12% SENIOR SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURE DUE NOVEMBER 11, 2017
Exhibit 10.2
NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
Original
Issue Date: April 11, 2017
Original
Conversion Price (subject to adjustment herein):
$3.9133
$1,120,000
12% SENIOR SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE
DEBENTURE
DUE NOVEMBER 11, 2017
THIS 12% SENIOR
SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURE is a duly
authorized and validly issued Senior Secured Original Issue
Discount Convertible Debenture (this “Debenture”) of AzurRx
BioPharma, Inc., a Delaware corporation, (the “Company”), having its
principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Biotechnology Incubator, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ pursuant to
that certain Securities Purchase Agreement, dated April 11, 2017,
by and between the Company and Lincoln Park Capital Fund, LLC as
amended, modified or supplemented from time to time in accordance
with its terms (the “Purchase
Agreement”).
FOR
VALUE RECEIVED, the Company promises to pay to Lincoln Park Capital
Fund, LLC or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of
$1,120,000.00 on November 11, 2017 (the “Maturity Date”), which
date shall be accelerated and extended in accordance with Section 6
herein or such earlier date as this Debenture is required or
permitted to be repaid as provided hereunder or such later date as
this Debenture may be extended as provided hereunder. This
Debenture is subject to the following additional
provisions:
Section
1. Definitions. For the purposes
hereof, in addition to the terms defined elsewhere in this
Debenture, (a) capitalized terms not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement and (b) the
following terms shall have the following meanings:
“Alternate Consideration”
has the meaning set forth in Section 5(d).
1
“Bankruptcy Event” means
any of the following events: (a) the Company or any Significant
Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Significant
Subsidiary thereof, (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that
is not dismissed within 60 days after commencement, (c) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company or any Significant
Subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such
appointment, (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) the
Company or any Significant Subsidiary thereof calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts, (g) the Company or any Significant
Subsidiary thereof admits in writing that it is generally unable to
pay its debts as they become due, (h) the Company or any
Significant Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in
any of the foregoing or takes any corporate or other action for the
purpose of effecting any of the foregoing.
“Beneficial Ownership
Limitation” has the meaning set forth in Section
4(d).
“Buy-In” has the meaning
set forth in Section 4(c)(v).
“Change of Control
Transaction” means the occurrence after the date
hereof of any of (a) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective
control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 45%
of the voting securities of the Company (other than by means of
conversion or exercise of the Debenture and the Securities issued
together with the Debenture), (b) the Company merges into or
consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to
such transaction own less than 60% of the aggregate voting power of
the Company or the successor entity of such transaction, (c) the
Company sells or transfers all or substantially all of its assets
to another Person and the stockholders of the Company immediately
prior to such transaction own less than 60% of the aggregate voting
power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a three year period of more
than one-half of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the
Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on
any date whose nomination to the Board of Directors was approved by
a majority of the members of the Board of Directors who are members
on the date hereof), or (e) the execution by the Company of an
agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through
(d) above.
“Conversion” has the
meaning ascribed to such term in Section 4.
“Conversion Date” has the
meaning set forth in Section 4(a).
“Conversion Price” has the
meaning set forth in Section 4(b).
2
“Conversion Schedule”
means the Conversion Schedule in the form of Schedule 1 attached
hereto.
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of this Debenture in accordance with the terms hereof.
“Debenture Register” means
the records of the Company regarding registration and transfers of
this Debenture.
“Effectiveness Period” has
the meaning set forth in the Registration Rights
Agreement.
