Exhibit 4.11
THIS DEBENTURE, AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
(COLLECTIVELY, THE "SECURITIES"), HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR HAVE THEY BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY U.S. STATE OR TERRITORY. THIS
DEBENTURE IS BEING OFFERED AND SOLD PURSUANT TO , AMONG OTHER EXEMPTIONS FROM
REGISTRATION, EITHER A SECTION 4(2) EXEMPTION UNDER REGULATION D (REGULATION
"D"), AS WELL AS A SAFE HARBOR FROM REGISTRATION UNDER REGULATIONS S
("REGULATION S"). THE SECURITIES ARE "RESTRICTED SECURITIES" AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON (AS DEFINED IN
REGULATION S) UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR PURSUANT TO REGULATION S, OR PURSUANT TO OTHER AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. A HOLDER OF ANY OF THE SECURITIES
ISSUED PURSUANT TO REGULATION S MAY NOT ENGAGE IN ANY HEDGING TRANSACTION WITH
REGARD TO SUCH SECURITIES UNLESS IN COMPLIANCE WITH THE ACT.
0% CONVERTIBLE SUBORDINATED DEBENTURE
DUE APRIL 15, 2001
$180,000 No. 1
iExalt, Inc., a Nevada corporation (the "Company"), for value received,
hereby promises to pay to the order of Ignatius Leonards (the "Agent"), or its
registered assigns, the principal sum of one hundred and eighty thousand
$180,000 in U.S. Legal Tender (as defined herein) on April 15, 2001 (the
"Maturity Date"), and to pay Interest (as defined herein) on this Debenture (as
defined herein) in accordance with the provisions of this Debenture in U.S.
Legal Tender to the Registered Holder (as defined herein) hereof, beginning to
accrue on the Issue Date (as defined herein). The principal and Interest payable
on any Interest Payment Date will be paid to the Person (as defined herein) in
whose name this Debenture is registered at the close of business on the
immediately preceding 15th day of the month in which the Interest is payable
(each such day, a "Record Date"). Payment of the principal of and Interest on
this Debenture will be mailed to the address of the Person entitled thereto as
such Person's name and address shall appear in the Register (as defined herein).
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. The following terms (except as otherwise
expressly provided or unless the context otherwise clearly requires) for all
purposes of this Debenture and of any amendment hereto shall have the respective
meanings specified in this Section 1.01.
"Acceleration Date" shall have the meaning assigned to such term in
Section 6.02.
"Affiliate" of any specified Person shall mean any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies
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of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "affiliated," "controlling"
and "controlled" have meanings correlative to the foregoing.
"Bankruptcy Law" means Title 11 of the United States Code or any similar
foreign, federal or state law for the relief of debtors.
"Business Day" shall mean any day of the year (other than any Saturday or
Sunday) on which the Federal Reserve Bank is open for business in Houston,
Texas.
"Capital Stock" shall mean, collectively, the Company's equity securities
of every class, including, without limitation, the Company's Common Stock.
"Common Stock" shall mean the Company's common stock, $.001 par value per
share.
"Company" shall mean iExalt, Inc. and its successors and assigns.
"Conversion Price" shall have the meaning assigned to such term in Section
5.01(b).
"Convertible Securities" shall have the meaning assigned to such term in
Section 5.03(b).
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Date of Conversion" shall mean the date set forth in such Notice of
Conversion, provided (i) that the advance copy of the Notice of Conversion is
faxed to the Company on or before 11:59 p.m., Houston, Texas time, on the Date
of Conversion, and (ii) that the original Debentures to be converted are
surrendered by depositing such Debentures with a common courier, as provided
above, and received by the Transfer Agent or the Company within three (3)
business days from the Date of Conversion. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Date of Conversion. If the original Debentures to be
converted are not received by the Transfer Agent or the Company within five (5)
business days after the Date of Conversion or if the facsimile of the Notice of
Conversion is not received by the Company or the Transfer Agent prior to the
Conversion Notice Deadline, the Notice of Conversion, at the Company's option,
may be declared null and void.
"Debenture" shall have the meaning assigned to such term in Section 2.01.
"Default" shall mean any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Default Notice" shall have the meaning assigned to such term in Section
6.02(b).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning assigned to such term in Section
6.01.
"Fixed Conversion Price" shall have the meaning assigned to such term in
Section 5.01(b).
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States of America on the date of this Debenture.
"Holder" or "Holder of Debentures" shall mean the Registered Holder of a
Debenture.
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"Indebtedness" shall mean, with respect to any Person, (i) any liability,
contingent or otherwise, of such Person (A) for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof), (B) evidenced by a note, debenture or similar instrument
(including a purchase money obligation) or (C) for the payment of money relating
to a Capitalized Lease Obligation; (ii) any liability of others of the kind
described in the preceding clause (i) which the Person has guaranteed or which
is otherwise its legal liability; (iii) any obligation secured by a lien to
which the property or assets of such Person are subject, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability; and (iv) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (i), (ii) or
(iii).
"Interest" shall mean all interest accruing hereunder, including Mandatory
Interest and Deferred Interest, together with accrued and unpaid interest on
Deferred Interest as provided in Section 2.02(a).
