EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE COMPANY IS PROVIDED WITH OPINION OF COUNSEL OR
OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER, HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY BE MADE ONLY IN COMPLIANCE WITH THE ACT.
EFINANCIAL DEPOT.COM, INC.
6% CONVERTIBLE DEBENTURE
$2,500,000 USD February 2, 2000
EFINANCIAL DEPOT.COM, INC., a Delaware corporation (the "Company"),
for the value received, hereby unconditionally and absolutely promises to pay to
the order of OXFORD CAPITAL CORP., or holder (collectively, the "Holder"), upon
presentation and surrender of this Debenture to the Company at its office at
150-1875 Century Park East, Century City California, 90067, or such other place
as the Company may designate from time to time, the Principal Sum due under this
Debenture, on February 2, 2003, or if such day is not a regular business day,
then on the next business day thereafter or (the "Maturity Date"), plus interest
at the simple rate of six percent (6%) per annum with all accrued and unpaid
interest due and payable on the Maturity Date or on the date this Debenture is
converted into shares of the common stock pursuant to Section 1.
All dollar amounts set forth in this Debenture are United States
Dollars. A regular business day is a day on which banks in the State of New York
and the Province of Alberta are open for business and a trading day is a day in
which the New York Stock Exchange is open for trading.
1. PRINCIPAL SUM.
The Principal Sum outstanding at any time shall be Two Million Five Hundred
Thousand ($2,500,000) Dollars less any Principal Sum prepaid through the date of
the calculation and less any Principal Sum which had been converted into Common
Stock as provided for in Section 2 hereof through the date of the calculation.
2. CONVERSION.
(a) The Holder of this Debenture shall have the right, at its
option, beginning on the thirtieth (30th) day after the Closing Date through
5:00 p.m. Alberta, Canada time on the last regular business day immediately
prior to the Maturity Date to convert, subject to the terms and provisions of
this Section 2, any or all of the outstanding Principal Sum of this Debenture.
Conversions made pursuant to this Section 2 shall be made at a price (the
"Conversion Price") per share equal to the lesser of: (i) eighty percent (80%)
of the average closing bid price of the Common Stock of the Company on the
principal market for such Common Stock for 5 days preceding the date a
conversion notice is provided to the Company (the "Conversion Date") or (ii)
five ($5.00) dollars; in no event shall the Conversion Price be lower than
$3.00.
To effect conversion of all or any part of the Principal Sum secured
by this Debenture, the Holder shall present the Company with a written Notice of
Conversion by either registered mail or facsimile on the date of Conversion. In
either case, prior to issuance of previously unissued shares in the Common Stock
of the Company to the Holder, this Debenture must be surrendered at the
principal office of the Company, accompanied by the original Notice of
Conversion duly executed, and, accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company duly executed by the
Holder or its attorney duly authorized in writing to specify whether the Holder
desires interest on the amount of the Principal Sum being converted to be paid
in cash by Company check, or in shares of Common Stock of the Company.
(b) As promptly as practicable after the surrender, as herein
provided, of this Debenture for conversion and the completed and executed Notice
of Conversion, the Company shall deliver or cause to be delivered, to or upon
the written order of the Holder of this Debenture so surrendered: (i)
certificates representing the largest number of fully paid and nonassessable
full shares of Common Stock into which this Debenture may be converted in
accordance with the provisions of this Section 2; (ii) a check in payment for
fractional shares, based on amount in cash equal to such fraction multiplied by
the current "Market Price" as defined in Section 4 hereof; (iii) cash or
additional shares of Common Stock of the Company for the accrued but unpaid
interest due on the Principal Sum being converted through the date of the Notice
of Conversion; and (iv) a replacement Debenture identical to this Debenture,
except as to the issue date and as adjusted to reflect the Principal Amount
actually outstanding after the conversion, if less than the then outstanding
Principal Sum is being converted. Such conversion shall be deemed to have been
made at the close of business on the date that this Debenture shall have been
received by the Company for conversion, with a Notice of Conversion duly
executed, in satisfactory form for conversion, so that the rights of the Holder
of this Debenture as a Debenture holder as to the Principal Sum being converted
shall cease at such time and, subject to the provisions of this Section 2(b),
the person or persons entitled to receive the shares of Common Stock upon
conversion of this Debenture shall be treated for all purposes as having become
the record holder or holders of such shares of Common Stock (including any
Common Stock issued for interest) at such time and such conversion shall be at
the Conversion Price in effect at such time.
(c) After the registration of the Common Stock underlying
this Debenture, and after the shares of the Common Stock have traded above
$10.00 on each day for 20 consecutive trading days, if there has been no Event
of Default under this Debenture, the principal amount of the Debenture will be
converted in accordance with the conversion terms of Section 2(a) above.
3. INTEREST
At the Holder's election, accrued but unpaid interest must be
paid in Common Stock of the Company in an amount of shares equal to the interest
to be paid in Common Stock divided by the Conversion Price applicable to the
Principal hereunder. Not earlier than the sixtieth (60th ) day and not later
than the thirtieth (30th) day prior to the Maturity Date, the Holder shall
notify the Company if it desires to have the accrued but unpaid interest due on
the Maturity Date paid in shares of Common Stock of the Company. If the Holder
does not give any such notice in a timely manner, the interest at Maturity shall
be paid in cash by Company check.
4. ANTI-DILUTION PROVISIONS.
After February 2, 2000, and so long as this Debenture is
outstanding and not fully exercised, the Company shall not, without the prior
consent of the Holder, issue or sell (i) any Common Stock without consideration
or for a consideration per share less than $3.00; or (ii) issue or sell any
warrant, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration per share less than $3.00.
5. RECLASSIFICATION, REORGANIZATION OR MERGER.
In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon conversion of this Debenture) or in case of any sale, lease
or conveyance to another corporation of the property of the Company as an
entirety, the Company shall, as a condition precedent to such transaction, cause
effective provisions to be made so that the Holder shall have the right
thereafter by converting this Debenture at any time prior to the payment in full
of the Debenture, to acquire the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been acquired
upon conversion of this Debenture immediately prior to such reclassification,
change consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Debenture. The foregoing
provisions of this Section 5 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances. In the event
that in connection with any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for a security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the provisions of this
Section 5 hereof.
6. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
The Company shall register the shares of the Common Stock which
may be issued upon the conversion of the principal sum of the Debenture and for
the interest payable thereunder as provided for in Exhibit C to the Debenture
Purchase Agreement, the Registration Rights Agreement.
7. REGULATION S.
This Debenture and the Common Stock issuable upon conversion or
as interest under this Debenture were issued under Regulation S under the
Securities Act of 1933, as amended, and may be transferred only as provided for
in the Debenture Purchase Agreement.
8. EVENTS OF DEFAULT.
If any of one or more of the following described events, or the
events as described in the Debenture Purchase Agreement, occur (each an "Event
of Default") then:
(a) The Company shall fail to pay the principal of, or interest on, this
Debenture within five (5) days after the Holder has given written notice to the
Company that the same has become due; or
(b) The Company shall fail to perform or observe any of the
provisions contained in any other Section of this Debenture or the Debenture
Purchase Agreement and such failure shall continue for more than thirty (30)
days after the Holder has given written notice to the Company; or
(c) Any material representation or warranty made in writing
by or on behalf of the Company in this Debenture shall prove to have been false
or incorrect in any material respect, or omits to state a material fact required
to be stated therein in order to make the statements contained therein, in the
light of the circumstances under which made, not misleading, on the date as of
which made, and the Company shall have failed to cure such false or incorrect
statement within thirty (30) days after the Holder has given written notice to
Borrower; or
(d) The Company shall be adjudicated a bankrupt or insolvent,
or admit in writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or the Company shall apply for or
consent to the appointment of a receiver, trustee, or similar officer for it or
for all or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of the
Company and such appointment shall continue undischarged for a period of thirty
(30) days; or the Company shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating to
it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against the Company and shall
remain undismissed for a period of thirty (30) days; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued or levied
against a substantial part of the property of the Company and such judgment,
writ, or similar process shall not be released, vacated or fully bonded within
thirty (30) days after its issue or levy; or
(e) A final judgment for money in excess of Twenty-Five
Thousand ($25,000) Dollars not covered by insurance shall be rendered against
the Company and if, within thirty (30) days after entry thereof, such judgment
shall not have been discharged, satisfied or execution thereof stayed pending
appeal, or if, within thirty (30) days after the expiration of any such stay,
such judgment shall not have been discharged or satisfied; or
(f) The Company shall be enjoined, restrained or in any way
prevented by a court order from continuing to conduct all or any material part
of its business affairs;
THEN, or at any time thereafter, and in each and every case:
(1) Where the Company is in default under the provisions
of Section 8(d) hereof, the entire unpaid principal amount of the Debenture, all
interest accrued and unpaid thereon, and all other amounts payable to the Holder
hereunder shall automatically become and be forthwith due and payable without
offset or counterclaim of any kind and without presentment, demand, protest or
notice of any kind, and without regard to the running of the statute of
limitations, all of which are hereby expressly waived by the Company; and
(2) In any other case referred to in this Section 8, the
Holder may, by written notice to the Company, declare the entire unpaid
principal amount of this Debenture, all interest accrued and unpaid hereon, and
all other amounts payable hereunder to be forthwith due and payable, whereupon
the same shall become immediately due and payable, without offset or
counterclaim of any kind and without presentment, demand, protest or further
notice of any kind, and without regard to the running of any statutes of
limitation, all of which are hereby expressly waived by the Company.
Any declaration made pursuant to Section 8(2) hereof is subject to the
condition that, if at any time after the principal of this Debenture shall have
become due and payable, and before any judgment or decree for the payment of the
moneys so due, or any thereof, shall have been entered, all arrears of interest
upon this Debenture (except that Principal Sum of this Debenture which by such
declaration shall have become payable) shall have been duly paid, and every
Event of Default shall have been made good, waived or cured, then and in every
such case the Holder shall be deemed to have rescinded and annulled such
declaration and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Event of Default or impair any right
consequent thereon.
9. CORPORATE OBLIGATION.
It is expressly understood that this Debenture is solely a
corporate obligation of the Company and that any and all personal liability,
either at common law or in equity, or by constitution or statute, of, and any
and all rights and claims against, every stockholder, officer, or director, as
such, past, present or future, are expressly waived and released by the Holder
as a part of the consideration for the issuance hereof.
10. TRANSFER.
Subject to the appropriate provisions of the Act and of Section 7
hereof, this Debenture or any portion of the principal amount hereof in One
Hundred Thousand Dollars ($100,000) increments, or multiples thereof (unless the
entire Principal Sum is being transferred), is transferable on the records of
the Company upon presentation of this Debenture, properly endorsed, at its
principal office; upon such presentation and transfer a new Debenture or
Debentures will be issued; provided, however, no transfer shall be made to any
competitors of the Company. For the purposes of payment and all other purposes,
the Company shall deem and treat the person in whose name this Debenture is
registered as the absolute owner hereof and the Company shall not be affected by
any notice to the contrary.
11. MISCELLANEOUS.
(a) Notwithstanding the foregoing, the Company promises to
pay interest after maturity (whether by acceleration or otherwise, and before as
well as after judgment) at the same rate as above provided prior to maturity on
balances, if any, then outstanding.
(b) Interest under this Debenture shall be computed on the
basis of a thirty (30) day month and a year of 360 days for the actual number of
days elapsed.
(c) In case at any time any Common Stock shall be listed on
any stock exchange or NASDAQ, the Company will list on such exchange or NASDAQ,
and all other exchanges where such stock or other stock, warrants, and
securities at the time issuable upon the conversion of this Debenture may be
listed, and keep listed thereon subject to listing requirements of such exchange
or exchanges, an official notice of issuance upon the conversion of this
Debenture, all shares of common stock and other stock and securities from time
to time issuable upon such conversion.
(d) Unless otherwise specifically proved herein, any notice
required by this Agreement is effective and deemed delivered when faxed to the
numbers set forth herein and receipt of such fax is electronically confirmed.
Any such notice shall also be sent on the day such fax is sent (or if such day
is not a business day, the next business day by overnight courier), properly
addressed. Notices will be sent to the fax numbers and addresses set forth in
this Agreement, unless either party notifies the other of an fax and/or address
change in writing.
IN WITNESS WHEREOF, the Company has caused this Debenture to be executed in
Vancouver, British Columbia as of the day and year first above written.
EFINANCIAL DEPOT.COM, INC.
By: /s/ John Huguet
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Its: President
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OXFORD CAPITAL CORP.
By: /s/ Riaz Mamdani
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