ANNEX I
TO
SECURITIES PURCHASE AGREEMENT
(PROTOTYPE FOR EACH ISSUANCE)
FORM OF DEBENTURE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. 05-01- (1) US $
------------------
CONSPIRACY ENTERTAINMENT HOLDINGS, INC.
5% SECURED CONVERTIBLE DEBENTURE SERIES 05-01 DUE FEBRUARY 9, 2007
THIS DEBENTURE is one of a duly authorized issue of up to $650,000 in
Debentures of CONSPIRACY ENTERTAINMENT HOLDINGS, INC., a corporation organized
and existing under the laws of the State of Utah (the "Company") designated as
its 5% Secured Convertible Debentures Series 05-01.
FOR VALUE RECEIVED, the Company promises to pay to , the registered holder
hereof (the "Holder"), the principal sum of and 00/100 Dollars (US $ ) on
February 9, 2007 (the "Maturity Date") and to pay interest on the principal sum
outstanding from time to time in arrears at the rate of 5% per annum, accruing
from February 9, 2005, the date of initial issuance of this Debenture (the
"Issue Date"), on the date (each, an "Interest Payment Date") which is the
earlier of (i) a Conversion Date (as defined below) or (ii) the Maturity Date,
as the case may be. Accrual of interest shall commence on the Issue Date and
shall continue to accrue on a daily basis until payment and/or conversion in
full of the principal sum has been made or duly provided for. Additional
provisions regarding the payment of interest are provided in Section 4(D) below
(the terms of which shall govern as if this sentence were not included in this
Debenture).
This Debenture is being issued pursuant to the terms of the Securities
Purchase Agreement, dated as of January 31, 2005 (the "Securities Purchase
Agreement"), to which the Company and the Holder (or the Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.
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1 Insert unique Debenture number for each issuance.
This Debenture is subject to the following additional provisions:
1. The Debentures will initially be issued in denominations determined by
the Company, but are exchangeable for an equal aggregate principal amount of
Debentures of different denominations, as reasonably requested by the Holder
surrendering the same. No service charge will be made for such registration or
transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws and the terms of the Securities
Purchase Agreement . The Holder shall deliver prior written notice to the
Company of any proposed transfer of this Debenture. In no event shall such
transfer by a Holder be for less than $50,000 of principal of the Debentures
held by the Holder or the remaining outstanding balance of the Holder's
Debentures, whichever is less. In the event of any proposed transfer of this
Debenture, the Company may require, prior to issuance of a new Debenture in the
name of such other person, that it receive reasonable transfer documentation,
including legal opinions, that is sufficient to evidence that such proposed
transfer complies with the Act and other applicable state and foreign securities
laws and the terms of the Securities Purchase Agreement. Prior to due
presentment for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly registered on
the Company's Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
4. A. (i) At any time on or after the Commencement Date (as defined below)
and prior to the time this Debenture is paid in full in accordance with its
terms (including without limitation after the Maturity Date and after the
occurrence of an Event of Default, as defined below), the Holder of this
Debenture is entitled, at its option, subject to the following provisions of
this Section 4, to convert this Debenture at any time into shares of Common
Stock, $0.001 par value ("Common Stock"), of the Company of the Company at the
Conversion Price (as defined below) per share.
(ii) The term "Conversion Price" means US $0.05 (which amount
is subject to adjustment as provided herein).
(iii) The term "Commencement Date" means the earlier of (i)
the date which is sixty-five (65) days after the Issue Date, or (ii) the
Effective Date.
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B. Conversion shall be effectuated either by delivery to the Company
or by facsimile transmission (as provided in Section 12 hereof) of a completed
and duly executed Notice of Conversion (as defined below) to the address or
facsimile number provided in the Notice of Exercise (as such address or
facsimile number may be revised by notice given by the Company as contemplated
by the Section headed "NOTICES" in the Securities Purchase Agreement). The
notice of conversion ("Notice of Conversion") shall be executed by the Holder of
this Debenture and shall evidence such Holder's intention to convert this
Debenture or a specified portion hereof in the form annexed hereto as Exhibit A.
