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DEBENTURE
$6,000,000 June 11, 1998
FOR VALUE RECEIVED, on or before June 11, 2000 ("Maturity Date"), the
undersigned and if more than one, each of them, jointly and severally
(hereinafter referred to as "Borrower"), promises to pay to the order of
INFINITY INVESTORS LIMITED ("Lender") at its offices at 38 Hertford Street,
London, England WIY 7TG the principal amount of SIX MILLION and 00/100 DOLLARS
($6,000,000) ("Total Principal Amount"), or such amount less than the Total
Principal Amount which is outstanding from time to time if the total amount
outstanding under this Debenture ("Debenture") is less than the Total Principal
Amount, together with interest on such portion of the Total Principal Amount
which has been advanced to Borrower from the date advanced until paid at a fixed
rate per annum equal to the lesser of (a) the Maximum Rate (as hereinafter
defined) or (b) eight percent (8%), calculated on the basis of actual days
elapsed but computed as if each year consisted of 360 days. The term "Maximum
Rate," as used herein, shall mean at the particular time in question the maximum
rate of interest, if any, which, under applicable law, may then be charged on
this Debenture. If such maximum rate of interest changes after the date hereof
and this Debenture provides for a fluctuating rate of interest, the Maximum Rate
shall be automatically increased or decreased, as the case may be, without
notice to Borrower from time to time as of the effective date of each change in
such maximum rate. If applicable law ceases to provide for such a maximum rate
of interest, the Maximum Rate shall be equal to eighteen percent (18%) per
annum.
The principal of and all accrued but unpaid interest on this Debenture
shall be due and payable as follows:
(a) interest shall be due and payable monthly as it accrues,
commencing on the 30th day of June, 1998 and continuing on the last day
of each successive month thereafter during the term of this Debenture;
(b) principal of the Debenture shall be due and payable in
seventeen (17) equal monthly installments in the amount of $50,000
each, commencing on January 31, 1999 and continuing on the last day of
each successive month thereafter;
(c) in addition to the payments pursuant to subsection (b)
above, Borrower shall, on the last day of each calendar month, prepay
all or a portion of the principal balance of this Debenture from all
Available Cash Flow of Borrower. As used herein, Available Cash Flow
means the amount of cash on hand on such last day of such month and
received by Borrower from any source, less the cash expenses of
Borrower, any capital expenditures of Borrower, any principal and
interest payments on indebtedness of Borrower and a reserve maintained
in an amount determined by Borrower's Board of Directors, considering
current needs for operating capital and prudent reserves for future
operating capital; and
(d) the outstanding principal balance of this Debenture,
together with all accrued but unpaid interest, shall be due and payable
on the Maturity Date.
If a payment is ten (10) or more days late, Borrower will pay a
delinquency charge in an amount equal to the greater of (i) 5.0% of the amount
of the delinquent payment up to the maximum amount of $250.00, or (ii) $25.00.
Upon an Event of Default, including failure to pay upon final maturity, Lender,
at its option, may also, if permitted under applicable law, do one or both of
the following: (a) increase the interest rate provided for herein by three
(3.00) percentage points and (b) add any unpaid accrued interest to principal
and such sum will bear interest therefrom until paid at the rate provided in
this Debenture.
This Debenture evidences obligations and indebtedness from time to time
owing by Borrower to Lender pursuant to that certain Securities Purchase
Agreement of even date herewith by and between Borrower and Lender ("Securities
Purchase Agreement"), and is secured by a Security Agreement and Pledge
Agreement, each of even
DEBENTURE - PAGE 1
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date herewith by Borrower, covering certain collateral as more particularly
described therein.
This Debenture, the Securities Purchase Agreement, such Security
Agreement and Pledge Agreement, and all other documents evidencing, securing,
governing, guaranteeing and/or pertaining to this Debenture, including but not
limited to those documents described above, are hereinafter collectively
referred to as the "Loan Documents." The holder of this Debenture is entitled to
the benefits and security provided in the Loan Documents.
