Exhibit 10.1
SECURITIES SUBSCRIPTION AGREEMENT
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THIS SECURITIES SUBSCRIPTION AGREEMENT, dated as of August 27,
2001 ("Agreement"), is executed in reliance upon the exemption from registration
afforded by Rule 504 promulgated under Regulation D by the Securities and
Exchange Commission ("SEC"), under the Securities Act of 1933, as amended.
Capitalized terms used herein and not defined shall have the meanings given to
them in Rule 504 and Regulation D.
This Agreement has been executed by the undersigned buyers
("Buyer"), to purchase the amounts set forth on Schedule A hereto, in connection
with the private placement of 8% Series A Senior Subordinated Convertible
Debentures of ▇▇▇▇ Acquisition Corp., a corporation organized under the laws of
Delaware, with executive offices ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ("Seller").
Buyer hereby represents and warrants to, and agrees with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION
3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER
(THE "1933 ACT"), AND RULE 504 OF REGULATION D
PROMULGATED THEREUNDER.
THIS INFORMATION IS DISTRIBUTED PURSUANT TO AN
EXEMPTION FOR SMALL OFFERINGS UNDER THE RULES OF
THE COLORADO SECURITIES DIVISION. THE SECURITIES
DIVISION HAS NEITHER REVIEWED OR APPROVED ITS FORM
OR CONTENT. THE SECURITIES DESCRIBED MAY ONLY BE
PURCHASED BY "ACCREDITED INVESTORS" AS DEFINED BY
RULE 504 OF SEC REGULATION D AND THE RULES OF THE
COLORADO SECURITIES DIVISION.
1. Agreement to Subscribe; Purchase Price.
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(a) Subscription. The undersigned Buyer hereby subscribes for and
agrees to purchase the Seller's 8% Series A Senior Subordinated Convertible
Redeemable Debentures substantially in the form of the Debenture attached as
Exhibit A hereto and having an aggregate original principal face amount of One
Million United States dollars $1,000,000 (singly, a "Debenture," and
collectively, the "Debentures"), at an aggregate purchase price of 87% of the
face amount of such Debentures as set forth in subsection (b) herein.
(b) Payment. The Purchase Price for the Debentures shall be Eight
Hundred Seventy Thousand United States Dollars (U.S. $870,000) ("Purchase
Price"), which shall be payable at closing, pursuant to Section 1(c) herein and
in accordance with the terms and conditions of Section 11 below.
(c) Closing. Subject to the satisfaction of the conditions set
forth in Sections 7, 8 and 11 below, the Closing of the transactions
contemplated by this Agreement shall take place ("Closing Date") when (i) Seller
delivers the Debentures to the Buyer, (ii) Seller delivers all accompanying
transaction documents including appropriate resolutions of its Board of
Directors, and (iii) Buyer pays $465,000 towards the Purchase Price for the
Debentures ("Initial Purchase Price").
2. Buyer Representations and Covenants;
Access to Information.
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In connection with the purchase and sale of the Debentures, Buyer
represents and warrants to, and covenants and agrees with Seller as follows:
(a) Buyer is not, and on the closing date will not be, an
affiliate of Seller;
(b) Buyer is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated under the 1933 Act, and is purchasing the Shares for
its own account and Buyer is qualified to purchase the Shares under the laws of
the State of Colorado;
(c) All offers and sales of any of the Debentures by Buyer shall
be made in compliance with any applicable securities laws of any applicable
jurisdiction and in accordance with Rule 504, as applicable, of Regulation D or
pursuant to registration of securities under the 1933 Act or pursuant to an
exemption from registration;
(d) Buyer understands that the Debentures are not registered under
the 1933 Act and are being offered and sold to it in reliance on specific
exemptions from the registration requirements of Federal and State securities
laws, and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Buyer set forth herein in order to determine the applicability of such
exemptions and the suitability of Buyer and any purchaser from Buyer to acquire
the Debentures;
(e) Buyer shall comply with Rule 504 promulgated under Regulation
D;
(f) Buyer has the full right, power and authority to enter into
this Agreement and to consummate the transaction contemplated herein. This
Agreement has been duly authorized, validly executed and delivered on behalf of
Buyer and is a valid and binding agreement in
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accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
(g) The execution and delivery of this Agreement and the
consummation of the purchase of the Debentures and the transactions contemplated
by this Agreement do not and will not conflict with or result in a breach by
Buyer of any of the terms or provisions of, or constitute a default under, the
articles of incorporation or by-laws (or similar constitutive documents) of
Buyer or any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Buyer is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule or regulation of the
United States or any State thereof or any applicable decree, judgment or order
of any Federal or State court, Federal or State regulatory body, administrative
agency or other United States governmental body having jurisdiction over buyer
or any of its properties or assets;
(h) All invitations, offers and sales of or in respect of, any of
the Debentures, by Buyer and any distribution by Buyer of any documents relating
to any invitation, offer or sale by it of any of the Debentures will be in
compliance with applicable laws and regulations, will be made in such a manner
that no prospectus need be filed and no other filing need be made by Seller with
any regulatory authority or stock exchange in any country or any political
sub-division of any country, and Buyer will make no misrepresentations nor
omissions of material fact in the invitation, offer or resale of the Debentures;
(i) The Buyer (or others for whom it is contracting hereunder) has
been advised to consult its own legal and tax advisors with respect to
applicable resale restrictions and applicable tax considerations and it (or
others for whom it is contracting hereunder) is solely responsible (and the
Seller is not in any way responsible) for compliance with applicable resale
restrictions and applicable tax legislation;
(j) Buyer understands that no Federal or State or foreign
government agency has passed on or made any recommendation or endorsement of the
Debentures;
(k) Buyer has had an opportunity to receive and review all
material information and financial data and to discuss with the officers of
Seller, all matters relating to the securities, financial condition, operations
and prospects of Seller and any questions raised by Buyer have been answered to
Buyer's satisfaction.
