NEITHER THIS DEBENTURE NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS DEBENTURE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR UNDER THE SECURITIES LAWS OF ANY STATE. NEITHER THIS
DEBENTURE NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE DEBENTURES UNDER SUCH
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE
ACT.
ROOMLINX, INC.
CONVERTIBLE DEBENTURE
March 2, 2005
$XXXXX.00
FOR VALUE RECEIVED, the undersigned RoomLinX Inc., a Nevada corporation
(referred to herein as "Borrower" or the "Company"), promises to pay to the
order of [Lender], with an address at [lender's address] ("Lender"), the
principal sum of [ ] and 00/100 Dollars ($XX,XXX.00), or such lesser principal
amount as is then outstanding on the earlier of 180 days from the date hereof or
such date that the Company consummates a financing with gross cash proceeds of
at least $1,000,000 (the "Maturity Date"), and interest thereon at a rate equal
to eleven percent (11%) per annum (the "Interest Rate"), payable at maturity.
The principal balance then outstanding under this convertible debenture
("Debenture") plus accrued but unpaid interest shall be paid in full on the
Maturity Date along with payment of any other amounts due hereunder. Neither
principal nor interest may be prepaid in whole or in part without the prior
written consent of the Lender.
Notwithstanding any other provision hereof, interest paid or becoming due
hereunder shall in no event exceed the maximum rate permitted by applicable law.
All amounts due hereunder are payable in lawful money of the United States of
America to the Lender at the address above indicated.
This is the Debenture referred to in the Securities Purchase Agreement
("Securities Purchase Agreement"), to be executed by the Borrower and Lender as
of the date hereof. The terms and conditions of the Securities Purchase
Agreement and all other documents and instruments delivered in connection
therewith, including, without limitation, the Registration Rights Agreement
(collectively, the "Loan Documents") are incorporated by reference herein and
made a part hereof. The execution and delivery of the Loan Documents shall not
be a condition to the effectiveness of this Debenture upon execution and
delivery hereof by the Borrower. The Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Debenture. This
Debenture constitutes the legal, valid and binding obligations of the Borrower,
enforceable against it in accordance with its terms. Notwithstanding anything
contained herein or in the Loan Documents, this Debenture shall be in default
and Lender shall have all rights and remedies available to it under the law, in
the event that Borrower shall not pay any amounts hereunder when due. All
capitalized terms not otherwise defined herein shall have their respective
meanings as set forth in the Securities Purchase Agreement.
Section 1. (a) At any time from the date hereof through the date that this
Debenture is paid in full, Lender shall have the right, in its sole discretion,
to convert the principal balance of this Debenture then outstanding plus accrued
but unpaid interest, in whole or in part, into shares of Common Stock, par value
$.001 per share ("Common Stock") of the Borrower at a conversion price equal to
$.075 per share of Common Stock, subject to adjustment as provided herein (the
"Conversion Price").
(b) Lender may convert this Debenture at the then applicable Conversion
Price by the surrender of this Debenture (properly endorsed) at the principal
office of the Borrower, or at such other agency or office of the Borrower in the
United States of America as the Borrower may designate by notice in writing to
the Lender at the address of Lender appearing herein. The Lender shall effect
conversions by delivering to the Borrower the form of Notice of Conversion
attached hereto as Annex A (a "Notice of Conversion"), specifying therein the
principal amount of Debenture to be converted and the date on which such
conversion is to be effected (a "Conversion Date"). If no Conversion Date is
specified in a Notice of Conversion, the Conversion Date shall be the date that
such Notice of Conversion is provided hereunder. To effect conversions
hereunder, the Lender shall not be required to physically surrender Debentures
to the Borrower unless the entire principal amount of this Debenture plus all
accrued and unpaid interest thereon has been so converted. Conversions hereunder
shall have the effect of lowering the outstanding principal amount of this
Debenture in an amount equal to the applicable conversion. The Lender and the
Borrower shall maintain records showing the principal amount converted and the
date of such conversions. The Lender and any assignee, by acceptance of this
Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof. In the event of the conversion of all or a portion of
this Debenture, a certificate or certificates for the securities so converted,
as applicable, registered in the name of the Lender, shall be delivered to the
Lender as soon as practicable after the receipt by Borrower of this Debenture
and Lender's written request for conversion.
