Exhibit 4.2 Form of Debenture
FORM OF DEBENTURE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. 00- US $
STOCKGROUP.COM HOLDINGS, INC.
3% CONVERTIBLE DEBENTURE SERIES 00-1 DUE DECEMBER 31, 2003
THIS DEBENTURE is one of a duly authorized issue of up to $500,000 in
Debentures of STOCKGROUP.COM HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Colorado (the "Company") designated as
its 3% Convertible Debentures Series 00-1. Such Debentures may be issued in
series, each of which may have a different maturity date, but which otherwise
have substantially similar terms.
FOR VALUE RECEIVED, the Company promises to pay to , the registered holder
hereof (the "Holder"), the principal sum of and 00/100 Dollars (US $ ) on
December 31, 2003 (the "Maturity Date") and to pay interest on the principal sum
outstanding from time to time in arrears at the rate of 3% per annum, accruing
from December , 2000, the date of initial issuance of this Debenture (the "Issue
Date"), on the date (each, an "Interest Payment Date") which is the earlier of
(i) the last calendar day of March, June, September and December of each
calendar year or (ii) a Conversion Date (as defined below). Accrual of interest
shall commence on the first such business day to occur after the Issue Date and
shall continue to accrue on a daily basis until payment in full of the principal
sum has been made or duly provided for. Subject to the provisions of Section 4
below (the terms of which shall govern as if this sentence were not included in
this Debenture), interest on this Debenture is payable, at the option of the
Company, in shares of Common Stock, no par value ("Common Stock"), of the
Company at the Conversion Price (as defined below) in effect on the relevant
date, or in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts, at the
address last appearing on the Debenture Register of the Company as designated in
writing by the Holder from time to time.
This Debenture is being issued pursuant to the terms of the Securities
Purchase Agreement, dated (the "Securities Purchase Agreement"), to which the
Company and the Holder (or the Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US$10,000) or any larger amounts (unless the aggregate outstanding Debentures
held by the
Holder is less than such amount). The Debentures are exchangeable for an equal
aggregate principal amount of Debentures of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws and the terms of the Securities
Purchase Agreement . In the event of any proposed transfer of this Debenture,
the Company may require, prior to issuance of a new Debenture in the name of
such other person, that it receive reasonable transfer documentation including
legal opinions from counsel reasonably acceptable to the Company in form and
substance reasonably acceptable to the Company that the issuance of the
Debenture in such other name does not and will not cause a violation of the Act
or any applicable state or foreign securities laws. Prior to due presentment for
transfer of this Debenture, the Company and any agent of the Company may treat
the person in whose name this Debenture is duly registered on the Company's
Debenture Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Debenture be
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.
4. A. (i) At any time on or after the date which is the earlier of (x)
sixty-five (65) days after the Closing Date or (y) the Effective Date, the
Holder of this Debenture is entitled, at its option, subject to the following
provisions of this Section 4, to convert this Debenture at any time into shares
of Common Stock of the Company at a conversion price for each share of Common
Stock ("Conversion Price") equal to the lower of the Fixed Conversion Price or
the Variable Conversion Price (as those terms are defined below).
(ii) The term "Fixed Conversion Price" means one dollar ($1.00;
which amount is subject to adjustment as provided herein).
(iii) The term "Variable Conversion Price" means the amount equal
to eighty percent (80%) of the average of the two (2) lowest Closing Bid Prices
(which need not be from consecutive trading days) during the ten (10) trading
days ending on the trading day immediately preceding the Conversion Date (as
defined below); provided, however, that the Variable Conversion Price shall not
be less than the Minimum Conversion Price.
(iv) The term "Minimum Conversion Price" means fifty cents ($0.50;
which amount is subject to adjustment as provided herein).
(v) The term "Closing Bid Price" means the closing bid price during
regular trading hours of the Common Stock (in U.S. Dollars) on the Principal
Trading Market, as reported by the Reporting Service.