If paid in Common Stock as contemplated hereby, interest accrued or accruing
from the Issue Date to the relevant Interest Payment Date shall be paid in
Common Stock at the Conversion Price applicable as of such Interest Payment
Date. No fractional shares of Common Stock or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share. The date on which Notice of Conversion is
given (the "Conversion Date") shall be deemed to be the date on which the Holder
faxes or otherwise delivers the Notice of Conversion to the Company so that it
is received by the Company on or before such specified date, provided that, if
such conversion would convert the entire remaining principal of this Debenture,
the Holder shall deliver to the Company the original Debentures being converted
no later than five (5) Trading Days thereafter. Facsimile delivery of the Notice
of Conversion shall be accepted by the Company by hand, mail or courier delivery
at the address specified in said Exhibit A or at the facsimile number specified
in said Exhibit A (each of such address or facsimile number may be changed by
notice given to the Holder in the manner provided in the Securities Purchase
Agreement). Certificates representing Common Stock upon conversion ("Conversion
Certificates") will be delivered to the Holder at the address specified in the
Notice of Conversion (which may be the Holder's address for notices as
contemplated by the Securities Purchase Agreement or a different address), via
express courier, by electronic transfer or otherwise, within three (3) Trading
Days (such third Trading Day, the "Delivery Date") after the date on which the
Notice of Conversion is delivered to the Company as contemplated in this
paragraph B, and, if interest is paid by Common Stock, the Interest Payment
Date. The Holder shall be deemed to be the holder of the shares issuable to it
in accordance with the provisions of this Section 4(B) on the Conversion Date.
C. Notwithstanding any other provision hereof or of any of the other
Transaction Agreements, in no event (except (i) as specifically provided herein
as an exception to this provision, or (ii) 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 portion of this Debenture, or shall the
Company have the obligation to convert such Debenture (and the Company shall not
have the right to pay interest hereon in shares of Common Stock) to the extent
that, after such conversion or issuance of stock in payment of interest, the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the
Debentures or other convertible securities or of the unexercised portion of
warrants or other rights to purchase Common Stock), and (2) the number of shares
of Common Stock issuable upon the conversion of the Debentures with respect to
which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such conversion). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
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accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, except as otherwise provided in clause (1) of such sentence. The
Holder, by its acceptance of this Debenture, further agrees that if the Holder
transfers or assigns any of the Debentures to a party who or which would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 4(C) as if such transferee or assignee were the original Holder
hereof. Aside from any restrictions imposed by applicable law, nothing herein
shall preclude the Holder from disposing of a sufficient number of other shares
of Common Stock beneficially owned by the Holder so as to thereafter permit the
continued conversion of this Debenture.
D. (i) Subject to the terms of Section 4(C) and to the other terms
of this Section 4(D), interest on the principal amount of this Debenture
converted pursuant to a Notice of Conversion shall be due and payable, at the
option of the Company, in cash or Common Stock on the Interest Payment Date.
(ii) If the interest is to be paid in cash, the Company shall
make such payment within three (3) Trading Days of the Interest Payment Date. If
the interest is not paid by such third Trading Day, the interest must be paid in
Common Stock in accordance with the provisions of Section 4(D)(i) hereof, unless
the Holder consents otherwise in each specific instance.
(iii) Notwithstanding the foregoing, the Company's right to
issue shares in payment of such interest is applicable if, and only if, there is
then a currently effective Registration Statement covering the resale of the
shares to be issued to the Holder in payment of such interest.
(iv) The number of shares of Common Stock to be issued in
payment of such interest shall be determined by dividing the dollar amount of
the interest to be so paid by the Conversion Price on the relevant Interest
Payment Date. Such Common Stock shall be delivered to the Holder, or per
Holder's instructions, on the Delivery Date for the related Conversion
Certificates pursuant to Section 4(B) hereof.
(iv) If the Company elects to have the interest paid in cash,
the Company shall make such payment within three (3) Trading Days of the
Interest Payment Date. If such payment is not made in cash by such date, it
shall be deemed that, subject to the provisions of Section 4(C) hereof, the
Company has elected to pay the interest in stock, if, but only if, the
Registration Statement covering the shares being issued is effective on the date
such shares are issued.
E. Anything herein to the contrary notwithstanding, in the circumstances
contemplated by said Section 4(g) of the Securities Purchase Agreement, the
Conversion Price and the other terms of the Unconverted Debenture (as defined
below) may be adjusted in the manner provided in said Section 4(g) of the
Securities Purchase Agreement. The term "Unconverted Debenture" means the
principal amount of this Debenture which has not been converted as of the
relevant date.
