CONVERTIBLE DEBENTURE
FOR VALUE RECEIVED, GLOBAL CONCEPTS, LTD., a Colorado corporation
(hereinafter called "Company"), hereby promises to pay to THE MARGOLIES
FAMILY TRUST, 14 Garrison Inn Lane, Garrison, NY 10524 (the "Holder") the
sum of Two Million Four Hundred Ninety-Nine Thousand Dollars ($2,499,000),
with simple interest accruing at the annual rate of 6%. The principal and
accrued interest shall be payable on January 1, 2009 (the "Maturity Date").
This Debenture has been entered into pursuant to the terms of the
Joint Management Agreement among the Company, the Holder and others.
The following terms shall apply to this Debenture:
ARTICLE I
CONVERSION RIGHTS
1.1 Conversion. The Holder is entitled, at its option, to
convert all or any part of the principal amount of the Debenture, plus
accrued interest, into shares (the "Conversion Shares") of the Company's
common stock, no par value ("Common Stock"), at the price per share (the
"Conversion Price") equal to the average of the closing bid prices of the
Company's Common Stock, as quoted by Bloomberg, LP, for the five (5)
trading days immediately preceding the Conversion Date (as defined herein).
No fraction of shares 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. To convert this Debenture, the Holder hereof
shall deliver written notice thereof, substantially in the form of
Exhibit "A" to this Debenture, with appropriate insertions (the "Conversion
Notice"), to the Company at its address as set forth herein. The date upon
which the conversion shall be effective (the "Conversion Date") shall be
deemed to be the date set forth in the Conversion Notice.
1.2 Adjustments. The number and kind of shares or other securities
to be issued upon conversion determined pursuant to Section 1.1 shall be
subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:
A. Merger, Sale of Assets, etc. If the Company at any time shall
consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, the conversion right in this
Debenture, as to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to purchase such
number and kind of shares or other securities and property as would have
been issuable or distributable on account of such consolidation, merger,
sale or conveyance, upon or with respect to the securities subject to the
conversion or purchase right immediately prior to such consolidation,
merger, sale or conveyance. The foregoing provision shall similarly apply
to successive transactions of a similar nature by any such successor or
purchaser.
B. Reclassification, etc. If the Company at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Debenture, as
to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number
of such securities and kind of securities as would have been issuable as
the result of such change with respect to the Common Stock immediately
prior to such reclassification or other change.
1.3 Reservation of Shares. During the period the conversion right
exists, Company will reserve from its authorized and unissued Common Stock
150% of the number of shares of Common Stock issuable upon the full
conversion of this Debenture. Company represents that, upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable.
Company agrees that its issuance of this Debenture shall constitute full
authority to its officers, agents, and transfer agents who are charged with
the duty of executing and issuing stock certificates to execute and issue
the necessary certificates for shares of Common Stock upon the conversion
of this Debenture.
1.4 Maximum Conversion. The aggregate conversion of principal
pursuant to this Article I shall not at any time exceed the Conversion
Limit, except that the Conversion Limit may be exceeded at any time when an
Event of Default has occurred and is continuing. The "Conversion Limit"
will equal the product of the principal amount of this Debenture recited on
its first page multiplied by a fraction, the numerator of which is the
number of months including and after the month in which the Effective Date
occurs, and the denominator of which is thirty-six (36). The "Effective
Date" will be date on which the Securities and Exchange Commission declares
effective the Registration Statement filed pursuant to the Joint Management
Agreement.
ARTICLE II
EVENTS OF DEFAULT
(a) An "Event of Default" shall mean any of the following:
(a) failure by the Company to pay amounts due hereunder within fifteen (15)
days of the date of maturity of this Debenture; (b) failure by the
Company's transfer agent to issue freely tradeable Common Stock to the
Holder within five (5) days of the Company's receipt of the attached Notice
of Conversion from Holder; (c) failure by the Company for ten (10) days
after notice to it to comply with any of its other agreements in the
Debenture; or (d) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any
law, or the issuance of any notice in relation to such event, for the
relief of Company's debt shall be instituted by or against the Company and
if instituted against Company are not dismissed within 45 days of
initiation events of bankruptcy or insolvency.
(b) Upon the occurrence of an Event of Default, the Holder may, in
its sole discretion, accelerate the Maturity Date for payment of the
principal amount of the Debenture and accrued interest thereon and may,
notwithstanding any limitations contained in this Debenture, convert the
principal amount in full and accrued interest thereon into shares of Common
Stock pursuant to Article I hereof.
ARTICLE III
MISCELLANEOUS
3.1 Failure or Indulgence Not Waiver. No failure or delay on the
part of Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
3.2 Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) delivered by reputable air courier service with charges
prepaid, or (iii) transmitted by facsimile, addressed as set forth below or
to such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or
delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall
be: (i) if to the Company, to: Ed Rodriguez, c/o Headliners Entertainment
Group, Inc., 501 Bloomfield Avenue, Montclair, NJ 07042, telecopier: (973)
233-1299, with a copy by telecopier only to: Robert Brantl, Esq., 322 4th
Street, Brooklyn, NY 11215, telecopier: 718-965-4042, and (ii) if to the
Holder, to: Michael Margolies, 10 Garrison Inn Lane, Garrison, NY 10524,
telecopier: (845) 424-4003.
3.3 Assignability. This Debenture shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
the Holder and its successors and assigns.
3.4 Governing Law. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
New York or in the federal courts located in the state of New York. Both
parties and the individual signing this Agreement on behalf of the Company
agree to submit to the jurisdiction of such courts. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's
fees and costs.
3.5 Redemption. This Debenture may not be redeemed or paid without
the consent of the Holder except as described herein.
IN WITNESS WHEREOF, the Company has caused this Debenture to be
signed in its name by an authorized officer as of the 7th day of March,
2005.
GLOBAL CONCEPTS, LTD.
By: /s/ Eduardo Rodriguez
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Eduardo Rodriguez, Chief Executive
Officer
NOTICE OF CONVERSION
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(To be executed by the Registered Holder in order to convert the Debenture)
The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Debenture issued by GLOBAL
CONCEPTS, LTD. on March ____, 2005 into Shares of Common Stock of GLOBAL
CONCEPTS, LTD. (the "Company") according to the conditions set forth in
such Debenture, as of the date written below.
Date of Conversion:_____________________________________________________
Conversion Price:_______________________________________________________
Shares To Be Delivered:_________________________________________________
Signature:______________________________________________________________
Print Name:_____________________________________________________________
Address:________________________________________________________________
________________________________________________________________________