(c) In addition to the conversion rights above, the Lender shall have the
right, in its sole discretion, to convert the principal balance of this
Debenture then outstanding plus accrued but unpaid interest, in whole or in
part, into equity securities of the Borrower being issued in any private
offering of equity securities of the Company consummated prior to the Maturity
Date, upon the terms and conditions of such offering, at a conversion price
equal to the lower of (i) the purchase price paid by such investors in such
private offering or (ii) a purchase price for such equity securities calculated
based on an assumption that the lowest underlying conversion price of such
equity securities is equal to the then effective Conversion Price.
2
Section 2. If the Borrower, at any time while this Debenture is
outstanding, (A) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock, (B) subdivide
outstanding shares of Common Stock into a larger number of shares, (C) combine
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Borrower, then the
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding after
such event. Any adjustment made pursuant to this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
In case of any consolidation or merger of the Borrower with or into
another corporation or the conveyance of all or substantially all of the assets
of the Borrower to another corporation, this Debenture shall thereafter be
convertible (to the extent such conversion is permitted hereunder) into the
number of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Borrower deliverable upon conversion
of this Debenture would have been entitled upon such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interest thereafter of the holders of this Debenture, to the end that the
provisions set forth herein shall be thereafter applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Debenture.
Section 3. (a) If the Borrower at any time while this Debenture is
outstanding shall issue, or be deemed to have issued (a "Triggering Issuance"),
Additional Shares of Common Stock (as hereinafter defined) without consideration
or for consideration per share of Common Stock less than the then applicable
Conversion Price (the "Dilutive Price") in effect immediately prior to such
issuance, then forthwith upon the occurrence of any such event (the "Dilutive
Event"), if such Triggering Issuance occurs prior to the 60th day following the
consummation of a subsequent financing by the Company with gross cash proceeds
of at least $3,000,000 (the "Qualified Offering"), then the Conversion Price
shall be reduced so that the Conversion Price in effect immediately following
the Dilutive Event will equal the Dilutive Price; if such Triggering Issuance
occurs after the 60th day following the consummation of a Qualified Offering,
then the Conversion Price in effect immediately following the Dilutive Event
will equal a price determined by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance plus the number of shares of Common
Stock which the aggregate offering price for such Dilutive Issuance (assuming
receipt by the Company in full of all consideration payable upon exercise of
such rights, options or warrants) would purchase at the Conversion Price, and
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to the Dilutive Issuance plus the number of
shares of Common Stock so issued or issuable in connection with the Dilutive
Issuance.
3
As used herein:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued or deemed to be issued by the Borrower after the date
hereof which represent a Triggering Issuance. If the Borrower issues
any Options or Convertible Securities (as hereinafter defined), the
maximum number of shares of Common Stock issuable thereunder shall
be deemed to be Additional Shares of Common Stock issued as of the
time of such issue, if the consideration per share of such
Additional Shares of Common Stock (as hereinafter determined) is
less than the then-applicable Conversion Price, until such time as
such Options or Convertible Securities shall terminate or be
exercised or converted into Common Stock, upon which time the number
of shares of Common Stock actually thereupon issued shall be deemed
to be Additional Shares of Common Stock. The Borrower shall be
deemed to have issued the maximum number of shares of Common Stock
potentially underlying any Options or Convertible Securities.
Notwithstanding the foregoing, no issuance or deemed issuance nor
Common Stock or options or warrants to purchase Common Stock issued
to (i) officers, directors or employees of or consultants to the
Borrower pursuant to any compensation agreement, plan or arrangement
or the issuance of Common Stock upon the exercise of any such
options or warrants, provided such securities were issued prior to
the date hereof or pursuant to a stock option plan that was approved
by the board of directors and stockholders of the Borrower or were
assumed in a merger or other business combination by the Borrower;
(ii) upon conversion of existing convertible securities outstanding
as of the date hereof or this Debenture; (iii) upon exercise of
outstanding warrants existing as of the date hereof; and (iv) in
connection with a business acquisition where the stockholders of the
Borrower prior to such acquisition own 50% or more of the Common
Stock of the Borrower following such acquisition, or to an
institution or bank lender or licensor of tangible or intangible
property in connection with a loan transaction or equipment lease or
licensing transaction (provided that the primary purpose of any such
equipment lease or licensing transaction is not raising capital),
shall be deemed the issuance of Additional Shares of Common Stock.
4
"Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible
Securities.
"Convertible Securities" shall mean any evidences of indebtedness,
shares (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Common Stock.
With respect to Options and Convertible Securities, "consideration" per
share of Additional Shares of Common Stock shall be determined by adding (x) the
aggregate consideration received upon issuance of the Options or Convertible
Securities divided by the number of shares receivable upon the exercise or
conversion thereof and (y) the minimum possible consideration per share received
or to be received per share upon the exercise, conversion or exchange of such
Options or Convertible Securities for shares of Common Stock. Common Stock
outstanding as of a given date shall be the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.
Upon the occurrence of each adjustment or readjustment of the Conversion
Price hereunder, the Borrower at its expense promptly shall compute such
adjustment or readjustment and furnish to the holder of this Debenture a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based.
Section 4. This Debenture and any of the rights granted hereunder are
freely transferable by the Lender, in its sole discretion, subject to federal
and state securities law restrictions, if any.
Section 5. The Borrower covenants that it will at all times reserve and
keep available out of its authorized and unissued shares of Common Stock solely
for the purpose of issuance upon conversion of this Debenture, each as herein
provided, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Lender, not less than such number of shares of
the Common Stock as shall be issuable upon the conversion of the outstanding
principal amount of this Debenture. The Borrower covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable. No consent of any other party
and no consent, license, approval or authorization of, or registration or
declaration with, any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance by the Borrower, or the
validity or enforceability of this Debenture other than such as have been met or
obtained. The execution, delivery and performance of this Debenture and all
other agreements and instruments executed and delivered or to be executed and
delivered pursuant hereto or thereto or the securities issuable upon conversion
of this will not violate any provision of any existing law or regulation or any
order or decree of any court, regulatory body or administrative agency or the
certificate of incorporation or by-laws of the Borrower or any mortgage,
indenture, contract or other agreement to which the Borrower is a party or by
which the Borrower or any property or assets of the Borrower may be bound.
Section 6. Upon a conversion hereunder the Borrower shall not be required
to issue stock certificates representing fractions of shares of the Common
Stock, and in lieu of any fractional shares which would otherwise be issuable,
the Borrower shall issue the next highest whole number of shares of Common
Stock.
5
Section 7. If (i) the Borrower shall declare a dividend (or any other
distribution) on the Common Stock; (ii) the Borrower shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (iii) the
Borrower shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (iv) the approval of any stockholders of the Borrower
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Borrower is a party, any sale or
transfer of all or substantially all of the assets of the Borrower, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Borrower shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Borrower; then, in each case, the Borrower shall cause to be filed at each
office or agency maintained for the purpose of conversion of the Debentures, and
shall cause to be mailed to the Lender at its last address as shall appear upon
the debenture records of the Borrower, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distribution, redemption, rights or warrants are to be
determined, or (ii) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up, provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Lender is entitled to convert this Debenture during the
20-day period commencing the date of such notice to the effective date of the
event triggering such notice.
Section 8. The issuance of certificates for shares of the Common Stock or
other securities on conversion of this Debenture shall be made without charge to
the Lender for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Borrower
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Lender and the Borrower shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Borrower or its
designee the amount of such tax or shall have established to the satisfaction of
the Borrower that such tax has been paid.
Section 9. Any payment of principal or interest which remains unpaid for
more than five (5) days after such payment is due shall be subject to a cash
penalty equal to one and one half percent (1.5%) compounded monthly, for each
month that payment in full is not received up to a maximum of eight percent
(8%). Notwithstanding anything herein to the contrary, in the event this
Debenture is not paid in full or converted on or prior the Maturity Date,
interest at the Interest Rate shall compound on a monthly basis, commencing
immediately following such Maturity Date.
6
Borrower agrees that in the event any amounts due and payable hereunder
are collected by law or through an attorney at law, to pay all costs of
collection, including, without limitation, reasonable attorney's fees.
Nothing herein shall limit any right granted to Lender by any other
instrument or document or by law or equity.
The undersigned for itself, and its respective successors and assigns,
hereby waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance or endorsement
of this Debenture.
Section 10. Each of the following events, if occurring while any of the
principal or interest of this Debenture remains unpaid, shall constitute an
"Event of Default" hereunder:
(a) The Borrower shall fail to pay the principal or interest of this Debenture
or any other amounts payable to the Lender hereunder when due whether at
scheduled maturity, upon acceleration or otherwise.