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5. A. Subject to the terms of the Securities Purchase Agreement, no
provision of this Debenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this Debenture at the time, place, and rate, and in the coin or currency or
where contemplated herein in shares of its Common Stock, as applicable, as
herein prescribed. This Debenture and all other Debentures now or hereafter
issued of similar terms are direct obligations of the Company.
B. Payment of this Debenture is secured pursuant to the terms of the
Security Interest Agreement of even date herewith executed by the Company, as
debtor, in favor of the Lender and the Other Lenders, as secured parties. The
terms of the Security Interest Agreement are incorporated herein by reference.
C. This Debenture may not be prepaid in whole or in part at any time
prior to the Maturity Date, except with the prior written consent of the Holder
in each instance, which consent is in the sole and absolute discretion of the
Holder and may be withheld for any reason or for no reason whatsoever.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
7. All payments contemplated hereby to be made "in cash" shall be made in
immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company (which
account may be changed by notice similarly given). All payments of cash and each
delivery of shares of Common Stock issuable to the Holder as contemplated hereby
shall be made to the Holder at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder from time to
time; except that the Holder can designate, by notice to the Company, a
different delivery address for any one or more specific payments or deliveries.
8. If, for as long as this Debenture remains outstanding, the Company
enters into a merger (other than where the Company is the surviving entity) or
consolidation with another corporation or other entity or a sale or transfer of
all or substantially all of the assets of the Company to another person
(collectively, a "Sale"), the Company will require, in the agreements reflecting
such transaction, that the surviving entity expressly assume the obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company enters into
a Sale and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for Common Stock, then as a
condition of such Sale, the Company and any such successor, purchaser or
transferee will agree that the Debenture may thereafter be converted on the
terms and subject to the conditions set forth above into the kind and amount of
stock, securities or property receivable upon such merger, consolidation, sale
or transfer by a holder of the number of shares of Common Stock into which this
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Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable. In the event of any such proposed Sale, (i)
the Holder hereof shall have the right to convert by delivering a Notice of
Conversion to the Company within fifteen (15) days of receipt of notice of such
Sale from the Company, except that Section 4(C) shall not apply to such
conversion.
9. If, at any time while any portion of this Debenture remains
outstanding, the Company spins off or otherwise divests itself of a part of its
business or operations or disposes of all or of a part of its assets in a
transaction (the "Spin Off") in which the Company, in addition to or in lieu of
any other compensation received and retained by the Company for such business,
operations or assets, causes securities of another entity (the "Spin Off
Securities") to be issued to security holders of the Company, the Company shall
cause (i) to be reserved Spin Off Securities equal to the number thereof which
would have been issued to the Holder had all of the Holder's Debentures
outstanding on the record date (the "Record Date") for determining the amount
and number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Debentures") been converted as of the close of
business on the Trading Day immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the Holder on the conversion of all
or any of the Outstanding Debentures, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction,
of which (I) the numerator is the principal amount of the Outstanding Debentures
then being converted, and (II) the denominator is the principal amount of the
Outstanding Debentures.
10. If, at any time while any portion of this Debenture remains
outstanding, the Company effectuates a stock split, combination or reverse stock
split of its Common Stock or issues a dividend on its Common Stock consisting of
shares of Common Stock, the Conversion Price and any other amounts calculated as
contemplated hereby or by any of the other Transaction Agreements shall be
equitably adjusted to reflect such action. By way of illustration, and not in
limitation, of the foregoing, (i) if the Company effectuates a 2:1 split of its
Common Stock, thereafter, with respect to any conversion for which the Company
issues shares after the record date of such split, the Conversion Price shall be
deemed to be one-half of what it had been immediately prior to such split; (ii)
if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter,
with respect to any conversion for which the Company issues shares after the
record date of such reverse split, the Conversion Price shall be deemed to be
ten times what it had been calculated to be immediately prior to such split; and
(iii) if the Company declares a stock dividend of one share of Common Stock for
every 10 shares outstanding, thereafter, with respect to any conversion for
which the Company issues shares after the record date of such dividend, the
Conversion Price shall be deemed to be such amount multiplied by a fraction, of
which the numerator is the number of shares (10 in the example) for which a
dividend share will be issued and the denominator is such number of shares plus
the dividend share(s) issuable or issued thereon (11 in the example).
11. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
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issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
12. Any notice required or permitted hereunder shall be given in manner
provided in the Section headed "NOTICES" in the Securities Purchase Agreement,
the terms of which are incorporated herein by reference.
13. A. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the exclusive jurisdiction of
the federal courts whose districts encompass any part of the County of New York
or the state courts of the State of New York sitting in the County of New York
in connection with any dispute arising under this Debenture and hereby waives,
to the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions or to any claim that such venue of the suit, action or proceeding
is improper. To the extent determined by such court, the Company shall reimburse
the Holder for any reasonable legal fees and disbursements incurred by the
Holder in enforcement of or protection of any of its rights under this
Debenture. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
B. The Company and the Holder acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Debenture
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Debenture and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
14. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out of or in
connection with this Debenture.
15. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture, or any other amount due hereunder,
and, in any such instance, the same shall continue for a
period of five (5) Trading Days; or
b. Any of the representations or warranties made by the Company
herein, in the Securities Purchase Agreement or any of the
other Transaction Agreements shall be false or misleading in
any material respect at the time made; or
c. Subject to the terms of the Securities Purchase Agreement, the
Company fails to authorize or to cause its Transfer Agent to
issue shares of Common Stock upon exercise by the Holder of
the conversion rights of the Holder in accordance with the
terms of this Debenture, fails to transfer or to cause its
Transfer Agent to transfer any certificate for shares of
Common Stock issued to the Holder upon conversion of this
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Debenture and when required by this Debenture or the
Registration Rights Agreement, and such transfer is otherwise
lawful, or fails to remove any restrictive legend on any
certificate or fails to cause its Transfer Agent to remove
such restricted legend, in each case where such removal is
lawful, as and when required by this Debenture, the Agreement
or the Registration Rights Agreement, and any such failure
shall continue uncured for ten (10) Trading Days; or
d. The Company shall fail to perform or observe, in any material
respect, any covenant, term, provision, condition, agreement
or obligation of the Company under any of the Transaction
Agreements and such failure shall continue uncured for a
period of thirty (30) days after written notice from the
Holder of such failure; or
e. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment for
the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment of
a trustee, liquidator or receiver for its or for a substantial
part of its property or business; or
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty
(60) days after such appointment; or
g. Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be
dismissed within sixty (60) days thereafter; or
h. Any money judgment, writ or warrant of attachment, or similar
process in excess of Two Hundred Thousand Dollars ($200,000)
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder; or
j. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60)
days after such institution or the Company shall by any action
or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding; or
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k. The Company shall have its Common Stock suspended from trading
on, or delisted from, the Principal Trading Market for in
excess of ten (10) Trading Days; or
l. Any event defined in another provision of this Debenture as an
Event of Default shall have occurred.
If an Event of Default shall have occurred, then, or at any time thereafter, and
in each and every such case, unless such Event of Default shall have been waived
in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) at the option of the Holder and in the Holder's sole
discretion, the Holder may consider this Debenture immediately due and payable
(and the Maturity Date shall be accelerated accordingly), without presentment,
demand, protest or notice of any kinds, all of which are hereby expressly
waived, anything herein or in any note or other instruments contained to the
contrary notwithstanding, and the Holder may immediately enforce any and all of
the Holder's rights and remedies provided herein or any other rights or remedies
afforded by law.
16. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
[Balance of page intentionally left blank]
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17. In the event for any reason, any payment by or act of the Company or
the Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation of the law of the jurisdiction applicable to
this Debenture, then ipso facto the obligation of the Company to pay interest or
perform such act or requirement shall be reduced to the limit authorized under
such law, so that in no event shall the Company be obligated to pay any such
interest, perform any such act or be bound by any requirement which would result
in the payment of interest in excess of the limit so authorized. In the event
any payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Debenture. If any part of such excess remains after the principal has been paid
in full, whether by the provisions of the preceding sentences of this Section 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 shall control every other provision
of this Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: ___________________, 20___
CONSPIRACY ENTERTAINMENT HOLDINGS, INC.
By:
------------------------------------------
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(Print Name)
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(Title)
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EXHIBIT A
NOTICE OF CONVERSION
OF
5% SECURED CONVERTIBLE DEBENTURE SERIES 05-01 DUE FEBRUARY 9, 2007
(To be Executed by the Registered Holder in Order to Convert the Debenture)
TO: CONSPIRACY ENTERTAINMENT HOLDINGS, INC.