B. Conversion shall be effectuated by faxing a Notice of Conversion
(as defined below) to the Company as provided in this paragraph. The Notice of
Conversion shall be
executed by the Holder of this Debenture and shall evidence such Holder's
intention to convert this Debenture or a specified portion hereof in the form
annexed hereto as Exhibit A. If paid in Common Stock as contemplated hereby,
interest accrued or accruing from the Issue Date to the relevant Interest
Payment Date shall be paid in Common Stock at the Conversion Price then
applicable as of such Interest Payment Date. No fractional shares of Common
Stock or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder faxes or otherwise delivers the
conversion notice ("Notice of Conversion") to the Company so that it is received
by the Company on or before such specified date, provided that, if such
conversion would convert the entire remaining principal of this Debenture, the
Holder shall deliver to the Company the original Debentures being converted no
later than five (5) business days thereafter. Facsimile delivery of the Notice
of Conversion shall be accepted by the Company at facsimile number (604)
331-1194; Attn: CEO. Certificates representing Common Stock upon conversion
("Conversion Certificates") will be delivered to the Holder at the address
specified in the Notice of Conversion (which may be the Buyer's address for
notices as contemplated by the Securities Purchase Agreement or a different
address), via express courier, by electronic transfer or otherwise, within three
(3) business days (such third business day, the "Delivery Date") after the date
on which the Notice of Conversion is delivered to the Company as contemplated in
this paragraph B, and, if interest is paid by Common Stock, the Interest Payment
Date.
C. Notwithstanding any other provision hereof or of any of the other
Transaction Agreements, in no event (except (i) as specifically provided herein
as an exception to this provision, (ii) while there is outstanding a tender
offer for any or all of the shares of the Company's Common Stock, or (iii) at
the Holder's option, on at least sixty-five (65) days' advance written notice
from the Holder) shall the Holder be entitled to convert any portion of this
Debenture, or shall the Company have the obligation to convert such Debenture
(and the Company shall not have the right to pay interest hereon in shares of
Common Stock) to the extent that, after such conversion or issuance of stock in
payment of interest, the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debentures or unexercised portion of the Warrants),
and (2) the number of shares of Common Stock issuable upon the conversion of the
Debentures with respect to which the determination of this proviso is being
made, would result in beneficial ownership by the Holder and its affiliates of
more than 9.99% of the outstanding shares of Common Stock (after taking into
account the shares to be issued to the Holder upon such conversion). For
purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), except as otherwise provided
in clause (1) of such sentence. The Holder, by its acceptance of this Debenture,
further agrees that if the Holder transfers or assigns any of the Debentures to
a party who or which would not be considered such an affiliate, such assignment
shall be made subject to the transferee's or assignee's specific agreement to be
bound by the provisions of this Section 4(C) as if such transferee or assignee
were the original Holder hereof. Nothing herein shall preclude the Holder from
disposing of a sufficient number of other shares of Common Stock beneficially
owned by the Holder so as to thereafter permit the continued conversion of this
Debenture.
D. (i) If the Company elects to pay interest due in Common Stock, the
number of shares of Common Stock to be issued shall be determined by dividing
the dollar amount of the interest to be so paid by the Conversion Price on the
relevant Interest Payment
Date. If the interest is to be paid in Common Stock, the Common Stock shall be
delivered to the Holder, or per Holder's instructions, (i) if being issued in
connection with a conversion, at the same time the Conversion Certificates
pursuant to Section 4(B) hereof are to be delivered, and (ii) with respect to
all other instances, within three (3) business days after the Interest Payment
Date (such third business date, a "Delivery Date").
(ii) If the interest is to be paid in cash, the Company shall make
such payment within three (3) business days of the Interest Payment Date. If the
interest is not paid by such third business day, the interest must be paid in
Common Stock in accordance with the provisions of Section 4(D)(i) hereof, unless
the Holder consents otherwise in each specific instance.
E. Anything herein to the contrary notwithstanding, in the event the
Company breaches the provisions of Section 4(g)(i) of the Securities Purchase
Agreement, the Conversion Price shall be amended to be equal to (i) ninety
percent (90%) of (ii) the Conversion Price determined in accordance with the
other provisions of this Debenture without regard to this Section 4(E), and the
Holder may require the Company to immediately redeem all or any part of the
outstanding portion of this Debenture for an amount equal to the Redemption
Amount.