"Issue Date" shall have the meaning assigned to such term in the first
paragraph of this Debenture.
"Maturity Date" shall have the meaning assigned to such term in the first
paragraph of this Debenture.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"New Debenture" shall have the meaning assigned to such term in Section
2.06.
"Notice of Conversion" shall mean an executed written notice provided to
the Company at the office of the Company or the Transfer Agent, which notice
shall specify the principal amount of Debentures to be converted and shall
contain a calculation of the number of shares of Common Stock to be issued upon
conversion.
"Notice of Default" shall have the meaning assigned to such term in
Section 6.01.
"Old Debenture" shall have the meaning assigned to such term in Section
2.06.
"Payment Date" shall have the meaning assigned to such term in the first
paragraph of this Debenture.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or other private legal entity or government or other
agency or political subdivision thereof.
"Record Date" shall mean December 15 and June 15 of each calendar year.
"Redemption Date" shall mean the date fixed for redemption pursuant to
this Debenture.
"Redemption Price" shall have the meaning assigned to such term in Section
3.04.
"Register" shall have the meaning assigned to such term in Section 2.03.
"Registered Holder" shall mean the Holder of a Debenture as set forth in
the Register.
"Registration Rights Agreement" means the registration rights agreement dated as
of the date hereof by and between the Company and the Holder granting the Holder
of this Debenture a right to register the underlying Common Stock into which
this Debenture (and accompanying Warrants) may be converted.
"Registration Statement" means the registration statement of the Company
filed with the Securities and Exchange Commission to register for sale the
shares of Common Stock issuable upon conversion of the Debentures, the shares of
Common Stock issuable upon exercise of the warrants issued in connection with
the Debentures and the shares of Common Stock issuable under the Company's
Equity Line of Credit dated as of the date hereof.
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"Registry Office" shall have the meaning assigned to such term in Section
2.03.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Securities Purchase Agreement
date as of the date hereof between the Company and the Agent.
"Subsidiary" shall mean a corporation all of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by a Subsidiary of the Company or
by the Company and a Subsidiary of the Company.
"Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday, other than a day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Transaction Documents" shall mean the Debentures, the Registration Rights
Agreement, the Securities Purchase Agreement, the Equity Line Financing
Agreement and any warrants issued in connection therewith.
"Transfer" shall have the meaning assigned to such term in Section
2.05(b).
"U.S. Legal Tender" shall mean such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts in the United States.
"Variable Conversion Price" shall have the meaning assigned to such term
in Section 5.01(b).
SECTION 1.02 Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning expressly assigned to it hereby;
(2) a technical accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Debenture as a whole and not to any particular Article, Section or
other subdivision;
(7) references to statutes, regulations and rules include subsequent
amendments and successors thereto unless the context otherwise requires;
(8) the various headings of this Debenture are provided herein for
convenience only any shall not affect the meaning or interpretation of
this Debenture or any provision hereof; and
(9) if any payment hereunder shall become due on any day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day.
ARTICLE II
THE DEBENTURES
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SECTION 2.01 Debentures Part of Series. This Debenture is designated as
its 0% Convertible Debenture Due April __, 2001, for $180,000 issued as of the
date hereof, The Debenture is secured further by certain accounts receivable of
PremierCare, L.L.C.
SECTION 2.02 Interest; Payment of Interest. This Debenture shall not bear
Interest for the period from the Issue Date to the Maturity Date (or in the case
of redemption in accordance with Article Three, to the Redemption Date, or in
the case of conversion, in accordance with Article Five, to the date of such
conversion). Payments of Principal and Interest on this Debenture will be made
by the Due Date, or redemption or conversion to the Holder of record will take
place at the close of business on the immediately preceding Record Date as
follows:
(a) Payment Upon Maturity Date. At the Maturity Date, the Holder of this
Debenture will be entitled to receive payment of the outstanding
principal amount hereunder.
(b) Payment Upon Redemption Date. At the Redemption Date, the Holder of
this Debenture will be entitled to receive (i) payment of the
outstanding principal balance hereunder to be redeemed in accordance
with Article Three plus (ii) any accrued and unpaid Interest thereon
to and including the Redemption Date.
(c) Payment Upon Conversion. Upon conversion of this Debenture into
Capital Stock pursuant to Section 5.02, accrued and unpaid Interest
shall be paid as provided in Section 5.01(a).
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 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
2.02 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 2.02 shall control every other
provision of this Debenture.
SECTION 2.03 The Register. The Company will keep at its principal office
(the "Registry Office") one or more books (the "Register") for the registration
of the Debentures (including all transfers) and the names and addresses of the
Registered Holders of the Debentures. All transfers of the Debentures and the
names and addresses of the transferees of the Debentures shall be registered in
the Register under such reasonable regulations as the Company may prescribe.
SECTION 2.04 Registered Holders. The Company will deem and treat the
Registered Holder of this Debenture as the absolute owner hereof and will not be
affected by any notice to the contrary. Payment of the principal of and Interest
on this Debenture shall be made only to the Registered Holder hereof. All such
payments so made shall be valid and effectual to satisfy and discharge the
liability of the Company upon this Debenture to the extent of the sum or sums so
paid. For the purpose of any request, direction or consent hereunder, the
Company may deem and treat the Registered Holder of this Debenture as the Holder
without production of such Debenture.