“Equity Conditions” means,
during the period in question, (a) the
Company shall have duly honored all conversions and amortizations
scheduled to occur or occurring by virtue of one or more Notices of
Conversion of the Holder, if any, (b) the Company shall have paid
all liquidated damages and other amounts owing to the Holder in
respect of this Debenture, (c) one of the following applies
to this Debenture: (i) there is an effective Registration Statement
pursuant to which the Holder is permitted to utilize the prospectus
thereunder to resell all of the shares of Common Stock issuable
pursuant to the Transaction Documents (and the Company believes, in
good faith, that such effectiveness will continue uninterrupted for
the foreseeable future), (ii) all of the Conversion Shares issuable
pursuant to the Transaction Documents (and shares issuable in lieu
of cash payments of interest) may be resold pursuant to Rule 144
without volume or manner-of-sale restrictions or current public
information requirements as determined by the counsel to the
Company as set forth in a written opinion letter to such effect,
addressed and acceptable to the Transfer Agent and the Holder, or
(iii) the Conversion Shares take on the registered characteristics
of the Preferred Stock and are free trading and issued without a
Securities Act legend; (d) the Common Stock is trading on a Trading
Market and all of the shares issuable pursuant to the Transaction
Documents are listed or quoted for trading on such Trading Market
(and the Company believes, in good faith, that trading of the
Common Stock on a Trading Market will continue uninterrupted for
the foreseeable future), (e) there is a sufficient number of
authorized but unissued and otherwise unreserved shares of Common
Stock for the issuance of all of the shares then issuable pursuant
to the Transaction Documents, (f) there is no existing Event of
Default and no existing event which, with the passage of time or
the giving of notice, would constitute an Event of Default, (g) the
issuance of the shares in question would not violate the
limitations set forth in Section 4(d) and Section 4(e) herein,
(h) there has been no public
announcement of a pending or proposed Fundamental Transaction or
Change of Control Transaction that has not been consummated, and
(i) the applicable Holder is not in possession of any information
provided by the Company, any of its Subsidiaries, or any of
their officers, directors, employees, agents or Affiliates,
that constitutes, or may constitute,
material non-public information.
“Event of
Default” has the meaning
set forth in Section 8(a).
“Fundamental Transaction”
has the meaning set forth in Section 5(d).
3
“Mandatory Default Amount”
means the sum of (a) the greater of (i) the outstanding principal
amount of this Debenture, divided by the Conversion Price on the
date the Mandatory Default Amount is either (A) demanded (if demand
or notice is required to create an Event of Default) or otherwise
due or (B) paid in full, whichever has a lower Conversion Price,
multiplied by the VWAP on the date the Mandatory Default Amount is
either (x) demanded or otherwise due or (y) paid in full, whichever
has a higher VWAP, or (ii) 118% of the outstanding principal amount
of this Debenture, plus 100% of accrued and unpaid interest hereon,
and (b) all other amounts, costs, expenses and liquidated damages
due in respect of this Debenture.
“Illinois Courts” has the
meaning set forth in Section 9(d).
“Notice of Conversion” has
the meaning set forth in Section 4(a).
“Original Issue Date”
means the date of the first issuance of the Debenture, regardless
of any transfers of the Debenture and regardless of the number of
instruments which may be issued to evidence the
Debenture.
“Permitted Indebtedness”
means (a) the indebtedness evidenced by the Debenture, (b) the
indebtedness existing on the Original Issue Date and set forth on
Schedule 3.1(bb)
attached to the Purchase Agreement, and (c) indebtedness that (i)
is expressly subordinate to the Debenture pursuant to any
subordination agreement with the Purchaser that is acceptable to
the Purchaser in its sole and absolute discretion, and (ii) matures
at a date later than the 91st day following the
Maturity Date.
“Permitted Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP, (b) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, (c) Liens incurred in
connection with Permitted Indebtedness under clauses (a), (b) and
(d)/(e) thereunder, and (d) Liens incurred in connection with
Permitted Indebtedness under clause (c) thereunder, provided that
such Liens are not secured by assets of the Company or its
Subsidiaries other than the assets so acquired or leased, (e) Liens
in connection with equipment leases in effect on the Original Issue
Date and (f) Liens in favor of the Florida Department of Revenue in
effect on the Original Issue Date.
“Share Delivery Date” has
the meaning set forth in Section 4(c)(ii).
“Successor Entity” has the
meaning set forth in Section 5(d).
4
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX
and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Purchasers of a
majority in interest of the Debenture then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
Section
2.
OID;
Prepayment.
a)
Original Issue
Discount. This Debenture is issued as an original issue
discount debenture and there are no regularly scheduled interest
payments on this Debenture, except as set forth in Section
7(b).
b)
Prepayment.
Debenture may be prepaid by the Company at 105% of the outstanding
principal and interest at any time subject to the Holder’s
right to convert.
Section
3.
Registration of Transfers
and Exchanges.
a)
Different
Denominations. This Debenture is exchangeable for an equal
aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same. No
service charge will be payable for such registration of transfer or
exchange.
b)
Investment Representations
and Warranties. This Debenture has been issued subject to
certain representations and warranties of the original Holder set
forth in the Purchase Agreement and may be transferred or exchanged
only in compliance with the Purchase Agreement and applicable
federal and state securities laws and regulations.
c) Reliance
on Debenture Register. Prior to due presentment for transfer
to the Company 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 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 is overdue, and neither the
Company nor any such agent shall be affected by notice to the
contrary.