612 Santa Monica Boulevard
Santa Monica, CA 90401
Attn: CEO VIA FAX: (310) 260-1450
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FROM: __________________________________________________ ("Holder")
DATE: __________________________________________________ (the "Conversion Date")
RE: Conversion of $___________ principal amount (the "Converted Debenture") of
the 5% Secured Convertible Debenture Series 05-01-__ Due February 9, 2007
(the "Debenture") of CONSPIRACY ENTERTAINMENT HOLDINGS, INC. (the
"Company") into _______________ shares (the "Conversion Shares") of Common
Stock (defined below)
The captioned Holder hereby gives notice to the Company, pursuant to the
captioned Debenture that the Holder elects to convert the Converted Debenture
into fully paid and non-assessable shares of Common Stock, $0.001 par value (the
"Common Stock"), of the Company as of the Conversion Date specified above. Said
conversion shall be based on the following Conversion Price (check one and fill
in blank)
|_| $__________, representing the original Conversion Price (as defined
in the Debenture)
|_| $__________, representing the original Conversion Price (as defined
in the Debenture), adjusted in accordance with the provisions of the
Debenture.
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Based on this Conversion Price, the number of Conversion Shares indicated above
should be issued in the following name(s):
Name and Record Address Conversion Shares
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It is the intention of the Holder to comply with the provisions of Section
4(C) of the Debenture regarding certain limits on the Holder's right to convert
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe this conversion complies with the provisions of said Section 4(C).
Nonetheless, to the extent that, pursuant to the conversion effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the conversion which would
result in the issuance of shares consistent with such provision. Any conversion
above such amount is hereby deemed void and revoked.
As contemplated by the Debenture, this Notice of Conversion is being sent
by facsimile to the telecopier number and officer indicated above.
If this Notice of Conversion represents the full conversion of the
outstanding balance of the Converted Debenture, the Holder either (1) has
previously surrendered the Converted Debenture, duly endorsed, to the Company or
(2) will surrender (or cause to be surrendered) the Converted Debenture, duly
endorsed, to the Company at the address indicated above by express courier
within five (5) Trading Days after delivery or facsimile transmission of this
Notice of Conversion.
The certificates representing the Conversion Shares should be transmitted
by the Company to the Holder (check one)
|_| via express courier or
|_| by electronic transfer (DTC)
within the time contemplated by the Debenture and Securities Purchase Agreement
after receipt of this Notice of Conversion (by facsimile transmission or
otherwise) to:
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2
The Holder has determined that accrued but unpaid interest on the
Converted Debenture through the Conversion Date is $____________________
(subject to further accrual if payment not timely made). As contemplated by the
Debenture, the Company should also pay all such accrued but unpaid interest on
the Converted Debenture to the Holder.
-- If the Company elects to pay such interest in Common Stock, as
contemplated by and subject to the provisions of the Debenture, such
shares should be issued in the name of the Holder and delivered in
the same manner as, and together with, the Conversion Shares.
-- If the Company elects or is required to pay the interest paid in
cash, such payment should be made by wire transfer as follows:
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--------------------------------------
--------------------------------------
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(Print name of Holder)
By
-----------------------------------
(Signature of Authorized Person)
-----------------------------------
(Printed Name and Title)
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NOTICE OF CONVERSION
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates
-----------------
2. Shares to be issued on current conversion (1)
-----------------
3. Other shares to be issued on other current conversion(s)
and other current exercise(s)(2)
-----------------
4. Other shares eligible to be acquired within next 60 days
without restriction
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5. Total [sum of Lines 1 through 4]
-----------------
6. Outstanding shares of Common Stock(3)
-----------------
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued to Holder
or others but not included in Line 6
-----------------
b. Shares to be issued per Line(s) 2 and 3
-----------------
c. Total Adjustments [Lines 7a and 7b]
-----------------
8. Total Adjusted Outstanding [Lines 6 plus 7c]
-----------------
9. Holder's Percentage [Line 5 divided by Line 8]
--------------- %
[Note: Line 9 not to be above 4.99%]
- --------
1 Includes conversion of stated value and assumes interest will be paid in
Common Stock at the Conversion Price.
2 Includes shares issuable on conversion of convertible securities
(including assumed payment of interest or dividends) or exercise of other
rights, including other warrants or options
3 Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent.