EXHIBIT 4.6
US$_____________ Debenture No. __________________
Date: ____________, 200___ Maturity Date: __________, 200___
PAYSTAR CORPORATION
TEN PERCENT (10%) CONVERTIBLE DEBENTURE
______ Nine-Month Debenture
______ Two-Year Debenture
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR
SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER
THE ACT OR THE LAWS OF THE APPLICABLE STATE OR A "NO ACTION" OR
INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND ITS COUNSEL,
TO THE EFFECT THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER
THE ACT AND SUCH STATE STATUTES.
THIS DEBENTURE (this "Debenture") is one of the duly authorized issue
of 10% Convertible Debentures of PayStar Corporation, a Nevada corporation
(the "Company"), in an aggregate principal amount of up to US$3,000,000.00
(collectively, the "Debentures"). This Debenture is offered, issued and
sold in part pursuant to and in accordance with the exemption from
securities registration afforded by Regulation D promulgated under the
Securities Act of 1933, as amended.
FOR VALUE RECEIVED, the Company promises to pay to __________________,
or the permitted registered holder hereof (the "Holder"), the principal sum
of US$________________ (_______________________________ United States
Dollars) (the "Initial Principal Amount") or such lesser principal amount
following the conversion or conversions of this Debenture in accordance
with Paragraph 2 (the "Outstanding Principal Amount") on the maturity date
set forth above (the "Maturity Date"), and to pay interest on the
Outstanding Principal Amount from time to time, quarterly in arrears on the
first business day following the first full quarter from the date hereof
and the first business day of each quarter thereafter and upon the Maturity
Date (the "Interest Payment Dates"), at the rate of ten percent (10%) per
annum occurring from the date of issuance.
1
Accrual of interest shall commence on the first day to occur after the
date hereof until repayment in full of the principal sum has been made or
duly provided for. Accrued and unpaid interest shall bear interest at the
same rate until paid. The principal of this Debenture is payable in such
coin or currency of the United States as at the time of payment is legal
tender for payment of public and private debts, at the address last
appearing on the Debenture Register of the Company as designated in writing
by the Holder from time to time.
The Company will pay the principal of this Debenture on the due date,
free of any withholding or deduction of any kind (subject to the provisions
of paragraph 2 below), to the Holder as of the due date and addressed to
the Holder at the address appearing on the Debenture Register.
The forwarding of such check shall constitute a payment of principal
and interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum
represented by such check.
This Debenture is subject to the following additional provisions:
1. Debentures. These Debentures are originally issuable in amounts
of not less than US$25,000.00, unless expressly waived by the Company.
2. Conversion of Debentures. The Holder of this Debenture is
entitled, at its option, at the Maturity Date, to convert all or any lesser
portion of the Initial Principal Amount into Common Stock at a conversion
price (the "Conversion Price") for each share of Common Stock equal to
$0.25 ____ $0.50 ______ per share [CHECK ONE]. In the event of any stock
split, dividend, combination or similar event occurring after a Conversion
Date and prior to the issuance of the respective stock certificates, the
Conversion Price will be subject to appropriate adjustment. Conversion of
this Debenture into Common Stock shall be effectuated by surrendering the
Debenture to be converted to the Company, with the form of Notice of
Conversion attached to the Debenture as Exhibit A, executed by the Holder
of the Debenture evidencing such ▇▇▇▇▇▇'s intention to convert the
Debenture. The Notice of Conversion must be given to the Company as
provided below not less than thirty (30) days prior to the Maturity Date.
Interest accrued or accruing from the date of issuance to the Conversion
Date (but not previously paid) on the amounts so converted shall be paid on
the Maturity Date.
If the Company shall at any time subdivide its outstanding shares of
Common Stock by recapitalization, reclassification or split-up thereof, the
number of shares convertible pursuant to this Debenture immediately prior
to such subdivision shall be proportionately increased in each instance,
and if the Company shall at any time combine the outstanding shares of
Common Stock by recapitalization, reclassification or combination thereof,
the number of shares convertible pursuant to this Debenture immediately
prior to such combination shall be proportionately decreased in each
instance.
Whenever the number of shares convertible pursuant to this Debenture
is required to be adjusted, the Conversion Price shall be adjusted (to the
nearest cent) in each instance by
2
multiplying such Conversion Price immediately prior to such adjustment by
a fraction (x) the numerator of which shall be the number of shares
purchasable upon the conversion of this Debenture immediately prior to
such adjustment, and (y) the denominator of which shall be the number
of shares so convertible immediately thereafter.
No fractional shares or scrip representing fractions of shares of
Common Stock will be issued on conversion, but the number of shares of
Common Stock issuable shall be rounded to the nearest whole share. The
date on which a Notice of Conversion is given shall be deemed to be the
date on which the Holder notifies the Company of its intention to so
convert by delivery, by facsimile transmission or otherwise, of a copy of
the Notice of Conversion. Notice of Conversion may be given by facsimile
to the Company at (▇▇▇) ▇▇▇-▇▇▇▇, attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO, or, if by
physical delivery of the Notice of Conversion to the Company, at the
address for the Company contained in the Subscription Agreement. Upon
conversion of all of the outstanding principal amount of this Debenture,
the Holder shall submit this original Debenture to the Company for
cancellation.
Upon the delivery by the Holder of a Notice of Conversion in the form
attached hereto as Exhibit A, properly completed and duly executed by the
Holder, the Company shall issue and, within five (5) business days after
actual delivery to the Company of the Notice of Conversion (the
"Deadline"), deliver to or upon the order of the Holder one or more
certificates (the "Certificates") representing that number of shares of
Common Stock into which the portion of the Debenture converted is
convertible, as shall be determined in accordance herewith.
The number of shares of Common Stock to be issued upon each conversion
of this Debenture shall be determined by dividing that portion of the
principal amount of the Debenture to be converted at such time by the
Conversion Price in effect on the date the Notice of Conversion is
delivered via facsimile to the Company by the Holder.
3. Prepayment. This Debenture is subject to prepayment, in whole or
in part, at any time upon not less than thirty (30) days notice by
certified or registered mail at the election of the Company. Prepayment
shall be effected by paying the amount equal to the outstanding principal
amount of this Debenture, plus all interest accrued to the date of
prepayment. During the thirty (30) days following the date of any notice
of prepayment, the holder shall have the right to convert this Debenture
into the Common Stock of the Company, on the terms and conditions provided
for in paragraph 2 above.
4. Waiver of Demand and Presentment. The Company hereby expressly
waives demand and presentment for payment, notice of nonpayment, protest,
notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit 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 hereon, regardless of and without
notice, diligence, act or omission as or with respect to the collection of
any amount called for hereunder.
5. Payment of Costs. If one or more of the "Events of Default" as
described in Paragraph 6 shall occur, the Company agrees to pay all costs
and expenses, including reasonable
3
attorney's fees, which may be incurred by the Holder in collecting any
amount due under, or enforcing any terms of, this Debenture.
6. Events of Default. If more than one of the following described
"Events of Default" shall occur:
(a) The Company shall default in the timely payment of principal
or interest; or
(b) Any of the representations or warranties made by the Company
herein, or in any certificate or financial or other document heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture, shall be false or misleading any
material respect at the time made; or
(c) The Company shall fail to perform or observe any other
covenant, provision, condition, agreement or obligation of the Company
under this Debenture 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 as they mature; (3) make an assignment for
the benefit of creditors or commence proceedings for its dissolution; or
(4) apply for or consent to the appointment of a trustee, liquidator or
receiver for it or for a substantial part of its property or business; 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
(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 and shall not be dismissed within
thirty (30) days thereafter; or
(g) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against the Company
and if instituted against the Company, shall not be dismissed, stayed or
bonded within sixty (60) days after such institution or the Company shall
by any action or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default in answering a
petition filed in any such proceeding;
Then, or at any time thereafter, and in each and in 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), the Holder may consider this Debenture immediately due or
payable, without presentment, demand, protest or notice of any kind, all of
which are expressly waived, anything herein or in any Debenture or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately demand without expiration of any period of
4
▇▇▇▇▇, enforce any and all of the Holder's rights and remedies provided
herein or any other rights or remedies afforded by law.