5
Section
4.
Conversion.
a) Voluntary
Conversion. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be
convertible, in whole or in part, into shares of Common Stock at
the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(d)
and Section 4(e) hereof). The Holder shall effect conversions by
delivering to the Company a Notice of Conversion, the form of which
is attached hereto as Annex A (each, a
“Notice of
Conversion”), specifying therein the principal amount
of this Debenture to be converted and the date on which such
conversion shall be effected (such date, the “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
deemed delivered hereunder. No ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required. To effect
conversions hereunder, the Holder shall not be required to
physically surrender this Debenture to the Company unless the
entire principal amount of this Debenture has been so converted in
which case the Holder shall surrender this Debenture as promptly as
is reasonably practicable after such conversion without delaying
the Company’s obligation to deliver the shares on the Share
Delivery Date. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture in an
amount equal to the applicable conversion. The Holder and the
Company shall maintain records showing the principal amount(s)
converted and the date of such conversion(s). The Company may
deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. In the event
of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.
The Holder, and any assignee by
acceptance of this Debenture, acknowledges and agrees 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.
b) Conversion
Price. The conversion price shall initially be equal to the
lesser of (i) $3.9133 (the “Original Conversion
Price”), or (ii) the ten (10) consecutive day average
closing price after April 11, 2017 (i.e., the date of expiration of
the October 11, 2016 Lock-Up Agreements), subject to adjustment
herein (the “Conversion Price”). For
purposes of clarification, whether or not the Company provides a
notice of adjustment of the Conversion Price pursuant to Section
5(g), the Holder shall receive a number of Conversion Shares and
retain the principal amount based upon the Conversion Price as it
may be adjusted pursuant to Section 5, regardless of whether the
Holder accurately refers to such price or principal amount of this
Debenture converted in any Notice of Conversion.
c)
Mechanics of
Conversion.
i. Conversion
Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the
outstanding principal amount of this Debenture to be converted by
(y) the Conversion Price.
6
ii. Delivery
of Conversion Shares Upon Conversion. Not later than the
earlier of (i) three (3) Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period (as defined
below) after each Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder
(A) the Conversion Shares which, on or after the earlier of (i) the
six month anniversary of the Original Issue Date or (ii) the
Effective Date, shall be free of restrictive legends and trading
restrictions (other than those which may then be required by the
Purchase Agreement) representing the number of Conversion Shares
being acquired upon the conversion of this Debenture. On or after
the earlier of (i) the six month anniversary of the Original Issue
Date or (ii) the Effective Date, the Company shall deliver any
Conversion Shares required to be delivered by the Company under
this Section 4(c) electronically through the Depository Trust
Company or another established clearing corporation performing
similar functions. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Conversion.
iii. Failure
to Deliver Conversion Shares. If, in the case of any Notice
of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the
Holder shall be entitled to elect by written notice to the Company
at any time on or before its receipt of such Conversion Shares, to
rescind such Conversion, in which event the Company shall promptly
return to the Holder any original Debenture delivered to the
Company and the Holder shall promptly return to the Company the
Conversion Shares issued to such Holder pursuant to the rescinded
Notice of Conversion.
iv. Obligation
Absolute; Partial Liquidated Damages. The Company’s
obligations to issue and deliver the Conversion Shares upon
conversion of this Debenture in accordance with the terms hereof
are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event the Holder of
this Debenture shall elect to convert any or all of the outstanding
principal amount hereof, the Company may not refuse conversion
based on any claim that the Holder or anyone associated or
affiliated with the Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Debenture shall have been sought and
obtained, and the Company posts a surety bond for the benefit of
the Holder in the amount of 150% of the outstanding principal
amount of this Debenture, which is subject to the injunction, which
bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to the Holder to the extent it obtains
judgment. In the absence of such injunction, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly
noticed conversion. If the Company fails for any reason to deliver
to the Holder such Conversion Shares pursuant to Section 4(c)(ii)
by the Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000
of principal amount being converted, $10 per Trading Day
(increasing to $20 per Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after
such Share Delivery Date until such Conversion Shares are delivered
or Holder rescinds such conversion. Nothing herein shall limit a
▇▇▇▇▇▇’s right to pursue actual damages or declare an Event
of Default pursuant to Section 8 hereof for the Company’s
failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
7
v. Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon
Conversion. In addition to any other rights available to the
Holder, if the Company fails for any reason to deliver to the
Holder such Conversion Shares by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the
Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which
the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any
other remedies available to or elected by the Holder) the amount,
if any, by which (x) the Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from
the conversion at issue multiplied by (2) the actual sale price at
which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this
Debenture in a principal amount equal to the principal amount of
the attempted conversion (in which case such conversion shall be
deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if the Company had timely
complied with its delivery requirements under Section 4(c)(ii). For
example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Debenture with respect to which the
actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely
deliver Conversion Shares upon conversion of this Debenture as
required pursuant to the terms hereof.
vi. Reservation
of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole 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 Holder (and
the other holders of the Debentures), not less than such aggregate
number of shares of the Common Stock as shall (subject to the terms
and conditions set forth in the Purchase Agreement be issuable
(taking into account the adjustments and restrictions of Section 5)
upon the conversion of the then outstanding principal amount of
this Debenture. The Company covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and nonassessable and, if
the Registration Statement is then effective under the Securities
Act, shall be registered for public resale in accordance with such
Registration Statement (subject to such Holder’s compliance
with its obligations under the Registration Rights
Agreement).
vii.
Fractional Shares.
No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of this Debenture. As to any fraction
of a share which the Holder would otherwise be entitled to purchase
upon such conversion, the Company shall at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round
up to the next whole share.
viii.
Transfer Taxes and
Expenses. The issuance of Conversion Shares on conversion of
this Debenture shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such Conversion Shares,
provided that the Company 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 Conversion Shares upon conversion in a
name other than that of the Holder of this Debenture so converted
and the Company shall not be required to issue or deliver such
Conversion Shares unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the
Company that such tax has been paid. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice
of Conversion and all fees to the Depository Trust Company (or
another established clearing corporation performing similar
functions) required for same-day electronic delivery of the
Conversion Shares.
8
d) ▇▇▇▇▇▇’s
Conversion Limitations. The Company shall not effect any
conversion of this Debenture, and a Holder shall not have the right
to convert any portion of this Debenture, to the extent that after
giving effect to the conversion set forth on the applicable Notice
of Conversion, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with
the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution
Parties”)) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the
number of shares of Common Stock issuable upon conversion of this
Debenture with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted
principal amount of this Debenture beneficially owned by the Holder
or any of its Affiliates or
Attribution Parties and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company subject to a limitation on conversion or exercise analogous
to the limitation contained herein (including, without limitation,
any other Debentures or the Warrants) beneficially owned by the
Holder or any of its Affiliates or
Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 4(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
To the extent that the limitation contained in this Section 4(d)
applies, the determination of whether this Debenture is convertible
(in relation to other securities owned by the Holder together with
any Affiliates and Attribution
Parties) and of which principal amount of this Debenture is
convertible shall be in the sole discretion of the Holder, and the
submission of a Notice of Conversion shall be deemed to be the
Holder’s determination of whether this Debenture may be
converted (in relation to other securities owned by the Holder
together with any Affiliates or
Attribution Parties) and which principal amount of this
Debenture is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction,
the Holder will be deemed to represent to the Company each time it
delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated
thereunder. For purposes of
this Section 4(d), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the
following: (i) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (ii) a more
recent public announcement by the Company, or (iii) a more recent
written notice by the Company or the Company’s transfer agent
setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including this Debenture, by the Holder
or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
conversion of this Debenture held by the Holder. The Holder, upon
notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 4(d), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon
conversion of this Debenture held by the Holder and the Beneficial
Ownership Limitation provisions of this Section 4(d) shall continue
to apply. Any increase in the Beneficial Ownership Limitation will
not be effective until the 61st day after such
notice is delivered to the Company. The Beneficial Ownership
Limitation provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 4(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation contained herein or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Debenture.
e) Forced
Conversion. The Company may, at
the Maturity Date (as accelerated to the Acceleration Date, or as
extended to July 11, 2018 in accordance with the terms herein and
in the Purchase Agreement), require that the Holder convert any and
all outstanding principal and interest at the Conversion Price
provided (i) the Equity Conditions have been met, (ii) that the
prior 60 day VWAP exceeds 150% of the Conversion Price, (iii) the
median daily volume for the preceding 30 days exceeds 50,000 shares
per day, (iv) the Conversion Shares may be sold pursuant to Rule
144 and (v) the Company is not then in breach of under any
Transaction Document
9
Section
5.
Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Company, at any time
while this Debenture is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares
of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or
payment of interest on, the Debentures), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split)
outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the
Common Stock, any shares of capital stock of the Company, then the
Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Company) outstanding immediately before
such event, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event,
and the number of shares issuable upon conversion of this Debenture
shall be proportionally adjusted such that the aggregate Conversion
Price of this Debenture shall remain unchanged. Any adjustment made
pursuant to this Section 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 re-classification.
b) Subsequent
Rights Offerings. In addition
to any adjustments pursuant to Section 5(a) above, if at any time
the Company grants, issues or sells any Common Stock Equivalents or
rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common
Stock (the “Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Debenture
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Debenture is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Debenture, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Debenture (without regard to any
limitations on conversion hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
10
d) Fundamental
Transaction. If, at any time while this Debenture is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Debenture, the Holder shall have the right to receive, for
each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 4(d) and
Section 4(e) on the conversion of this Debenture), the number of
shares of Common Stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Debenture is
convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 4(d) and Section 4(e)
on the conversion of this Debenture). For purposes of any such
conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Debenture following such Fundamental Transaction. The Company shall
cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Debenture and the other Transaction Documents (as defined in the
Purchase Agreement) in accordance with the provisions of this
Section 5(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Debenture, deliver
to the Holder in exchange for this Debenture a security of the
Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Debenture which is
convertible for a corresponding number of shares of capital stock
of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon conversion of
this Debenture (without regard to any limitations on the conversion
of this Debenture) prior to such Fundamental Transaction, and with
a conversion price which applies the conversion price hereunder to
such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being
for the purpose of protecting the economic value of this Debenture
immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Debenture and the
other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the
obligations of the Company under this Debenture and the other
Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein.
e) Calculations.
All calculations under this Section 5 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 5, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding any treasury
shares of the Company) issued and outstanding.
f)
Notice
to the Holder.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, the Company
shall promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
11
ii. Notice
to Allow Conversion by ▇▇▇▇▇▇. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E)
the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall
cause to be filed at each office or agency maintained for the
purpose of conversion of this Debenture, and shall cause to be
delivered to the Holder at its last address as it shall appear upon
the Debenture Register, at least twenty (20) calendar days prior to
the applicable record or effective date hereinafter specified, a
notice stating (x) 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, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange 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 or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
convert this Debenture during the 20-day period commencing on the
date of such notice through the effective date of the event
triggering such notice except as may otherwise be expressly set
forth herein.
Section
6. Acceleration and Extension of Maturity
Date. The Maturity Date shall be (i) automatically
accelerated to the Acceleration Date, and (ii) extended, at the
election of the Company, to July 11, 2018, so long as (A) the Tax
Credit has been received in full, (B) the Company is not in default
under the terms of any of the Transaction Documents after receipt
of notice from the Purchaser of the same (subject to any cure
periods), and (C) subject to and in accordance with the terms
herein and in the Debenture.
Section
7.
Negative Covenants.
So long as any principal amount of the Debenture is then
outstanding, unless the Holder shall have otherwise given prior
written consent, the Company shall not, and shall not permit any of
the Subsidiaries to, directly or indirectly:
a)
other than Permitted Indebtedness,
enter into, create, incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money of any kind, including, but not
limited to, a guarantee, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom;
c) amend
its charter documents, including, without limitation, its
certificate of incorporation and bylaws, in any manner that
adversely affects any rights of the Holder;
12
d)
repay, repurchase or offer to repay, repurchase or otherwise
acquire more than a de minimis number of shares of its
Common Stock or Common Stock Equivalents other than as to (i) the
Debenture, the Conversion Shares or Warrant Shares as permitted or
required under the Transaction Documents and (ii) repurchases of
Common Stock or Common Stock Equivalents of departing officers and
directors of the Company, provided that such repurchases shall not
exceed an aggregate of $50,000 for all officers and directors
during the term of this Debenture;
e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any
indebtedness, other than the Debenture if on a pro-rata basis and
other than regularly scheduled principal and interest payments as
such terms are in effect as of the Original Issue Date, provided
that such payments shall not be permitted if, at such time, or
after giving effect to such payment, any Event of Default exists or
occur as a result thereof;
f) pay
cash dividends or distributions on any equity securities of the
Company;
g)
enter into any transaction with any Affiliate of the Company which
would be required to be disclosed in any public filing with the
Commission, unless such transaction is made on an
arm’s-length basis and expressly approved by a majority of
the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or
h) enter
into any agreement with respect to any of the foregoing.