Borrower may from time to time prepay all or any portion of the
principal of this Debenture without premium or penalty. Unless otherwise agreed
to in writing, or otherwise required by applicable law, payments will be applied
first to unpaid accrued interest, then to principal, and any remaining amount to
any unpaid collection costs, delinquency charges and other charges; provided,
however, upon delinquency or other Event of Default, Lender reserves the right
to apply payments among principal, interest, delinquency charges, collection
costs and other charges, at its discretion. All prepayments shall be applied to
the indebtedness owing hereunder in such order and manner as Lender may from
time to time determine in its sole discretion. All payments and prepayments of
principal of or interest on this Debenture shall be made in lawful money of the
United States of America in immediately available funds, at the address of
Lender indicated above, or such other place as the holder of this Debenture
shall designate in writing to Borrower. If any payment of principal of or
interest on this Debenture shall become due on a day which is not a Business Day
(as hereinafter defined), such payment shall be made on the next succeeding
Business Day and any such extension of time shall be included in computing
interest in connection with such payment. As used herein, the term "Business
Day" shall mean any day other than a Saturday, Sunday or any other day on which
national banking associations are authorized to be closed. The books and records
of Lender shall be prima facie evidence of all outstanding principal of and
accrued and unpaid interest on this Debenture.
Borrower agrees that no advances under this Debenture shall be used for
personal, family or household purposes, and that all advances hereunder shall be
used solely for business, commercial, investment or other similar purposes.
Borrower agrees that upon the occurrence of any one or more of the
following events of default ("Event of Default"):
(a) failure of Borrower to pay when due all or any part of the
principal on this Debenture or any other Debenture issued pursuant to
the terms of the Securities Purchase Agreement;
(b) failure of Borrower to pay (i) within twenty (20) Business
Days of the due date thereof any interest on this Debenture or any
other Debenture issued pursuant to the terms of the Securities Purchase
Agreement or (ii) within twenty (20) Business Days following the
delivery of notice to Borrower of any fees or any other amount payable
(not otherwise referred to in (a) above or this clause (b)) by Borrower
under this Debenture or any other Debenture issued pursuant to the
terms of the Securities Purchase Agreement;
(c) any representation, warranty, certification or statement
made by Borrower in the Securities Purchase Agreement or any Related
Agreement (as such term is defined in the Securities Purchase
Agreement) or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with the Securities Purchase Agreement or any Related
Agreement shall prove to have been untrue in any material respect when
made;
(d) failure on the part of Borrower to observe or perform any
of the covenants or agreement contained in Section 10 of the Securities
Purchase Agreement (Negative Covenants);
(e) failure on the part of Borrower to observe or perform any
covenant or agreement contained in the Securities Purchase Agreement or
any Related Document (other than those covered by clauses (a) through
(d) above), which failure is not cured within thirty (30) days of such
failure;
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(f) any of the Current Stockholders (as such term is defined
in the Securities Purchase Agreement) shall fail to perform, in any
material respect, any of their respective obligations under, or shall
have breached any material item of, the Securities Purchase Agreement
or any Related Agreement;
(g) Borrower or any Subsidiary (as such term is defined in the
Securities Purchase Agreement) has commenced a voluntary case or other
proceeding seeking liquidation, winding-up, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency, moratorium or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or has consented to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or has made a general assignment
for the benefit of creditors, or has failed generally to pay its debts
as they become due, or has taken any corporate action to authorize any
of the foregoing;
(h) an involuntary case or other proceeding has been commenced
against Borrower or any Subsidiary, seeking liquidation, winding-up,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency, moratorium or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days, or an order for relief has been entered against Borrower or any
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect; or
(i) judgments or orders for the payment of money which in the
aggregate at any one time exceed $250,000 and are not covered by
insurance have been rendered against Borrower or any Subsidiary by a
court of competent jurisdiction and such judgments or orders shall
continue unsatisfied and unstayed for a period of 60 days,
the holder of this Debenture may, at its option, without further notice or
demand, (i) declare the outstanding principal balance of and accrued but unpaid
interest on this Debenture at once due and payable, (ii) refuse to advance any
additional amounts under this Debenture, (iii) foreclose all liens securing
payment hereof, (iv) pursue any and all other rights, remedies and recourses
available to the holder hereof, including but not limited to any such rights,
remedies or recourses under the Related Agreements and Loan Documents, at law or
in equity, or (v) pursue any combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Debenture or any other right, remedy or recourse available to the holder hereof
upon the occurrence of an Event of Default hereunder shall not constitute a
waiver of the right of the holder of this Debenture to exercise the same at that
time or at any subsequent time with respect to such Event of Default or any
other Event of Default. The rights, remedies and recourses of the holder hereof,
as provided in this Debenture and in any of the other Loan Documents, shall be
cumulative and concurrent and may be pursued separately, successively or
together as often as occasion therefore shall arise, at the sole discretion of
the holder hereof. The acceptance by the holder hereof of any payment under this
Debenture which is less than the payment in full of all amounts due and payable
at the time of such payment shall not (i) constitute a waiver of or impair,
reduce, release or extinguish any right, remedy or recourse of the holder
hereof, or nullify any prior exercise of any such right, remedy or recourse, or
(ii) impair, reduce, release or extinguish the obligations of any party liable
under any of the Loan Documents as originally provided herein or therein.
This Debenture and all of the other Loan Documents and Related
Agreements are intended to be performed in accordance with, and only to the
extent permitted by, all applicable usury laws. If any provision hereof or of
any of the other Loan Documents or Related Agreements or the application thereof
to any person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the application of such provision to any other
person or circumstance nor the remainder of the instrument in which such
provision is contained shall be affected thereby and shall be enforced to the
greatest extent permitted by law. It is expressly stipulated and agreed to be
the intent of the holder hereof to at all times comply with the usury and other
applicable laws now or hereafter governing the interest payable on the
indebtedness evidenced by this Debenture. If the
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applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Debenture or under any of the
other Loan Documents, or contracted for, charged, taken, reserved or received
with respect to the indebtedness evidenced by this Debenture, or if Lender's
exercise of the option to accelerate the maturity of this Debenture, or if any
prepayment by Borrower results in Borrower having paid any interest in excess of
that permitted by law, then it is the express intent of Borrower and Lender that
all excess amounts theretofore collected by Lender be credited on the principal
balance of this Debenture (or, if this Debenture and all other indebtedness
arising under or pursuant to the other Loan Documents have been paid in full,
refunded to Borrower), and the provisions of this Debenture and the other Loan
Documents and Related Documents immediately be deemed reformed and the amounts
thereafter collectable hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the then applicable
law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder. All sums paid, or agreed to be paid, by Borrower for
the use, forbearance, detention, taking, charging, receiving or reserving of the
indebtedness of Borrower to Lender under this Debenture or arising under or
pursuant to the other Loan Documents and Related Agreements shall, to the
maximum extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in full
so that the rate or amount of interest on account of such indebtedness does not
exceed the usury ceiling from time to time in effect and applicable to such
indebtedness for so long as such indebtedness is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents
and Related Agreements, it is not the intention of Lender to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
If this Debenture is placed in the hands of an attorney for collection,
or is collected in whole or in part by suit or through probate, bankruptcy or
other legal proceedings of any kind, Borrower agrees to pay, in addition to all
other sums payable hereunder, all costs and expenses of collection, including
but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this Debenture
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after maturity.
Any and all payments by Borrower hereunder to any holder of this
Debenture and each "qualified assignee" thereof shall be made free and clear of
and without deduction or withholding for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto (all such taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes") unless
such Taxes are required by law or the administration thereof to be deducted or
withheld. If Borrower shall be required by law or the administration thereof to
deduct or withhold any Taxes from or in respect of any sum payable with respect
to this Debenture (i) the sum payable shall be increased as may be necessary so
that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional amounts paid under this paragraph) such
holder of this Debenture receives an amount equal to the sum it would have
received if no such deduction or withholding had been made; (ii) Borrower shall
make such deductions or withholdings; and (iii) Borrower shall forthwith pay the
full amount deducted or withheld to the relevant taxation or other authority in
accordance with applicable law. A "qualified assignee" of a holder of this
Debenture is a person that is organized under the laws of (I) the United States
or (II) any jurisdiction other than the United States or any political
subdivision thereof and that (y) represents and warrants to Borrower that
payments of Borrower to such assignee under applicable law would not be subject
to any Taxes and (z) from time to time, as and when requested by Borrower,
executes and delivers to Borrower and the Internal Revenue Service forms, and
provides Borrower with any information, necessary to establish such assignee's
continued exemption from Taxes under applicable law. Borrower shall forthwith
pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (all such taxes, charges and levies
hereinafter referred to as "Other Taxes") which arise from any payment made
under this Debenture or the transactions contemplated hereby. Borrower shall
indemnify each holder of this Debenture, or qualified assignee, for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts
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payable under this paragraph) paid by each holder of this Debenture, or
qualified assignee, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date such holder of this
Debenture or assignee makes written demand therefor. A certificate as to the
amount of such Taxes or Other Taxes submitted to Borrower by such holder of this
Debenture or assignee shall be conclusive evidence of the amount due from
Borrower to such party. Within 30 days after the date of any payment of Taxes,
Borrower will furnish to each holder of this Debenture the original or a
certified copy of a receipt evidencing payment thereof.
[SIGNATURE PAGE FOLLOWS]
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THIS DEBENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEVADA AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE.
BORROWER:
ORIX GLOBAL COMMUNICATIONS, INC.
By:
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Name:
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Title:
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