SECTION 2.05 Transfers and Exchanges of Debentures; Lost or Mutilated
Debentures.
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(a) Subject to Section 2.05(b), the Registered Holder hereof may from time
to time assign or transfer in the manner provided in this Section 2.05 to one or
more Persons all or any part of this Debenture, and to the extent of any such
assignment or transfer (unless otherwise stated therein), the transferee of such
assignment or transfer (unless otherwise stated therein), shall become a
Registered Holder of this Debenture. Each transferee so becoming a Registered
Holder shall be vested with all rights and powers under this Debenture of a
Registered Holder hereunder and shall take and hold its Debenture subject to the
provisions of this Debenture and to any request made, waiver or consent given or
other action taken hereunder by each previous Registered Holder of this
Debenture.
(b) No Holder may sell, assign, transfer, or otherwise dispose of this
Debenture (collectively "Transfer"), if the Transfer, taken alone or together
with all other Transfers of Debentures, would (i) violate or result in a
violation of, any provision of the Securities Act, applicable state securities
or "blue sky" laws, as amended, or any other applicable provision of law; (ii)
subject the Company or an Affiliate of the Company to regulation as an
investment company under the Investment Company Act of 1940, as amended; or
(iii) subject the Company or an Affiliate of the Company to duties and
liabilities under ERISA.
(c) The Registered Holder may Transfer this Debenture upon the surrender
of this Debenture at the Registry Office, and no such Transfer shall be
effective until such surrender to the Company of the Debenture to be transferred
has been made. Upon such surrender the Company shall execute in the name of the
transferee(s) a new Debenture or Debentures in denominations not less than
$1,000 each and in aggregate principal amount equal to the original principal
amount of the Debenture so surrendered.
(d) If this Debenture is presented or surrendered for exchange or
Transfer, it shall be accompanied by a written instrument or instruments of
assignment or transfer, duly executed by the Registered Holder and the
transferee or by their respective attorneys duly authorized in writing (which
instrument shall contain appropriate warranties of the transferee), and an
opinion of counsel addressed to the Company, each in form and substance and
furnished by counsel reasonably satisfactory to the Company, and which opinion
shall state that such Transfer or assignment does not violate, or result in the
violation of, any provision of the Securities Act, applicable state securities
or "blue sky" laws or any other applicable provision of law, and as to such
other matters as the Company reasonably may request. The Company shall not be
required to make a transfer or an exchange of this Debenture for a period of ten
(10) Business Days preceding any Interest Payment Date.
(e) No notarial act shall be necessary for the Transfer or exchange of
this Debenture pursuant to this Section 2.05, and the Holder of any Debenture
issued as provided in this Section 2.05 shall be entitled to any and all rights
and privileges granted under this Debenture to a Registered Holder.
(f) If this Debenture shall become mutilated or be destroyed, lost or
stolen, the Company, upon the written request of the Registered Holder, shall
execute and deliver to the Registered Holder a new Debenture in exchange and
substitution for the mutilated Debenture, or in lieu of and in substitution for
the Debenture so destroyed, lost or stolen, in either case in a principal amount
equal to the original principal amount of the Debenture so mutilated, destroyed,
lost or stolen, as reflected in the Register. The applicant for a substituted
Debenture shall furnish to the Company such security or indemnity or such
combination thereof as may be reasonably required by the Company to save the
Company harmless from all risks, and the applicant shall also furnish to the
Company evidence to its reasonable satisfaction of the mutilation, destruction,
loss or theft of the applicant's Debenture and of the applicant's ownership
thereof.
SECTION 2.06 New Debentures.
(a) Each new Debenture (a "New Debenture") issued pursuant to Section 2.05
in exchange for, in substitution for or in lieu of a Debenture (an "Old
Debenture") shall be dated the date of such Old Debenture. The Company shall
mark on each New Debenture (i) the date and the extent to which principal and
Interest has been paid on such Old Debenture and (ii) all payments and
prepayments of principal made on such Old Debenture which
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are allocable to such New Debenture. Interest and principal shall be deemed to
have been paid on such New Debenture to the date and to the extent to which
Interest and principal was paid on such Old Debenture.
(b) Any New Debenture issued pursuant to Section 2.05 in exchange for or
in substitution for or in lieu of an Old Debenture shall be the valid obligation
of the Company evidencing the same debt as such Old Debenture and shall be
entitled to the benefits of this Debenture. No service charge shall be made for
any exchange or transfer of this Debenture, but the Company may require payment
of a sum sufficient to cover any tax or governmental charge imposed with respect
thereto.
SECTION 2.07 Cancellation of Debentures. If this Debenture is surrendered
to the Company for the purpose of payment, transfer or exchange, it shall be
canceled by the Company, and no Debentures shall be issued in lieu hereof except
as expressly required or permitted by this Debenture.
ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.01 Redemption at the Option of the Company. If the Company is
not in Default (and no Event of Default has occurred or with notice or lapse of
time would reasonably be expected to occur), the Company may redeem Debentures
(including this Debenture), in whole or in part, at any time upon not less than
sixty (60) days prior written notice to the Holders of the Debentures at a
price, payable in U.S. Legal Tender only, equal to the economic benefit that the
Holder would realize from the sale of the Common Stock to be received upon the
conversion of that portion of the Debenture to be redeemed on the date of the
notice of redemption in accordance with Section 3.04 (the "Redemption Price").
SECTION 3.02 Redemption in Part. Debentures may be redeemed in part in
denominations of $1,000 or any integral multiple thereof. In case of a
redemption in part, the Debentures to be redeemed shall be selected pro rata and
there shall be redeemed from each Holder that portion of principal amount of all
Debentures being redeemed which the outstanding principal amount of Debentures
held by such Holder bears to the total principal amount of Debentures then
outstanding.
SECTION 3.03 Notice of Redemption. The Company shall provide notice of
redemption to each Holder at such Holder's latest address set forth in the
Register. Failure to give notice by mail, or any defect in the notice to the
Holder of any Debenture shall not affect the validity of the proceedings for the
redemption of any other Debentures. The notice shall state:
(1) the Redemption Price;
(2) that payment of the Redemption Price shall be made by wire
transfer to an account designated in writing by the Holder with seven (7)
Business Days after the Holder's receipt of the redemption notice (the
"Redemption Date") provided that the Debentures called for redemption must
be surrendered to the Company to collect the Redemption Price;
(3) that, unless the Company defaults in making the redemption
payment on the Redemption Date, Interest on Debentures called for
redemption shall cease to accrue on and after the Redemption Date and, the
only remaining right of the Holder of such Debentures is to receive
payment of the Redemption Price upon surrender of the Debentures redeemed
to the Company;
(4) if any Debenture is being redeemed in part, the portion of the
principal amount of such Debenture to be redeemed and that, after the
Redemption Date, and upon surrender of such Debenture, a new Debenture or
Debentures in aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
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(5) if less than the entire principal amount of Debentures is to be
redeemed, the aggregate principal amount of Debentures to be redeemed and
the aggregate principal amount of Debentures estimated to be outstanding
after such partial redemption.
SECTION 3.04 Inability to Send Notice of Redemption The Company shall not
be entitled to send any redemption notice and begin the redemption procedure
hereunder unless it has: (a) the full amount of the Redemption Price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution, specifically allotted for such redemption; (b)
immediately available credit facilities, in the full amount of the Redemption
Price with a bank or similar financial institution specifically allotted for
such redemption; or (c) a combination of the items set forth in (a) and (b)
above, aggregating the full amount of the Redemption Price. Notwithstanding the
foregoing, in the event the redemption is expected to be made contemporaneously
with the closing of a public offering of the Company's securities for an amount
in excess of the Redemption Price, the Company shall not be required to have the
full amount of the Redemption Price available to it as set forth above.
SECTION 3.05 Effect of Notice of Redemption Once notice of redemption is
mailed, all Debentures called for redemption in whole or in part become due and
payable only to the extent of the Redemption Price on the Redemption Date. Upon
surrender to the Company, such Debentures called for redemption shall be paid at
the Redemption Price. If the Company fails to pay the Redemption Price on the
Redemption Date, the redemption shall be null and void and the Company shall
have no further right to redeem the Debentures or portion thereof called for
redemption.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Debenture. The Company shall pay the principal of
and Interest on this Debenture on the dates and in the manner provided in
Article Two, Article Three and Article Five.
SECTION 4.02 Corporate Existence, Etc. The Company will preserve and keep
in force and effect its corporate existence and all material licenses and
permits reasonably necessary to the proper conduct of its business; provided
that nothing contained in this Section 4.02 shall prevent the Company from
consolidating with, selling all or substantially all of its properties and
assets to, or being a party to a merger with any other Person if: (i) no Default
exists or would result therefrom and (ii) the surviving Person is organized
under the laws of the United States and expressly and unconditionally assumes in
writing the due and punctual performance of all obligations hereunder and under
the Debentures.
SECTION 4.03 Insurance. The Company will maintain insurance coverage by
financially sound and reputable insurers in such forms and amounts and against
such risks as are reasonable for corporations of established reputation engaged
in the same or similar business and owning and operating similar assets.
SECTION 4.04 Taxes, Claims for Labor and Materials, Compliance with Laws.
(a) The Company will promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon the Company, or upon
or in respect of all or any part of the property or business of the Company, all
trade accounts payable in accordance with usual and customary business terms,
and all claims for work, labor or materials, which if unpaid would become a lien
or charge upon any property of the Company; provided that the Company shall not
be required to pay any such tax, assessment, charge, levy, account payable or
claim if (1) the validity, applicability or amount thereof is being contested in
good faith by appropriate actions or proceedings and (2) the Company shall set
aside on its books, reserves deemed by it to be adequate with respect thereto.
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(b) The Company will promptly comply with all applicable laws, ordinances
or governmental rules and regulations to which it is subject the penalty for
violation of which would materially and adversely affect the properties,
business, prospects, profits or condition of the Company.