5. The Holder recognizes that, if applicable to the Company, the Company
may be limited in the number of shares of Common Stock it may issue by virtue of
(a) the Issuance Limitations. Without limiting the other provisions of the
Securities Purchase Agreement or this Debenture, the Company will take all steps
reasonably necessary to be in a position to issue shares of Common Stock on
conversion of all the debentures issued in this series of Debentures without
violating the Issuance Limitations. If, despite taking such steps, the Company
still can not issue such shares of Common Stock without violating the Issuance
Limitations, the Holder of this Debenture (to the extent the same can not be
converted in compliance with the Issuance Limitations, an "Unconverted
Debenture"), shall have the option, exercisable in such Holder's sole and
absolute discretion, to elect either of the following remedies:
(i) if permitted by the Cap Regulations, require the Company to issue
shares of Common Stock in accordance with such Holder's Notice of
Conversion at a conversion purchase price equal to the average of the
Closing Bid Price per share of Common Stock for any five (5) consecutive
trading days (subject to certain equitable adjustments for certain events
occurring during such period) during the sixty (60) trading days
immediately preceding the date of Notice of Conversion; or
(y) require the Company to redeem each Unconverted Debenture for an
amount (the "Redemption Amount"), payable in cash, equal to:
V x M
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CP
where:
"V" means the principal of an Unconverted Debenture plus any accrued
but unpaid interest thereon;
"CP" means the Conversion Price in effect on the date of redemption
(the "Cap Redemption Date") specified in the notice from the holder of the
Unconverted Debentures electing this remedy; and
"M" means the highest closing price per share of the Common Stock
during the period beginning on the Redemption Date and ending on the date
of payment of the Redemption Amount.
The notice of exercise of this provision by the Holder shall specify the date on
which the Redemption Amount shall be paid, which date shall be at least five (5)
business days after the Redemption Date; provided, however, that the Company
shall have the right to accelerate the date of such payment. The Holder of an
Unconverted Debenture may elect one of the above remedies with respect to a
portion of such Unconverted Debenture and the other remedy with respect to other
portions of the Unconverted Debenture. If the Redemption Amount is not timely
paid by the Company, the Redemption Amount computed as of such date will bear
interest at the rate of eighteen percent (18%) or the highest rate allowed by
law, whichever is lower, from the date it was due until and including the date
actually paid.
6. Subject to the terms of the Securities Purchase Agreement, no provision
of this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture and all other Debentures now or hereafter issued of
similar terms are direct obligations of the Company.
7. A. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
B. All payments contemplated hereby to be made "in cash" shall be made
in immediately available good funds in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments of cash and each delivery of shares of
Common Stock issuable to the Holder as contemplated hereby shall be made to the
Holder at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder from time to time; except that the Holder
can designate, by notice to the Company, a different delivery address for any
one or more specific payments or deliveries.
8. If, for as long as this Debenture remains outstanding, the Company
enters into a merger (other than where the Company is the surviving entity) or
consolidation with another corporation or other entity or a sale or transfer of
all or substantially all of the assets of the Company to another person
(collectively, a "Sale"), the Company will require, in the agreements reflecting
such transaction, that the surviving entity expressly assume the obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company enters into
a Sale and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a
condition of such Sale, the Company and any such successor, purchaser or
transferee will agree that the Debenture may thereafter be converted on the
terms and subject to the conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger, consolidation, sale
or transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable. In the event of any such proposed Sale, (i)
the Holder hereof shall have the right to convert by delivering a Notice of
Conversion to the Company within fifteen (15) days of receipt of notice of such
Sale from the Company, except that Section 4(C) shall not apply to such
conversion.
9. If, at any time while any portion of this Debenture remains outstanding,
the Company spins off or otherwise divests itself of a part of its business or
operations or disposes of all or of a part of its assets in a transaction (the
"Spin Off") in which the Company does not receive just compensation for such
business, operations or assets, but causes securities of another entity (the
"Spin Off Securities") to be issued to security holders of the Company, the
Company shall cause (i) to be reserved Spin Off Securities equal to the number
thereof which would have been issued to the Holder had all of the Holder's
Debentures outstanding on the record date (the "Record Date") for determining
the amount and number of Spin Off Securities to be issued to security holders of
the Company (the "Outstanding Debentures") been converted as of the close of
business on the trading day immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the Holder on the conversion of all
or any of the Outstanding Debentures, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction,
of which (I) the numerator is the principal amount of the Outstanding Debentures
then being converted, and (II) the denominator is the principal amount of the
Outstanding Debentures.