(l) Buyer acknowledges that the purchase of the Debentures involve
a high degree of risk. Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
purchasing the Debentures. Buyer understands that the Debentures are not being
registered under the 1933 Act, or under any state securities
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laws, and therefore, Buyer must bear the economic risk of this investment for an
indefinite period of time;
(m) Buyer is not a "10-percent Shareholder" (as defined in Section
871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller; and
(n) Buyer acknowledges and agrees that the transactions
contemplated by this Agreement have taken place solely and exclusively within
the State of Colorado.
3. Seller Representations and Covenants.
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(a) Seller is a corporation duly organized and validly existing
under the laws of the State of Delaware and is in good standing under such laws
with its principal executive office located in the State of Florida. The Seller
has all requisite corporate power and authority to own, lease and operate its
properties and assets, and to carry on its business as presently conducted. The
Seller is qualified to do business as a foreign corporation in each jurisdiction
in which the ownership of its property or the nature of its business requires
such qualification, except where failure to so qualify would not have a material
adverse effect on the Seller.
(b) There are 10,000,000 shares of Seller's Common Stock, $.01 par
value per share ("Common Stock") authorized and 1,000 outstanding as of August
27, 2001. All issued and outstanding shares of Common Stock have been authorized
and validly issued and are fully paid and non-assessable.
(c) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or to a loss of a material benefit, under, any provision of
the Articles of Incorporation, and any amendments thereto, By-Laws, Stockholders
Agreements and any amendments thereto of the Seller or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law ordinance, rule or
regulation applicable to the Seller, its properties or assets. There is no
action, suit or proceeding pending, or to the knowledge of the Seller,
threatened against the Seller, before any court or arbitrator or any government
body, agency or official, which would have a material adverse affect on Seller's
operations or financial condition.
(d) The Seller is not subject to the reporting requirements of
Sections 13 or 15(d) of the Securities and Exchange Act, is not an investment
company or a developmental stage company that either has no specific business
plan or no purpose. The Debentures and common stock issued upon conversion
("Shares") when issued, will be issued in compliance with all applicable U.S.
federal and state securities laws. The Seller understands and acknowledges that,
in certain, circumstances, the issuance of the Shares could dilute the
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ownership interests of other stockholders of the Seller. The execution and
delivery by the Seller of this Agreement and the issuance of the Shares will not
contravene or constitute a default under any provision of applicable law or
regulation. The Seller is in compliance with and conforms to all statutes, laws,
ordinances, rules, regulations, orders, restrictions and all other legal
requirements of any domestic or foreign government or any instrumentality
thereof having jurisdiction over the conduct of its businesses or the ownership
of its properties.
(e) There is no fact known to the Seller that has not been
publicly disclosed by the Seller or disclosed in writing to the Buyer which
could reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs, properties or
assets of the Seller, or could reasonably be expected to materially and
adversely affect the ability of the Seller to perform its obligations pursuant
to this Agreement. The information furnished by the Seller to Buyer for purposes
of or in connection with this Agreement or any transaction contemplated hereby,
does not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they are made, not misleading.
(f) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Seller
is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the Debentures or Common Stock, or
the consummation of any other transaction contemplated hereby, except the filing
with the SEC of Form D.