Section
8. Events
of Default.
a) “Event
of Default” means, wherever used herein, any of the
following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative
or governmental body):
i.
any default in the payment of (A) the
principal amount of any Debenture or (B) liquidated damages and
other amounts owing to a Holder on any Debenture, as and when the
same shall become due and payable (whether on a Conversion Date or
the Maturity Date or by acceleration or otherwise) which default,
solely in the case of a default under clause (B) above, is not
cured in 5 Trading Days;
ii. the
Company shall breach, or fail to observe or perform, any covenant
or agreement (including, without limitation, negative covenants and
Section 2.4 of the Purchase Agreement) contained in the Debenture
(other than a breach by the Company of its obligations to deliver
shares of Common Stock to the Holder upon conversion, which breach
is addressed in clause (viii) below) or in any Transaction
Document, which breach or failure is not cured, but only if a cure
period is expressly provided for such breach or failure) within the
earlier to occur of (A) 5 Trading Days
after notice of such failure sent by the Holder or by any other
Holder to the Company and (B) 10 Trading Days after the Company has
become or should have become aware of such
failure;
iii. any
representation or warranty made in this Debenture, any other
Transaction Documents, any written statement pursuant hereto or
thereto or any other report, financial statement or certificate
made or delivered to the Holder or any other Holder shall be untrue
or incorrect in any material respect as of the date when made or
deemed made;
13
iv. the
Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;
v. the
Company or any Subsidiary shall default on any of its obligations
under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which
there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long
term leasing or factoring arrangement that (a) involves an
obligation greater than $100,000, whether such indebtedness now
exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, which
default is not cured within five (5) Trading Days;
vi. the
Common Stock shall not be eligible for listing or quotation for
trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five (5) Trading
Days;
vii. the
Company shall be a party to any Change of Control Transaction or
Fundamental Transaction or shall agree to sell or dispose of all or
in excess of 33% of its assets in one transaction or a series of
related transactions (whether or not such sale would constitute a
Change of Control Transaction);
viii. the
Company shall fail for any reason to deliver Conversion Shares to a
Holder prior to the fifth (5th) Trading Day after a Conversion Date
pursuant to Section 4(c) or the Company shall provide at any time
notice to the Holder, including by way of public announcement, of
the Company’s intention to not honor requests for conversions
of the Debenture in accordance with the terms hereof;
ix.
any Person shall breach any agreement delivered to the initial
Holder pursuant to Section 2.2 of the Purchase
Agreement;
x. the
electronic transfer by the Company of shares of Common Stock
through the Depository Trust Company or another established
clearing corporation is no longer available or is subject to a
“chill” and such default is not cured within five (5)
Trading Days;
xi. any
monetary judgment, writ or similar non-appealable final process
shall be entered or filed against the Company, any subsidiary or
any of their respective property or other assets for more than
$50,000, and such judgment, writ or similar final process shall
remain unvacated, unbonded or unstayed for a period of 45 calendar
days;
xii. a
false or inaccurate certification (including a false or inaccurate
deemed certification) by the Company that the Equity Conditions are
satisfied or that there has been no Equity Conditions Failure or as
to whether any Event of Default has occurred;
xiii. any
event that impairs or delays the payment of the Tax Credit to the
Company or ABS; or
14
xiv. any
event which causes the Company’s current Chief Executive
Officer to no longer be involved with the day to day operations of
the Company.
b) Remedies
Upon Event of Default. If any Event of Default occurs, the
outstanding principal amount of this Debenture, liquidated damages
and other amounts owing in respect thereof through the date of
acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Mandatory Default
Amount. Commencing five (5) days after the occurrence of any Event
of Default that results in the eventual acceleration of this
Debenture, the (i) interest rate on this Debenture shall accrue at
an interest rate equal to the lesser of 18% per annum or the
maximum rate permitted under applicable law and (ii) the Conversion
Price shall thereafter be the lesser of (i) the Conversion Price
and (ii) the closing price of the Common Stock on the Trading Day
immediately preceding the Event of Default. Upon the payment in
full of the Mandatory Default Amount, the Holder shall promptly
surrender this Debenture to or as directed by the Company. In
connection with such acceleration described herein, the Holder need
not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any
and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be
rescinded and annulled by ▇▇▇▇▇▇ at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the
Debenture until such time, if any, as the Holder receives full
payment pursuant to this Section 8(b). No such rescission or
annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.
