officer on the date of this Debenture.
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EXHIBIT A
DEBENTURE
CONVERSION NOTICE
The
undersigned owner of the Convertible Debenture due April 18, 2012 (the
“Debenture”)
issued
by TraceGuard Technologies, Inc. (the “Company”)
hereby
irrevocably exercises its option to convert $__________ Principal Amount of
the
Debenture into shares of Common Stock in accordance with the terms of the
Debenture. The undersigned hereby instructs the Company to convert the portion
of the Debenture specified above into shares of Common Stock Issued at
Conversion in accordance with the provisions of Article 3 of the Debenture.
The
undersigned directs that the Common Stock and certificates therefor deliverable
upon conversion, the Debenture reissued in the Principal Amount not being
surrendered for conversion hereby, [the check or shares of Common Stock in
payment of the accrued and unpaid interest thereon to the date of this Notice,]
together with any check in payment for fractional Common Stock, be registered
in
the name of and/or delivered to the undersigned unless a different name has
been
indicated below. All capitalized terms used and not defined herein have the
respective meanings assigned to them in the Debenture. The conversion pursuant
hereto shall be deemed to have been effected at the date and time specified
below, and at such time the rights of the undersigned as a Holder of the
Principal Amount of the Debenture set forth above shall cease and the Person
or
Persons in whose name or names the Common Stock Issued at Conversion shall
be
registered shall be deemed to have become the holder or holders of record of
the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest
with
such Person or Persons.
Date
and
time: _______________________
___________________________________
By:
_______________________________
Title:
_____________________________
Fill
in
for registration of Debenture:
Please
print name and address
(including
ZIP code number):
______________________________
______________________________
______________________________
A-