(g) There is no action, proceeding or investigation pending, or to
the Seller's knowledge, threatened, against the Seller which might result,
either individually or in the aggregate, in any material adverse change in the
business, prospects, conditions, affairs or operations of the Seller. The Seller
is not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit proceeding or investigation by the Seller currently pending
or which the Seller intends to initiate. The SEC has not issued any order
suspending trading in the Seller's Common Stock and the Seller is not under
investigation by the SEC or the National Association of Securities Dealers, and
there are no proceedings pending or threatened before either regulatory body.
(h) There are no other material outstanding debt or equity
securities presently convertible into Common Stock.
(i) The Seller has not sold any securities within the 12 month
period prior to the date the Common Stock was first offered in reliance on any
exemption under Section 3(b) of the 1933 Act, Regulation D or its rules or in
violation of Section 5(a) of the 1933 Act.
(j) The issuance, sale and delivery of the Debentures have been
duly authorized by all required corporate action on the part of the Seller, and
when issued, sold and delivered in accordance with the terms hereof and thereof
for the consideration expressed herein
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and therein, will be duly and validly issued, fully paid and non-assessable. The
Common Stock issuable upon conversion of the Debentures has been duly and
validly reserved for issuance and upon issuance in accordance with the terms of
the Debentures, shall be duly and validly issued, fully paid, and non-assessable
There are no pre-emptive rights of any shareholder of Seller.
(k) This Agreement has been duly authorized, validly executed and
delivered on behalf of Seller and is a valid and binding agreement in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally. The Seller
has all requisite right, power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All corporate
action on the part of the Seller, its directors and shareholders necessary for
the authorization, execution, delivery and performance of this Agreement and the
Debentures has been taken. Upon their issuance to the Buyer, the Debentures will
be validly issued and nonassessable, and will be free of any liens or
encumbrances.
(l) Seller acknowledges and agrees that the transactions
contemplated by this the Agreement have taken place solely and exclusively
within the State of Colorado.
4. Exemption; Reliance on Representations. Buyer understands that
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the offer and sale of the Securities are not being registered under the 1933
Act. Seller and Buyer are relying on the rules governing offers and sales made
pursuant to Rule 504 promulgated under Regulation D. The offer and sale of the
Shares are made solely within the State and jurisdiction of Colorado.
5. Transfer Agent Instructions.
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(a) Debentures. Upon the conversion of the Debentures, the Buyer
or holder shall give a notice of conversion to the Seller and the Seller shall
instruct its transfer agent to issue one or more Certificates representing that
number of shares of Common Stock into which the Debentures are convertible in
accordance with the provisions regarding conversion set forth in Exhibit A. The
Seller shall act as Debenture Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of any Debenture, Seller shall instruct Seller's transfer agent to
issue Stock Certificates up to the total of the "Conversion Amount" (as defined
in the Debentures) and any "Interest Shares" (as defined in the Debentures)
without restrictive legend in the name of the Buyer (or its nominee) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable. The Common Stock
shall be immediately freely transferable on the books and records of Seller.
Seller shall also instruct its attorney to issue and render any legal opinion
which is required at any time by Seller's transfer agent to permit Seller's
transfer agent to issue any and all Stock Certificates without a restrictive
legend as required by this Agreement.
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6. Registration. If upon conversion of the Debentures effected by
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the Buyer pursuant to the terms of this Agreement or payment of interest
pursuant to the Debentures the Seller fails to issue certificates for shares of
Common Stock issuable upon such conversion ("Underlying Shares") or the Interest
Shares, as defined in Section 4(b) of the Debentures, to the Buyer bearing no
restrictive legend for any reason, then the Seller shall be required, at the
request of the Buyer and at the Seller's expense, to effect the registration of
the Underlying Shares and/or Interest Shares issuable upon conversion of the
Debentures and payment of interest under the Act and relevant Blue Sky laws as
promptly as is practicable. The Seller and the Buyer shall cooperate in good
faith in connection with the furnishings of information required for such
registration and the taking of such other actions as may be legally or
commercially necessary in order to effect such registration. The Seller shall
file such a registration statement within 30 days of Buyer's demand and shall
use its good faith diligent efforts to cause such registration statement to
become effective as soon as practicable thereafter. Such good faith diligent
efforts shall include, but not be limited to, promptly responding to all
comments received from the staff of the SEC, providing Buyer's counsel with a
contemporaneous copy of all written communications from and to the staff of the
SEC with respect to such registration statement and promptly preparing and
filing amendments to such registration statement which are responsive to the
comments received from the staff of the SEC. Once declared effective by the SEC,
the Seller shall cause such registration statement to remain effective until the
earlier of (i) the sale by the Buyer of all Underlying Shares registered or (ii)
120 days after the effective date of such registration statement. In the event
the Seller undertakes to file a Registration Statement on in connection with the
Common Stock, upon the effectiveness of such Registration, Buyer shall have the
option to sell the Common Stock pursuant thereto.