SECTION 4.05 Limitation on Dividends and Purchases of Capital Stock. The
Company will not, directly or indirectly, declare or pay any dividend on, or
make any distribution to the holders of, Capital Stock of the Company with
respect to such Capital Stock (other than dividends in Capital Stock or rights
to acquire Capital Stock) and neither the Company nor any Subsidiary may
purchase, redeem, or otherwise acquire or retire for value any of the Capital
Stock of the Company or Indebtedness of the Company without the prior written
consent of the Holders of a majority of the outstanding principal balance of the
Debentures.
SECTION 4.06 Reporting.
(a) As soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, the Company shall deliver to each Holder copies
of the audited consolidated balance sheet of the Company and its Subsidiaries
together with the related consolidated statements of income and cash flows for
such fiscal year prepared in accordance with GAAP consistently followed
throughout the period involved and presenting fairly the financial condition of
the Company and its Subsidiaries.
(b) As soon as available, but in any event within 45 days after the end of
each fiscal quarter of the Company, the Company shall deliver to each Holder
copies of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statements of income and cash flows for such fiscal quarter and the
portion of the fiscal year through such fiscal quarter.
ARTICLE V
CONVERSION
SECTION 5.01 Conversion Privilege.
(a) Subject to and upon compliance with the provisions of this Article
Five, up to $90,000.00 of the principal amount of this Debenture, or any portion
thereof, is convertible into Common Stock at the option of the Holder up to the
times set forth in the Date of Conversion above, unless a redemption notice has
been received by the Holder pursuant to the terms of Article Three.
(b) The record Holder of this Debenture shall be entitled to convert the
Debenture into that number of fully-paid and non-assessable shares of Common
Stock of the Company, subject to the limitations above, at a price of $0.18 per
share (the Conversion Rate). Provided, however, Holder acknowledges execution of
one certain Warrant to Purchase Common Stock executed of even date with Company
(Warrant Document). In this regard and consistent with 4(c) in the Warrant
Document, Holder may not exercise its conversion privilege if, when combined
with those rights under the Warrant Document, Holder has 1,000,000 shares of
Common Stock. Accordingly, Holder herein takes subject to all provisions in the
Warrant Document.
(c) Nothing in this Debenture shall grant, or shall be deemed to
constitute the incurrence, creation, assumption or sufferance by the Company of,
and the Holder of this Debenture shall not assert, any mortgage, pledge, lien,
charge or other encumbrance of any nature whatsoever on the Common Stock
deliverable upon conversion of this Debenture.
SECTION 5.02 Exercise of Conversion Privilege.
(a) To exercise the conversion privilege, the Holder of this Debenture
shall surrender this Debenture, duly endorsed or assigned to the Company or in
blank, at the Registry Office or any other office or agency designated in
writing by the Company to the Holder of this Debenture, accompanied by written
notice to the
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Company at such office or agency that the Holder of this Debenture elects to
convert such Debenture and the selection of the three closing bid prices as
specified in Section 5.01(b).
(b) This Debenture shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of this Debenture for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holder of this Debenture as a Holder shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the day of conversion, but
no more than three (3) business days, the Company shall issue and shall deliver
at its principal office or other office or agency which it may designate in
writing to the Holder of this Debenture a certificate or certificates for the
number of shares of Common Stock issuable upon conversion (which may include
fractional shares, as applicable).
(c) If this Debenture is converted in part only, upon such conversion the
Company shall execute and deliver to the Holder hereof, at the expense of the
Company, a new Debenture or Debentures of authorized denominations in aggregate
principal amount equal to the unconverted portion of the principal amount of
this Debenture.
SECTION 5.03 Notice of Certain Corporate Action. In case, as allowed by
this Debenture:
(a) the Company shall declare a dividend (or any other distribution) on
its Capital Stock, other than cash dividends payable from current earnings; or
(b) the Company shall authorize the granting of its Capital Stock of (i)
rights or warrants to subscribe for or purchase any shares of Capital Stock of
any class, or (ii) any other rights; or
(c) of any reclassification of the Capital Stock of the Company (other
than a subdivision or combination of its outstanding shares of Capital Stock),
or of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
then the Company shall cause to be filed in the minute book of the Company and
shall cause to be mailed to the Holder of this Debenture at the Holder's last
address appearing in the Register, at least 30 days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Capital Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) 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 Capital Stock of record shall be entitled
to exchange their shares of Capital Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
SECTION 5.04 Company to Reserve Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of the Debentures, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding Debentures, and the Company will
maintain at all times all other rights and privileges sufficient to enable it to
fulfill all its obligations hereunder.
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SECTION 5.05 Adjustments.
(a) If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person 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 merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee 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.
(c) If, for any reason, prior to the date of conversion or redemption
pursuant to the terms of this Debenture, the Company spins off or otherwise
divests itself of a part of its business or operations or disposes all or of a
part of its assets in a transaction (the "Spin Off") in which the Company does
not receive cash 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, then 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 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 that 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.
SECTION 5.06 Taxes on Conversion. The Company will pay any and all stamp
and transfer taxes that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of this Debenture pursuant to the terms
hereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the Holder of this Debenture or
Debentures to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax, or has established to the satisfaction of the Company that such
tax has been paid.
SECTION 5.07 Covenant as to Common Stock. The Company covenants that all
shares of Common Stock which may be issued upon conversion of this Debenture
will upon issue be duly authorized, validly issued, fully paid and
nonassessable.
SECTION 5.08 Restriction on Conversion (9.99% Limitation). Notwithstanding
any other provision of any of the other Transaction Documents, in no event
(except while there is outstanding a tender offer for any or all of the shares
of the Company's Common Stock) shall the Holder be entitled to convert any
Debenture or shall the Company have the obligation, to convert all or any
portion of this Debenture to the extent that, after such conversion, the sum of
(a) 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), and (b) 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 or exercise). 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 (a) of such sentence. Any issuance
by the Company to the Buyer in excess of the limit contained in this
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Section 5.08 shall be null and void, and upon notice of such invalid issuance,
the Company shall correct its books and cause its transfer agent's books to be
corrected forthwith to reflect that the Holder's ownership of Common Stock is
within the limit set forth herein. Holder shall immediately deliver any
certificates for invalidly issued Common Stock to the Company's transfer agent.
The Company further agrees to (i) immediately reissue certificates for Common
Stock to the extent that a portion of the Common Stock represented by said
certificates have been validly issued and (ii) immediately reissue all or a
portion of those shares which were deemed invalidly issued (at the Conversion
Price set forth in the original conversion notice(s) applicable to such shares)
upon notice from Holder that the reissuance of such shares would not cause such
Holder to have a beneficial ownership interest in excess of 9.99%.
Notwithstanding the foregoing, Holder may elect, by providing the Company
written notice at any time prior to the reissuance of shares, to cancel that
portion of a prior conversion applicable to shares of Common Stock surrendered
by it pursuant to this Section 5.08. The Company hereby indemnifies and holds
Holder free and harmless in connection with any and all liabilities, losses,
costs and expenses, including, without limitation, attorneys' fees and costs
arising from or relating to claims made by any third parties alleging that any
Holder has violated Sections 13(d) and/or 16, to the extent such violation is
premised on the fact that, notwithstanding this Section 5.08, the Holder is the
beneficial owner of all of the shares of Common Stock which would be issuable,
from time to time, if Holder converted the entire principal and interest balance
of the Debenture.
SECTION 5.09 Limitation on Issuances. The Holder recognizes that the
Company may be limited in the number of shares of Common Stock it may issue by
(a) reason of its authorized shares, or (b) the applicable rules and regulations
of the principal securities market on which the Common Stock is listed or traded
(collectively, the "Cap Regulations"). Without limiting the other provisions
hereof, (i) the Company will take all steps reasonably necessary to be in a
position to issue shares of Common Stock on conversion of the Debentures without
violating the Cap Regulations and (ii) if, despite taking such steps, the
Company still can not issue such shares of Common Stock without violating the
Cap Regulations, the Holder of this Debenture (to the extent the same can not be
converted in compliance with the Cap Regulations (an "Unconverted Debenture"),
shall have the option, exercisable in the Holder's sole and absolute discretion,
to elect any one of the following remedies:
(1) require the Company to issue shares of Common Stock in
accordance with such Holder's Notice of Conversion relating to the
Unconverted Debenture 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 the equitable adjustments for certain
events occurring during such period as provided in this Debenture) during
the sixty (60) trading days immediately preceding the date of the Notice
of Conversion; or
(2) require the Company to redeem each Unconverted Debenture for the
Redemption Price assuming for that purpose that the date of Redemption is
the proposed date of conversion as specified in the Holder's Notice of
Conversion.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.01 Notice of Default; Default Defined. Within ten (10) days
after the occurrence of any default hereunder with respect to the Debentures,
the Company shall send notice of such default to the Holders of the Debenture,
unless such default shall have been cured or waived. For the purpose of this
Section 6.01, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
SECTION 6.02 Events of Default. Regardless of the notice required in
Section 6.01 above, an "Event of Default" with respect to this Debenture occurs
if:
(a) the Company defaults in the payment of the principal of this Debenture
or any other Debenture or the Registration Rights Agreement when the same
becomes due and payable at maturity, upon redemption or otherwise;
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(b) the Company fails to comply in any material respect with any of its
covenants or other agreements contained in the Transaction Documents and the
default continues for the period and after the notice specified below (other
than the failure to cause a registration statement to become effective within a
specified time period as to which no cure period shall apply);
(c) any of the representations or warranties made by the Company in the
Transaction Documents 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 the Transaction Documents shall be false or
misleading in any material respect at the time made;
(d) there shall be a default under any bond, debenture, note or other
evidence of Indebtedness of the Company or any Subsidiary or under any mortgage,
debenture or other instrument under which there may be issued or by which there
may be secured or evidenced any Indebtedness of the Company or any Subsidiary or
under any guarantee of the payment by the Company or any Subsidiary of
Indebtedness, whether such Indebtedness or guarantee now exists or shall
hereafter be created, which default relates to (i) the obligation to pay the
principal of or interest on any such Indebtedness or guarantee which default
shall have resulted in such Indebtedness becoming or being declared due and
payable prior to its stated maturity or (ii) an obligation other than the
obligations to pay the principal of or interest on any such Indebtedness and
which default shall have resulted in such Indebtedness becoming or being
declared due and payable prior to its stated maturity; provided that no default
under this clause (e) shall exist if (A) all such defaults relate to
Indebtedness owed to a party other than the Holder and (ii) all such defaults
relate to Indebtedness or guarantees with an aggregate principal amount of no
more than $1,000,000;
(e) the Company or any Subsidiary pursuant to or within the meaning of any
Bankruptcy Law (as defined below) (A) becomes insolvent, (B) fails generally to
pay its debts as they become due, (C) admits in writing its inability to pay its
debts as they become due, (D) commences a voluntary case or proceeding, (E)
consents to the entry of a judgment, decree or order for relief against it in an
involuntary case or proceeding, (F) consents to the appointment of a Custodian
(as defined below) of it or for any material part of its property, (G) consents
to or acquiesces in the institution of bankruptcy or insolvency proceedings to
or against it, (H) applies for, consents to or acquiesces in the appointment of
or taking possession by a Custodian of the Company or any such Subsidiary or for
any material part of the Company's or any such Subsidiary's property, or (I)
makes a general assignment for the benefit of its creditors;
(f) a court of competent jurisdiction enters a judgment, decree or order
for relief in respect of the Company or any Subsidiary in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly filed a
petition seeking reorganization, arrangement, adjustment or composition in
respect of the Company or any Subsidiary, (B) appoint a Custodian of the Company
or any Subsidiary or for any material part of its property or (C) order the
winding-up or liquidation of its affairs, and such judgment, decree or order
shall remain unstayed and in effect for a period of 30 consecutive days; or any
warrant of attachment is issued against any portion of the property of the
Company or any Subsidiary which is not released within 60 days of service;
(g) uninsured final judgments for the payment of money which in the
aggregate at any one time exceed $10,000 shall be rendered against the Company
or any Subsidiary by a court of competent jurisdiction, and shall remain
undischarged for a period (during which execution shall not be effectively
stayed) of 30 days after such judgment becomes final and nonappealable;
provided, however, that the Company promptly shall give notice to the Holder of
any uninsured financial judgments rendered against the Company or a Subsidiary;
or
A Default under clause (c) is not an Event of Default until the Holders of
at least a majority in aggregate principal amount of the then outstanding
Debentures (excluding any Debentures held by the Company) notify the Company of
the Default and the Company does not cure the Default within 20 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default." When a Default is
cured, it ceases.
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SECTION 6.03 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.02(e) or Section 6.02(f)) occurs and is
continuing, the Holders of at least a majority in aggregate principal amount of
the Debentures then outstanding (excluding any Debentures held by the Company)
may, by notice to the Company, declare all unpaid principal and accrued Interest
to the date of acceleration on the Debentures then outstanding (if not then due
and payable) to be due and payable on the "Acceleration Date," which shall be
the the fifth (5th) Business Day after the receipt of notice of such declaration
by the Company; provided that, in the event the condition giving rise to such
Event of Default shall have ceased to exist or payment shall have been made
prior to the Acceleration Date, such declaration shall be automatically
rescinded and such amounts shall no longer become due and payable pursuant
hereto. If an Event of Default specified in Section 6.02(e) or Section 6.02(f)
with respect to the Company occurs, all unpaid principal and accrued Interest on
this Debenture then outstanding shall become immediately due and payable without
any declaration or other act on the part of any Person. Upon payment of such
principal amount and Interest, all of the Company's obligations under this
Debenture shall terminate. The Holders of a majority in aggregate principal
amount of the then outstanding Debentures (excluding any Debentures held by the
Company) by notice to the Company may rescind an acceleration and its
consequences if (i) all existing Events of Default, other than the non-payment
of the principal of the Debentures which has become due solely by such
declaration of acceleration, have been cured or waived, (ii) to the extent the
payment of such interest is lawful, interest on overdue installments of interest
and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, and (iii) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction. It is expressly
understood and agreed that the decision so to waive any Default and so to
rescind and annul any consequences thereof is within the sole judgment and
control of the Holders and such Holders shall be under no obligation to do so.
Notwithstanding the foregoing, if a declaration of acceleration shall have
occurred because of an Event of Default specified in Section 6.02(d), such
declaration shall be automatically rescinded if the Indebtedness that is the
subject of such Event of Default shall have been paid or discharged or such
Event of Default shall have been rescinded, cured or waived in accordance with
the terms of any agreement governing or evidencing such Indebtedness and written
notice of such payment, discharge, rescission, cure or waiver, as the case may
be, shall have been given to the Holders of the Debentures by the Company or by
the requisite holders of such Indebtedness or the trustee, agent or other
representative of such holders within 60 days after such declaration and no
other Event of Default shall have occurred and be continuing on the date of
receipt of such notice.
SECTION 6.04 Other Remedies. If an Event of Default with respect to this
Debenture occurs and is continuing and, except in the case of Defaults under
Sections 6.01(e) and 6.01(f), the Indebtedness represented hereby has been
declared due and payable pursuant to Section 6.02, the Holder hereof may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of or Interest on this Debenture or to enforce the performance of any
provision of this Debenture.
A delay or omission by the Holder of this Debenture in exercising any
right or remedy accruing upon Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are cumulative
to the extent permitted by law.
SECTION 6.05 Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the then outstanding Debentures (excluding any
Debentures held by the Company or any of its Affiliates) on behalf of the
Holders of all the Debentures, including this Debenture, by notice to the
Company, may waive an existing Default or Event of Default and its consequences;
except a Default or an Event of Default in the payment of the principal of or
Interest on any Debenture, or in respect of a covenant or provision hereof which
under Article Eight cannot be modified or amended without the consent of the
Holder of each outstanding Debenture affected. When a Default or Event of
Default is waived, it is cured and ceases; but no such waiver shall extend to
any subsequent default or impair any right consequent thereon.
SECTION 6.06 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Debenture, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees,
14
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.05
does not apply to a suit by a Holder or Holders of more than 10% in aggregate
principal amount of the then outstanding Debentures.
ARTICLE VII
AMENDMENTS AND WAIVERS
SECTION 7.01 With Consent of Holders. This Debenture may not be amended
except in a writing signed by the Company and Holder.
SECTION 7.02 Effect of Amendment. Upon the execution of any amendment
pursuant to the provisions hereof, this Debenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations and duties under this Debenture of the
Company and the Holders of this Debenture shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such amendment shall be
and be deemed to be part of the terms and conditions of this Debenture for any
and all purposes.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telecopier by a nationally recognized express courier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company, to:
iExalt, Inc.
Attention: President: Don Sapaugh
12000 Aerospace Avenue, Suite 375
Houston, TX 77034
Telecopy: 281-464-0068:
Telephone: 281-464-8400
With a copy (which shall not constitute notice) to:
James W. Christian
Christian & Smith, L.L.P.
2302 Fannin, Suite 500
Houston, TX 77002
Telecopy: 713-659-7641
Telephone: 713-659-7617
If to the holder of the Debenture, to
Ignatius Leonards
1103 Cowards Creek
Friendswood, Texas 77546
Any notice or communication to the Company or the Holder of this Debenture
shall be deemed to have been given or made as of the date so delivered if
personally delivered; when receipt is acknowledged, if telecopied;
15
one (1) day (three (3) days in the case of international deliveries) after
dispatch if sent by a nationally recognized express courier for overnight
delivery; and five (5) calendar days (seven (7) days in the case of
international deliveries) after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Where this Debenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed by first-class mail, postage prepaid to such Registered
Holders as their names and addresses appear in the Register. Where this
Debenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Company, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver. In any case where notice to Holders is given by mail, neither the
failure to mail such notices nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders, and any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given.
SECTION 8.02 Consents. Failure to respond to any notice given pursuant to
the terms of this Debenture shall not be deemed consent to any proposed action
described in such notice.
SECTION 8.03 Governing Law, Jurisdiction and Venue. Governing Law,
Jurisdiction and Venue. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of Texas as well as the U.S. securities
laws. Any controversy, dispute or claim that arises out of or relates to this
Agreement or a breach thereof shall be resolved by and be subject to binding
Christian mediation/arbitration. The mediation/arbitration shall be conducted
according to the laws of the State of Texas and shall take place in Harris
County, Texas. The Company and the Investor, for themselves and their respective
successors in interest, hereby irrevocably consent to such binding
mediation/arbitration, and hereby irrevocably waive any claim of forum non
conveniens or right to change such venue. If arbitration should be necessary,
the parties agree to a three panel board, with each party picking one
arbitrator, and the two selected arbitrators agreeing upon the third arbitrator.
SECTION 8.04 No Adverse Interpretation of Other Agreements. This Debenture
may not be used to interpret any debenture, loan or debt agreement of the
Company or any of its Subsidiaries. Any such debenture, loan or debt agreement
may not be used to interpret this Debenture.
SECTION 8.05 Successors. All agreements of the Company in this Debenture
shall bind its successor.
SECTION 8.06 Execution in Counterparts; Copies Valid as an Original. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one (1) instrument. A signed copy or facsimile
shall be as valid and binding as an original.
SECTION 8.07 Severability. In case any provision in this Debenture shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby, and a Holder shall have no claim therefor against any party hereto.
This Debenture shall be construed to give economic effect to the intent of the
parties hereto. Without limiting the foregoing, in the event and to the extent
that payment of any portion of Interest shall at any time be unlawful or
unenforceable, such portion of such Interest (including, without limitation, any
Interest as to which interest thereon is payable hereunder) as may be necessary
to give economic effect to the intent of the parties hereto, shall be deemed to
be principal.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed, as of the date first written above.
The principal amount of this Debenture is $180,000.00.
Dated as of February15, 2001.
IEXALT, INC.
By: /s/Don Sapaugh
------------------------------------
Name: Don Sapaugh
Title: President and CEO
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