Page 40 of 67 SEC Filing
(c) the delisting of the Company’s Common
Stock from Nasdaq’s markets.
A conversion of this Debenture under this
Section 5(ii) into shares of Common Stock shall be effected at the Conversion Price. A conversion of this Debenture under
this Section 5(ii) shall convert the outstanding principal and interest accrued and unpaid as of the Optional Conversion
Date together with any interest that would have accrued after the Optional Conversion Date up to and including the Maturity Date.
To effect a conversion under this Section 5(ii), the Payee shall provide written notice of such conversion to the Company,
along with such other documents required under Section 5(iv) hereof, on or prior to the Optional Conversion Date. To assist
Payee with the exercise of its rights hereunder, the Company shall provide notice to the Payee upon such time that the Company’s
cash balance and short-term investments, net of debt or borrowed funds that are payable within one year, is less than Three Million
One Hundred Thousand Dollars ($3,000,000), calculated at the month’s end.
(iii)Optional Conversion
by the Payee on Maturity Date. On the Maturity Date (but not before), the outstanding principal amount of this Debenture outstanding
from time to time and all accrued and unpaid interest thereon may be converted, in whole, at the option of the Payee into shares
of Common Stock so long as the Subsequent Closing contemplated by the Purchase Agreement has ocurred. A conversion of this Debenture
under this Section 5(iii) into shares of Common Stock shall be effected at the Conversion Price. To effect a conversion
under this Section 5(iii), the Payee shall provide written notice of such conversion to the Company, along with such other
documents required under Section 5(iv) hereof, on or prior to the Maturity Date.
(iv)Mechanics of Conversion. Upon a conversion of the outstanding principal balance of this Debenture and accrued and
unpaid interest thereon under Section 5(ii) or Section 5(ii) hereof, Payee shall surrender this Debenture, duly endorsed,
together with the Payee’s duly executed form of subscription attached hereto as Exhibit A, at the principal offices
of the Company. At its expense, the Company will, as soon as practicable thereafter, issue and deliver to Payee a legended certificate
(which such certificate shall include the legends required by Section 5.7 and Section 5.12(b) of the Purchase Agreement)
for the number of shares of Common Stock to which Payee is entitled upon such conversion, together with any cash or a check payable
to Payee for any amounts payable as described in Section 5(v) below. Upon conversion of this Debenture into Common Stock
under Section 5(i), Section 5(ii) or Section 5(iii), the Company will be forever released from all its obligations
and liabilities under this Debenture, including without limitation the obligation to pay the principal amount and any accrued interest.
(v)
Fractional Shares. No fractional shares of capital stock shall be issued upon conversion of this Debenture. In lieu
of any fractional share to which Payee would otherwise be entitled, the Company shall pay to Payee the amount of the outstanding
principal balance and/or accrued interest due that is not so converted, such payment to be in cash or by check.
(vi)No Rights as Stockholder. Payee understands that Payee shall not have any of the rights of a stockholder with respect
to the shares of Common Stock issuable upon conversion of any principal or accrued interest of this Debenture, until such principal
or accrued interest is converted into capital stock of the Company as provided herein.
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