10. If, at any time while any portion of this Debenture remains
outstanding, the Company effectuates a stock split or reverse stock split of its
Common Stock or issues a dividend on its Common Stock consisting of shares of
Common Stock, the Conversion Price, the Minimum Conversion Price, the Fixed
Conversion Price and any other amounts calculated as contemplated hereby or by
any of the other Transaction Agreements shall be equitably adjusted to reflect
such action. By way of illustration, and not in limitation, of the foregoing (i)
if the Company effectuates a 2:1 split of its Common Stock, thereafter, with
respect to any conversion for which the Company issues shares after the record
date of such split, any market price from a date prior to such split which was
used in any of the calculation of the Conversion Price shall be deemed to be
one-half of what it had been calculated to be immediately prior to such split;
(ii) if the Company effectuates a 1:10 reverse split of its Common Stock,
thereafter, with respect to any conversion for which the Company issues shares
after the record date of such reverse split, any market price from a date prior
to such split which was used in any of the calculation of the Conversion Price
shall be deemed to be ten times what it had been calculated to be immediately
prior to such split; and (iii) if the Company declares a stock dividend of one
share of Common Stock for every 10 shares outstanding, thereafter, with respect
to any conversion for which the Company issues shares after the record date of
such dividend, any market price from a date prior to such record date which was
used in any of the calculation of the Conversion Price shall be deemed to be
such amount multiplied by a fraction, of which the numerator is the number of
shares (10 in the example) for which a dividend share will be issued and the
denominator is such number of shares plus the dividend share(s) issuable or
issued thereon (11 in the example).
11. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon conversion thereof except under
circumstances which will not result in a violation of the Act or any applicable
state Blue Sky or foreign laws or similar laws relating to the sale of
securities.
12. This Debenture shall be governed by and construed in accordance with
the laws of the State of New York. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. To the extent determined by such court, the
Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under any of this Debenture.
13. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture and same shall continue for a period of five
(5) business days; or
b. Any of the representations or warranties made by the Company
herein, in the Securities Purchase Agreement, the Registration
Rights Agreement (as defined in the Securities Purchase
Agreement) or in any certificate or financial or other written
statements heretofore or hereafter furnished by the Company in
connection with the execution and delivery of this Debenture or
the Securities Purchase Agreement shall be false or misleading in
any material respect at the time made; or
c. Subject to the terms of the Securities Purchase Agreement, the
Company fails to authorize or to cause its Transfer Agent to
issue shares of Common Stock upon exercise by the Holder of the
conversion rights of the Holder in accordance with the terms of
this Debenture, fails to transfer or to cause its Transfer Agent
to transfer any certificate for shares of Common Stock issued to
the Holder upon conversion of this Debenture and when required by
this Debenture or the Registration Rights Agreement, and such
transfer is otherwise lawful, or fails to remove any restrictive
legend on any certificate or fails to cause its Transfer Agent to
remove such restricted legend, in each case where such removal is
lawful, as and when required by this Debenture, the Agreement or
the Registration Rights Agreement, and any such failure shall
continue uncured for ten (10) business days; or
d. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of any Debenture in this series and such
failure shall continue uncured for a period of thirty (30) days
after written notice from the Holder of such failure; or
e. The Company shall fail to perform or observe, in any material
respect, any covenant, term, provision, condition, agreement or
obligation of the Company under the Securities Purchase Agreement
or the Registration Rights Agreement and such failure shall
continue uncured for a period of
thirty (30) days after written notice from the Holder of such
failure (other than a failure to use the Company's best efforts
to cause the Registration Statement to become effective, as
provided in the Registration Rights Agreement, as to which the
cure period shall be five (5) days after written notice from the
Holder of such failure); or
f. The Company shall (1) admit in writing its inability to pay its
debts generally as they mature; (2) make an assignment for the
benefit of creditors or commence proceedings for its dissolution;
or (3) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its
property or business; or
g. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within ninety
(90) days after such appointment; or
h. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within ninety
(90) days thereafter; or
i. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within ninety (90) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
j. The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in
excess of fifteen (15) trading days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
14. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
15. In the event for any reason, any payment by or act of the Company or
the Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation
of the law of the jurisdiction applicable to this Debenture, then ipso facto the
obligation of the Company to pay interest or perform such act or requirement
shall be reduced to the limit authorized under such law, so that in no event
shall the Company be obligated to pay any such interest, perform any such act or
be bound by any requirement which would result in the payment of interest in
excess of the limit so authorized. In the event any payment by or act of the
Company shall result in the extraction of a rate of interest in excess of a sum
which is lawfully collectible as interest, then such amount (to the extent of
such excess not returned to the Company) shall, without further agreement or
notice between or by the Company or the Holder, be deemed applied to the payment
of principal, if any, hereunder immediately upon receipt of such excess funds by
the Holder, with the same force and effect as though the Company had
specifically designated such sums to be so applied to principal and the Holder
had agreed to accept such sums as an interest-free prepayment of this Debenture.