7. Delivery Instructions. The Debentures being purchased hereunder
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shall be delivered to the Buyer, and the Purchase Price, shall be delivered to
the Seller.
8. Conditions To Seller's Obligation To Sell. Seller's obligation
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to sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
executed by Buyer.
(b) All of the representations and warranties of the Buyer
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date. The Buyer
shall have performed or complied with all agreements and satisfied all
conditions on its part to be performed, complied with or satisfied at or prior
to the Closing Date.
(c) No order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act shall have
been issued, and no proceedings for that purpose shall have been commenced or
shall be pending or, to the knowledge of the Seller, be contemplated. No stop
order suspending the sale of the Debentures or Common Stock
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shall have been issued, and no proceedings for that purpose shall have been
commenced or shall be pending or, to the knowledge of the Seller, be
contemplated.
9. Conditions To Buyer's Obligation To Purchase. Buyer's
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obligation to purchase the Debentures is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of this
Agreement as evidenced by execution of this Agreement of the duly authorized
officer of Seller.
(b) Delivery of the Debentures to the Buyer.
10. No Shareholder Approval and No Dilution.
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(a) Seller hereby agrees that from the Closing Date until the
issuance of Common Stock upon the conversion of the Debentures, Seller will not
take any action which would require Seller to seek shareholder approval of such
issuance unless such shareholder approval is required by law or regulatory body
(including but not limited to the NASDAQ Stock Market, Inc.) as a result of the
issuance of the Debentures or Common Stock hereunder.
(2) Provided the Debentures, or any Seller Debentures from a
series which predate the Debentures remain outstanding and unpaid, or if there
is any portion of any such Debentures which have not been converted into the
Seller's Common Stock, then the Seller shall not split nor reverse split the
Common Stock, nor consolidate the outstanding number of shares of Common Stock
into a small number of shares, nor otherwise take any action, directly or
indirectly, which would have a material adverse effect on the value of the
Debentures or the trading price of the Common Stock.
(c) Upon (i) a transfer of all or substantially all of the assets
of the Seller to any person in a single transaction or series of related
transactions, or (ii) a consolidation, merger or amalgamation of the Seller with
or into another person or entity in which the Seller is not the surviving entity
(other than a merger which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock solely into shares of Common
Stock) (each of items (i) and (ii) being referred to as a "Sale Event"), then,
in each case, the Seller shall, upon request of any Holder, redeem the Debenture
registered in the name of such Holder in cash for 130% of the principal amount,
plus accrued but unpaid interest through the date of redemption, or at the
election of the Holder, such Holder may convert the unpaid principal amount of
such Debenture (together with the amount of accrued but unpaid interest) into
shares of Common Stock of the surviving entity at the Conversion Price as set
forth in the Debentures.
(d) In case of any reclassification, capital reorganization or
other change or
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exchange of outstanding shares of the Common Stock, or in case of any
consolidation or merger of the Seller with or into another corporation (other
than a consolidation or merger in which the Seller is the continuing corporation
and which does not result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock), the Seller shall cause
effective provision to be made so that the Purchaser or Holder of the Debenture,
as the case may be, shall have the right thereafter, by exercising the
Debenture, to purchase the kind and number of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of
the number of shares of Common Stock that could have been purchased upon
exercise of the Debenture and at the same Conversion Price, as defined in the
Debentures, immediately prior to such reclassification, capital reorganization
or other change, consolidation or merger. The foregoing provisions shall
similarly apply to successive reclassifications, capital reorganizations and
other changes of outstanding shares of Common Stock and to successive
consolidations or mergers. If the consideration received by the holders of
Common Stock is other than cash, the value shall be as determined by the Board
of Directors of the Seller or successor person or entity acting in good faith.
11. Payment of the Debentures, Conversions, Security and Demand.
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(a) Security Resolution. If Seller shall become a publicly traded
company by merger or acquisition in which Seller shall cease to exist and
another corporation shall survive the merger, or Seller shall exchange its
shares with a publicly traded corporation which shall own more than 50% of the
issued and outstanding shares of Seller (collectively in either the case of
merger or exchange of shares "Seller Parent"), then Seller shall assign the
Debentures to the Seller Parent and deliver to the Buyer a resolution in the
form annexed hereto as Exhibit B ("Resolution"), instructing the Seller Parent
transfer agent ("Transfer Agent") to issue to Buyer shares of the Seller Parent
common stock registered in the name of the Buyer, without restrictive legend as
provided in Section 5(b) of this Agreement, in an amount equal up to $1,000,000,
or at some lesser amount as the Buyer, in his sole discretion may direct the
transfer agent, at a price per share which is 70% of the lowest closing bid
price of the Seller Parent's common stock as reported on the OTC Electronic
Bulletin Board ("OTCBB") or any exchange in which the Seller Parent's shares are
traded for any trading day on which a Notice of Conversion is received by the
Company, provided such Notice of Conversion is delivered by fax to the Company
between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 7 P.M.