Section 9.
Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, by email attachment, or sent by a
nationally recognized overnight courier service, addressed to the
Company, at the address set forth above, or such other facsimile
number, email address, or address as the Company may specify for
such purposes by notice to the Holder delivered in accordance with
this Section 9(a). Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, by email
attachment, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number, email
address or address of the Holder appearing on the books of the
Company, or if no such facsimile number or email attachment or
address appears on the books of the Company, at the principal place
of business of such Holder, as set forth in the Purchase Agreement.
Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment to the email
address set forth on the signature pages attached hereto prior to
5:30 p.m. (New York City time) on any Trading Day, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email attachment to the email address set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the
second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (iv) upon actual
receipt by the party to whom such notice is required to be
given.
15
b) Absolute
Obligation. Except as expressly provided herein, no
provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the
principal of, liquidated damages and accrued interest, as
applicable, on this Debenture at the time, place, and rate, and in
the coin or currency, herein prescribed. This Debenture is a direct
debt obligation of the Company. This Debenture ranks pari passu with all other Debentures
now or hereafter issued under the terms set forth
herein.
c) Lost
or Mutilated Debenture. If this Debenture shall be
mutilated, lost, stolen or destroyed, the Company shall execute and
deliver, in exchange and substitution for and upon cancellation of
a mutilated Debenture, or in lieu of or in substitution for a lost,
stolen or destroyed Debenture, a new Debenture for the principal
amount of this Debenture so mutilated, lost, stolen or destroyed,
but only upon receipt of evidence of such loss, theft or
destruction of such Debenture, and of the ownership hereof,
reasonably satisfactory to the Company.
d) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction
Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the
City of Illinois, County of Cook (the “Illinois Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Illinois Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such Illinois Courts, or such Illinois Courts are
improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Debenture or the transactions
contemplated hereby. If any party shall commence an action or
proceeding to enforce any provisions of this Debenture, then the
prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys fees and other costs and
expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.
e)
Waiver. Any waiver
by the Company or the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other
provision of this Debenture. The failure of the Company or the
Holder to insist upon strict adherence to any term of this
Debenture on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Debenture on any
other occasion. Any waiver by the Company or the Holder must be in
writing.
16
f)
Severability. If any provision
of this Debenture is invalid, illegal or unenforceable, the balance
of this Debenture shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of
the principal of this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Debenture, and the Company
(to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will
not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Holder, but will
suffer and permit the execution of every such as though no such law
has been enacted.
g)
Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Debenture shall be
cumulative and in addition to all other remedies available under
this Debenture and any of the other Transaction Documents at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the
Holder’s right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this
Debenture. The Company covenants to the Holder that there shall be
no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein
with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Debenture.
h)
Next Business Day.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
i) Headings.
The headings contained herein are for convenience only, do not
constitute a part of this Debenture and shall not be deemed to
limit or affect any of the provisions hereof.
j)
Secured Obligation.
The obligations of the Company under this Debenture are secured by
the collateral set forth in the Security Agreement and guaranteed
by ABS pursuant to the Subsidiary Guarantee.
Section
10. Disclosure.
Upon receipt or delivery by the Company of any notice in accordance
with the terms of this Debenture, unless the Company has in good
faith determined that the matters relating to such notice do not
constitute material, nonpublic information relating to the Company
or its Subsidiaries, the Company shall within two (2) Business Days
after such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains
material, non-public information relating to the Company or its
Subsidiaries, the Company so shall indicate to the Holder
contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that
all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its
Subsidiaries.
*********************
(Signature Pages Follow)
17
IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above
indicated.
|
|
|
|
|
By:__________________________________________
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Chief Executive Officer
Email
and Facsimile No. for delivery of Notices:
▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
|
|
|
|
|
|
|