(b) Any representation or warranty made or deemed to be made by the Borrower
(or any of its officers, directors, employees or agents) under or in
connection with this Debenture or in any Loan Document shall prove to have
been false or incorrect in any material respect when made.
(c) The Borrower shall fail to observe or perform any other material covenant,
agreement or warranty contained in, or otherwise commit any material
breach of any of the Loan Documents, which failure or breach is not cured,
if possible to cure, within the earlier to occur of (A) 5 business days
after notice of such default is sent by the Lender or by any other Lender
and (B) 10 business days after the Borrower shall become or should have
become aware of such failure or breach.
(d) The Borrower or any of its active subsidiaries shall commence, or there
shall be commenced against the Borrower or any such active subsidiary a
case under any applicable bankruptcy or insolvency laws as now or
hereafter in effect or any successor thereto, or the Borrower commences
any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Borrower or any active subsidiary thereof or there is commenced against
the Borrower or any active subsidiary thereof any such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of
60 days; or the Borrower or any active subsidiary thereof is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or the Borrower or any active
subsidiary thereof suffers any appointment of any custodian or the like
for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Borrower or any
active subsidiary thereof makes a general assignment for the benefit of
creditors; or the Borrower shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts generally as they
become due; or the Borrower or any active subsidiary thereof shall call a
meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or the Borrower or any active
subsidiary thereof shall by any act or failure to act expressly indicate
its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Borrower or any active
subsidiary thereof for the purpose of effecting any of the foregoing;
7
Immediately upon the occurrence of an Event of Default, at Lender's
option, (i) the Maturity Date shall be deemed to have occurred automatically and
(ii) the entire principal amount of this Debenture then outstanding, all other
amounts payable by the Borrower hereunder shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind, all
of which are hereby expressly waived by the Borrower, anything herein to the
contrary notwithstanding.
Section 11. Any and all notices or other communications or deliveries to
be provided by the Lender hereunder, including, without limitation, any
conversion notice, shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to the Borrower, 401 Hackensack
Ave., 3rd Floor, Hackensack, NJ 07601, with a copy to Lowenstein Sandler, P.C.,
65 Livingston Avenue, Roseland, NJ 07068, Attn: Peter H. Ehrenberg, Esq., or
such other address or facsimile number as the Borrower may specify for such
purposes by notice to the Lender delivered in accordance with this paragraph.
Any and all notices or other communications or deliveries to be provided by the
Borrower hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to each Lender at the address of
such Lender appearing on the books of the Borrower, or if no such address
appears, at the principal place of business of the Lender. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission if delivered by hand or by telecopy
that has been confirmed as received by 5:00 P.M. on a business day, (ii) one
business day after being sent by nationally recognized overnight courier or
received by telecopy after 5:00 P.M. on any day, or (iii) five business days
after being sent by certified or registered mail, postage and charges prepaid,
return receipt requested.
Section 12. Upon the occurrence and during the continuation of an Event of
Default and the declaration of the Maturity Date, the Lender shall have, in
addition to all other rights and remedies under this Agreement, this Debenture
and related documents, all other rights and remedies provided under each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative.
Section 13. This Debenture and the provisions hereof are to be construed
according to and are governed by the laws of the State of New York, without
regard to principles of conflicts of laws thereof.
8
IN WITNESS WHEREOF, the Borrower has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.
ROOMLINX, INC.
By:____________________________________
Name: Frank Elenio
Title: Chief Financial Officer
9
ANNEX A
NOTICE OF CONVERSION
To Be Executed by the Holder
in Order to Convert Note
The undersigned Lender hereby elects to convert $__________ currently
outstanding and owed under the Convertible Debenture issued to [______________]
at a Conversion Price of $_______ (the "Debenture") and to purchase ___________
shares of Common Stock of RoomLinX, Inc. issuable upon conversion of such
Debenture, and requests that certificates for such securities shall be issued in
the name of:
___________________________________________________________
(please print or type name and address)
___________________________________________________________
(please insert social security or other identifying number)
and be delivered as follows:
___________________________________________________________
please print or type name and address)
___________________________________________________________
(please insert social security or other identifying number)
[NAME OF LENDER]
By:________________________________________________________
Name:
Title:
Conversion Date:___________________________________________