If any part of such excess remains after the principal has been paid in full,
whether by the provisions of the preceding sentences of this Section 15 or
otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section 15 shall control every other
provision of this Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: ,
STOCKGROUP.COM HOLDINGS, INC.
By:_______________________________________
__________________________________________
(Print Name)
__________________________________________
(Title)
EXHIBIT A
NOTICE OF CONVERSION
OF
3% CONVERTIBLE DEBENTURE SERIES 00-1 DUE DECEMBER 31, 2003
(To be Executed by the Registered Holder in Order to Convert the Debenture)
FROM: ("Holder")
DATE: (the "Conversion Date")
RE: Conversion of $ principal amount (the "Converted Debenture") of the 3%
Convertible Debenture Series 00-1 Due December 31, 2003 (the "Debenture")
of STOCKGROUP.COM HOLDINGS, INC. (the "Company") into shares (the
"Conversion Shares") of Common Stock (defined below)
CONVERSION DATE:
The captioned Holder hereby gives notice to the Company, pursuant to the
Debenture of STOCKGROUP.COM HOLDINGS, INC. that the Holder elects to convert the
Converted Debenture into fully paid and non-assessable shares of Common Stock,
no par value (the "Common Stock"), of the Company as of the Conversion Date
specified above. Said conversion shall be based on the following Conversion
Price (the lower of the two alternatives is checked):
_ $ , representing the Fixed Conversion Price (as defined in the
Debenture)
_ $ , representing the Variable Conversion Price (as defined in the
Debenture). If the Variable Conversion Price is selected above, a
schedule of the Closing Bid Prices of the Common Stock for the ten
trading days prior to the Conversion Date, on the Principal Trading
Market as reported by the Reporting Service (as those terms are
defined in the Securities Purchase Agreement defined in the
Debenture), is attached for your reference in determining the
Conversion Price. The Variable Conversion Price is not less than the
Minimum Conversion Price.Based on this Conversion Price, the number
of Conversion Shares indicated above should be issued in the
following name(s):
Name and Record Address Conversion Shares
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As contemplated by the Debenture and the Securities Purchase Agreement,
this Notice of Conversion is being sent by facsimile to the telec
11754-00013/784671.5 -59- Registration Rights Agreement opier number and officer
indicated above, with a copy to the Company's counsel.
If this Notice of Conversion represents the full conversion of the
outstanding balance of the Converted Debenture, the Holder either (1) has
previously surrendered the Converted Debenture, duly endorsed, to the Company or
(2) will surrender (or cause to be surrendered) the Converted Debenture, duly
endorsed, to the Company at the address indicated above by express courier
within five (5) business days after delivery or facsimile transmission of this
Notice of Conversion.
The certificates representing the Conversion Shares should be transmitted
by the Company to the Holder via express courier or by electronic transfer
within the time contemplated by the Debenture and Securities Purchase Agreement
after receipt of this Notice of Conversion (by facsimile transmission or
otherwise) to:
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As contemplated by the Debenture, the Company should also pay all accrued
but unpaid interest on the Converted Debenture to the Holder. If being paid in
cash, such payment should be made by wire transfer as follows:
If being paid in Common Stock as contemplated by the Debenture, such shares
should be issued in the name of the Holder and delivered in the same manner as,
and together with, the Conversion Shares.
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(Print name of Holder)
By:
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(Signature of Authorized Person)
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(Printed Name and Title)
38