Eastern Standard or Daylight Savings Time, or for any of the 3 consecutive
trading days immediately preceding the date of receipt by the Company of each
Notice of Conversion ("Conversion Shares") and providing that the Seller Parent
shall not change its transfer agent from the Transfer Agent once established,
without the express written consent and directive of the Buyer. In the event the
Debentures are assigned to a publicly traded entity, Seller shall also deliver
to the Buyer along with the Resolution, the Irrevocable Instructions, in the
form annexed hereto as Exhibit C, signed by the Seller Parent and the Seller
Parent's transfer agent. Delivery of the Resolution to the Transfer Agent and
the issuance of shares by the Transfer Agent in accordance with the
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Resolution shall not preclude the Buyer from exercising any and all other
remedies available to the Buyer against the Seller Parent and Seller for a
breach of this Agreement or the Debentures.
(b) Conversions and Demand. As provided in paragraph 4 of the
Debentures, Buyer may give Notice of Conversion of the Debentures to Seller or
the Seller Parent, as the case may be, by facsimile to the number set forth in
Section 12(h) below. Conversion of Debentures may take place at any time until
the Maturity Date of the Debentures, as defined in the Debentures. As provided
in paragraph 4 of the Debentures, within 5 business days of receipt of the
Notice of Conversion, Seller or the Seller Parent, as the case may be, shall
deliver to the Buyer, or to an account designated by Buyer in the Notice of
Conversion, certificates representing the shares of common stock to which the
Buyer shall be entitled by reason of the conversion ("Certificates"). Provided
that (i) there is no Event of Default, as defined in the Debentures or this
Agreement, (ii) the Seller Parent has assumed all of the obligations of the
Agreement and the Debentures by virtue of a merger with or acquisition of Seller
("Assumption") and the publicly traded stock of the Seller Parent trades on the
Over the Counter Electronic Bulletin Board, (iii) the representations and
warranties contained in this Agreement shall be true and correct on the date of
the First Demand, as defined below, as to Seller or Seller Parent, as the case
may be, except for the number of issued and outstanding shares if such shares
have been increased through a conversion of the Debentures, and (iv) Buyer has
converted a sum equal to the Initial Purchase Price of the Debentures into the
common stock of the Seller or the Seller Parent, as the case may be, Seller
Parent may demand that Buyer pay the Seller Parent $135,000 towards the purchase
price of the Debentures ("First Demand"). Upon payment of the First Demand,
provided that (x) there is no Event of Default, as defined in the Debentures or
this Agreement, and (y) for any of the 3 trading days preceding any Demand, the
lowest closing bid price of Seller Parent's common stock, as reported on OTCBB
or any other exchange on which such shares trade, has not fallen below $.05 per
share ("Floor Price"), and (z) Buyer has converted all amounts paid towards the
Purchase Price of the Debentures into the common stock of the Seller Parent, and
(xx) on the date any Additional Demand, as defined below, is made, the Seller
has at least a number of shares of Common Stock authorized but not issued based
on the following formula: $135,000/x (5); x = the average closing bid price for
the Common Stock for the 3 days preceding the date of the Additional Demand,
then Seller Parent may demand that Buyer pay the Seller Parent additional
installments of the Debenture of $135,000 each provided also that at least 30
business days from the date of the First Demand or any Additional Demands as the
case may be, has elapsed ("Additional Demands"). When Buyer has paid a total of
$870,000 to the Seller and/or Seller Parent in the aggregate, such payments
shall constitute full and complete payment of the Debenture and complete
satisfaction of Buyer's obligations under the Debentures and this Agreement.
Nothing in this Section 11(b) shall preclude Buyer from making discretionary
payments of the purchase price of the Debentures earlier than required under the
First Demand and the Additional Demands. (The First Demand and Additional
Demands are sometimes referred to herein singularly as a "Demand").
Notwithstanding the foregoing, Buyer shall have the right, but not the
obligation, to purchase all or any portion of the Debentures at any time by
issuing a written call to the Seller("Call"). If a Call is issued, the closing
for the call shall take place within 5 business
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days of the receipt of the Call by the Company, and in accordance with the
provisions of Section 1(c) above.