7. Conversion Requirements. Notwithstanding anything to the
contrary contained herein, and in addition to any other requirements
reasonably requested by the Company to comply with state of federal
securities laws, each Notice of Conversion shall contain representations to
the effect that (i) the Holder is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D promulgated by the SEC under the
1933 Act, and (ii) the Conversion Shares are being acquired for the
Holder's own account and not as a nominee for any other party.
8. Transfer Restrictions. The Holder may, subject to compliance
with the provisions of Regulation D under the Securities Act of 1933, as
amended (the 1933 Act"), without notice, transfer, assign, mortgage or
encumber this Debenture, any interest herein or any part hereof in integral
multiples of $10,000 or the entire outstanding balance to an "accredited
investor" as defined in the 1933 Act that will be acquiring the Debenture
or interest herein for its account for the purpose of investment and not
with a view to or for sale in connection with any distribution hereof and,
each assignee, transferee or mortgage (which may include any affiliate of
the Holder) shall have the right to transfer or assign its interest subject
to the same limitations. Each such assignee, transferee and mortgagee
shall have all of the rights of the Holder under this Debenture. The
Company may condition registrations of transfers on the receipt of a
certificate from the assignee, transferee of mortgagee in a form acceptable
to the Company that contains representations and warranties similar to
those of the Holder contained in the Subscription Agreement, and IRS Form
W-9 or an equivalent certification under penalty of perjury in compliance
with the Internal Revenue Code of 1986, as amended from time to time.
9. Covenants of the Company. The Company covenants that until all
amounts due under this Debenture have been paid in full, by conversion or
otherwise, unless the Holder or subsequent Holder waives compliance in
writing, the Company shall:
(a) give prompt written notice to the Holder of any Event of
Default or of any other matter which has resulted in, or could reasonably
be expected to result in a materially adverse change in its financial
condition or operations;
(b) at all times reserve and keep available out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of this Debenture into Common Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion of the outstanding principal balance of this
Debenture into Common Stock.
(c) Upon receipt by the Company of evidence from the Holder
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Debenture,
(i) in the case of loss, theft or destruction, upon
provision of indemnity reasonably satisfactory to it and/or its
transfer agent, or
5
(ii) in the case of mutilation, upon surrender and
cancellation of this Debenture,
then the Company at its expense will execute and deliver to the
Holder a new Debenture, dated the date of the lost, stolen,
destroyed or mutilated Debenture, and evidencing the outstanding
and unpaid principal amount of the lost, stolen, destroyed or
mutilated Debenture.
10. Partial Invalidity. In the 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 adjusted rather
than voided, if possible, so that its 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 impaired thereby.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: _________________, 200___ PayStar Corporation
By________________________________
Its ______________________________
6
EXHIBIT A
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 Ten Percent (10%) Convertible Debenture, No.____________, into shares
of Common Stock of PayStar Corporation (the "Company"), according to the terms
and conditions set forth in the Debenture, as of the date written below. If
securities are to be issued to a person other than the Undersigned, the
Undersigned agrees to pay all applicable transfer taxes with respect thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other
party. The Undersigned represents and warrants that all offers and sales by
the Undersigned of the Conversion Shares shall be made pursuant to either
an effective registration statement or an exemption from registration under
the 1933 Act.
Conversion Date*: ________________________
Holder (Print True Legal Name): _________________________________
______________________________________________
(Signature of Duly Authorized Representative of Holder)
Address of Holder: _____________________________________________
_____________________________________________
_____________________________________________
* This Notice of Conversion (whether by facsimile or otherwise as permitted
in the Debenture) must be received by the Company by the first business day
following the Conversion Date and at least thirty (30) days prior to the
Maturity Date of the Debenture.