(d) Conversion Limit. Notwithstanding the conversion rights under
the Debentures, unless the Buyer delivers a waiver in accordance with the
immediately following sentence, in no event shall the Buyer be entitled to
convert any portion of the Debentures, in excess of that portion of the
Debentures upon conversion, as applicable, of which the sum of (i) the number of
shares of Common Stock beneficially owned by the Buyer 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 and (ii) the number of
shares of Common Stock issuable upon the conversion of the portion of the
Debentures with respect to which this determination is being made, would result
in beneficial ownership by the Buyer and its Affiliates of more than 4.999% of
the then issued and outstanding shares of Common Stock. For purposes of this
Section 11(d), beneficial ownership shall be determined in accordance with Rule
13d-3 of the Exchange Act and Regulations 13 D-G thereunder, except as otherwise
provided in this Section 11(d). The foregoing limitation shall not apply and
shall be of no further force or effect (i) immediately preceding and upon the
occurrence of any voluntary or mandatory redemption or repayment transaction
described herein or in the Debentures (ii) on the Maturity Date or (iii)
following the occurrence of any Event of Default which is not cured within the
greater of the applicable time period specified in either (A) such written
notice of Buyer or (B) Section 8 of the Debentures.
(e) Liquidated Damages. If Seller or the Seller Parent fails to
timely deliver Certificates, as provided in Section 11(c) above, then Seller or
the Seller Parent, as the case may be, shall pay Buyer $150 per day for each day
late in delivering Certificates up to and including the 10th late day, and $500
per day for each day late in delivering the Certificates after the 10th late day
("Liquidated Damages"). Any Liquidated Damages incurred by Seller or the Seller
Parent, as the case may be, shall be payable immediately and in cash upon demand
in writing made by Buyer, or their agent, to Seller or the Seller Parent, as the
case may be. However, such Liquidated Damages may be deducted from any amounts
owed to Seller or the Seller Parent, as the case may be, by the Buyer pursuant
to this Section 11. Notwithstanding anything contained in this Agreement to the
contrary, including but not limited to the provisions of Section 6 regarding the
registration of restricted Conversion Shares, Seller or the Seller Parent, as
the case may be, shall be required to pay the Liquidated Damages set forth in
this Section 11(d).
(f) Bankruptcy. In the event any proceeding under the Bankruptcy
Laws of the United States or any proceedings under any state laws for the
protection of debtors or creditors, are filed, voluntarily or involuntarily, by
or on behalf of Seller or the Seller Parent, as the case may be, then Seller or
the Seller Parent, as the case may be, shall continue to honor all Notices of
Conversion given by Buyer and Buyer shall not be required to honor any Demand
made by Seller, the Seller Parent or the trustee in bankruptcy, as the case may
be.
11
12. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement together with the Debentures,
constitutes the entire agreement between the parties, and neither party shall be
liable or bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous agreement among
the parties related to the transactions described herein is superseded hereby.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the restrictive successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
(b) Independent Contractor. Buyer is an independent contractor and
is not the agent of Seller. Buyer is not authorized to bind Seller or to make
any representation or warranties on behalf of Seller.
(c) Survival. All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(d) Governing Law. This Agreement shall be construed in accordance
with the laws of Colorado applicable to contracts made and wholly to be
performed within the State of Colorado and shall be binding upon the successors
and assigns of each party hereto. Buyer and Seller hereby mutually waive trial
by jury and consent to exclusive jurisdiction and venue in the courts of the
State of Colorado. At Buyer's election, any dispute between the parties may be
arbitrated rather than litigated in the courts, before the arbitration board of
the American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by the Buyer to the Seller, Seller agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
(e) Seller Indemnification. Seller agrees to indemnify and hold
Buyer harmless from any and all claims, damages and liabilities arising from
Seller's breach of its representations and/or covenants set forth herein.
(f) Buyer Indemnification. Buyer agrees to indemnify and hold
Seller harmless from any and all claims, damages and liabilities arising from
Buyer's breach of its representations and warranties set forth in this
Agreement.
(g) Form D. Seller shall filed a Form D with the Commission and
all filings required by the Colorado Securities Division upon the Closing of
this transaction.
(h) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be delivered by hand or sent
by Fedex for next day delivery. Each such notice or other communication shall
for all purposes of this Escrow Agreement be
12
treated as effective or having been given when delivered, if delivered
personally, or, if sent by overnight express mail service, 1 day after the same
has been deposited with the Fedex. All such notices must also be sent by
facsimile on the same day to the parties as follows:
If to Seller: ▇▇▇▇ Acquisition Corp.
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
If to Buyer: Equity Planners LLC
Quadrant Center, 5445 DTC Parkway, Penthouse Four
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Sea Lion Investors LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Myrtle Holdings LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
{Remainder of this page intentionally left blank}
13
IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of the date first set forth above.
Official Signatory of Seller:
-----------------------------
▇▇▇▇ ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Accepted this 27th day of August , 2001 Title: President
Official Signatory of Buyer:
---------------------------
EQUITY PLANNERS LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
SEA LION INVESTORS LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
MYRTLE HOLDINGS LLC
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
14
EXHIBIT A
---------
DEBENTURES
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION
3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER
(THE "1933 ACT"), AND RULE 504 OF REGULATION D
PROMULGATED THEREUNDER.
THIS INFORMATION IS DISTRIBUTED PURSUANT TO AN
EXEMPTION FOR SMALL OFFERINGS UNDER THE RULES OF
THE COLORADO SECURITIES DIVISION. THE SECURITIES
DIVISION HAS NEITHER REVIEWED OR APPROVED ITS FORM
OR CONTENT. THE SECURITIES DESCRIBED MAY ONLY BE
PURCHASED BY "ACCREDITED INVESTORS" AS DEFINED BY
RULE 504 OF SEC REGULATION D AND THE RULES OF THE
COLORADO SECURITIES DIVISION.
A-001
US
$1,000,000
▇▇▇▇ ACQUISITION CORP.
----------------------
8% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURES
DUE AUGUST_____ , 2003
THIS DEBENTURE of ▇▇▇▇ Acquisition Corp., a corporation duly
organized and existing under the laws of Delaware ("Company"), designated as its
8% Series A Senior Subordinated Convertible Debentures Due August ______, 2003,
in an aggregate principal face amount not
1
exceeding One Million Dollars (U.S. $1,000,000 ), which Debentures are being
purchased at 87% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to the registered
holders hereof and their authorized successors and permitted assigns as set
forth on Schedule A hereto ("Holder"), the aggregate principal face of One
Million Dollars (U.S. $1,000.000) on August , 2003 ("Maturity Date"), and to pay
interest on the principal sum outstanding, at the rate of 8% per annum
commencing September , 2001 and due in full at the Maturity Date pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of August
, 2001 between the Company and ▇▇▇▇ Acquisition Corp. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and addressed to such Holder at the last address appearing
on the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Five Thousand
Dollars (US$5,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $5,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended ("Act") and applicable
state securities laws. 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 all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also
2
required to give the Company written confirmation that the Debenture is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit I. The
date of receipt (including receipt by telecopy) of such Notice of Conversion
shall be the Conversion Date.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $5,000 of the principal face
amount of this Debenture then outstanding into freely tradeable shares of common
stock, no par value per share, of the Company without restrictive legend of any
nature ("Common Stock"), at a conversion price ("Conversion Price") for each
share of Common Stock equal to (i) 70 % of the per share price valued in
accordance with the book value of the Company's shares which shall include but
not be limited to all assets and good will of the Company and the proceeds of
this Debenture and any other Debenture issued simultaneously with this Debenture
or within 30 days of the issuance of this Debenture, but shall not include any
liabilities of the Company ("Asset Book Value"), or, if the Company or its
successor or the assignee of this Debenture is publicly traded on any exchange,
(ii) 70% of the lowest closing bid price of the Common Stock as reported on the
OTC Electronic Bulletin Board or any exchange on which the Company's shares are
traded ("OTCBB") for any trading day on which a Notice of Conversion is received
by the Company, provided such Notice of Conversion is delivered by fax to the
Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time
and 7 P.M. Eastern Standard or Daylight Savings Time, or for any of the 3
consecutive trading days immediately preceding the date of receipt by the
Company of each Notice of Conversion ("Conversion Shares"). If the number of
resultant Conversion Shares would as a matter of law or pursuant to regulatory
authority require the Company to seek shareholder approval of such issuance, the
Company shall, as soon as practicable, take the necessary steps to seek such
approval. Such conversion shall be effectuated, by the Company delivering the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the Notice of Conversion. Once the Holder has received such Conversion
Shares, the Holder shall surrender the Debentures to be converted to the
Company, executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and
accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional 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.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the Asset Book Value, or 70% of
the lowest closing bid price of the Common Stock as reported on the OTC
Electronic Bulletin Board or any exchange on which the Company's shares are
traded ("OTCBB") for any trading day on which a Notice of Conversion is received
by the Company, provided such Notice of Conversion is delivered by fax to the
Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time
and 7 P.M. Eastern Standard or Daylight Savings Time, or for any of the 3
consecutive trading days immediately preceding the date of the monthly interest
payment due ("Market Price"), the Company shall issue to the Holder shares of
Common Stock in an amount equal to the total monthly interest accrued and due
divided by 70% of the Market Price ("Interest Shares"). The dollar amount of
interest payable pursuant to this paragraph 4(b) shall be calculated based upon
the total amount of payments actually made by the Holder in connection with the
purchase of the Debentures at the time any interest payment is due. If such
payment is made by check, interest shall accrue beginning 10 days from the date
the check is
3
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 130% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture.
(c) Upon (i) a transfer of all or substantially all of the assets
of the Company to any person in a single transaction or series of related
transactions, or (ii) a consolidation, merger or amalgamation of the Company
with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction
of incorporation of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock solely into shares of Common
Stock) (each of items (i) and (ii) being referred to as a "Sale Event"), then,
in each case, the Company shall, upon request of any Holder, redeem the
Debentures registered in the name of such Holder in cash for 130% of the
principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid
principal amount of this Debenture (together with the amount of accrued but
unpaid interest) into shares of Common Stock of the surviving entity at the
Conversion Price.
(d) In case of any reclassification, capital reorganization or
other change or exchange of outstanding shares of the Common Stock, or in case
of any consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Seller is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock), the
Company shall cause effective provision to be made so that the Holder of this
Debenture shall have the right thereafter, by converting this Debenture, to
purchase or convert this Debenture into the kind and number of shares of stock
or other securities or property (including cash) receivable upon such
reclassification, capital reorganization or other change, consolidation or
merger by a holder of the number of shares of Common Stock that could have been
purchased upon exercise of the Debentures and at the same Conversion Price, as
defined in the Debenture, immediately prior to such reclassification, capital
reorganization or other change, consolidation or merger. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other changes of outstanding shares of Common Stock and to
successive consolidations or mergers. If the consideration received by the
holders of Common Stock is other than cash, the value shall be as determined by
the Board of Directors of the Company or successor person or entity acting in
good faith.
4
5. 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 form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made or the Company shall violate any covenants in the
Subscription Agreement including but not limited to Section 5(b)
or 10; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition, agreement
or obligation of the Company under this Debenture, and the
Subscription Agreement and such failure shall continue uncured for
a period of thirty (30) days after notice from the Holder of such
failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3) make
an assignment for the benefit of creditors or commence proceedings
for its dissolution; (4) 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; (5) file a petition for
bankruptcy relief, consent to the filing of such petition or have
filed against it an involuntary petition for bankruptcy relief,
all under federal or state laws as applicable; or
(e) 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 thirty (30)
days after such appointment; or
5
(f) 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; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars 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 fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) 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
voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which the
Common Stock is or becomes listed or, if the Common Stock trades,
then trading in the Common Stock shall be suspended for more than
10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend within 5
business days.
Then, or at any time thereafter, unless cured, 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, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), 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, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, 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.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be
6
adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining
provisions of this Debenture will not in any way be affected or impaired
thereby.
11. This Debenture and the agreements referred to in this
Debenture constitute the full and entire understanding and agreement between the
Company and the Holder with respect to the subject hereof. Neither this
Debenture nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in
accordance with the laws of Colorado applicable to contracts made and wholly to
be performed within the State of Colorado and shall be binding upon the
successors and assigns of each party hereto. The Holder and the Company hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue in
the courts of the State of Colorado. At Holder's election, any dispute between
the parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
7
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: August , 2001
-----
▇▇▇▇ ACQUISITION CORP.
By:
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
8
A SERIES EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $___________
of the above Debenture No. _______ into Shares of Common Stock of ▇▇▇▇
Acquisition Corp. according to the conditions set forth in such Debenture, as of
the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion___________________________________________________
Applicable Conversion Price__________________________________________
Signature____________________________________________________________
[Print Name of Holder and Title of Signer]
Address:_____________________________________________________________
SSN or EIN:
----------------------------------------------------------
Shares are to be registered in the following name:
Name:
----------------------------------------------------------------
Address:
-------------------------------------------------------------
Tel:
----------------------------------------
Fax:
----------------------------------------
SSN or EIN:
---------------------------------
Shares are to be sent or delivered to the following account:
Account Name:
--------------------------------------------------------
Address:
-------------------------------------------------------------
9
SCHEDULE A
DEBENTURES
----------
--------------------------------------------------------------------------------
Aggregate
Principal
Name/Address Amount of Purchase Price
----------- ---------- -------------
Debentures
----------
--------------------------------------------------------------------------------
---------------------- ------------------------- ------------------ ------------
---------------------- ------------------------- ------------------ ------------
---------------------- ------------------------- ------------------ ------------
TOTAL
---------------------- ------------------------- ------------------ ------------