EXHIBIT 10.1
 

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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  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.

THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR THE PURPOSES OF SECTION
1271 et seq. OF THE INTERNAL REVENUE CODE.

NXT NUTRITIONALS HOLDINGS, INC.

Convertible Debenture
No. ____
     
$_____________ 2009
Issue Date:  [________

 
This Convertible Debenture (the “Debenture”) is duly authorized and issued by
NXT Nutritionals Holdings, Inc., a Delaware corporation (the “Company”).

FOR VALUE RECEIVED, the Company, promises to pay to the order of
[______________], and or its registered assigns (the “Payee” or the “Holder”),
the principal sum of $[_____________] (the “Principal Amount”), which is
inclusive of all accrued interest through the Maturity Date at a rate of ten
percent (10%) per annum, until the earlier of (i)  [____________], 2012 (the
“Maturity Date”), and (ii) the date the Holder elects to exercise its right to
convert this Debenture, in accordance with the provisions hereof. This Debenture
is payable in lawful money of the United States of America and in same day
funds, without abatement, reduction, deduction, counterclaim, recoupment,
defense or setoff, to Holder at such account as Holder may designate. As
additional consideration, upon execution of this Debenture, the Company shall
issue to the Holder (i) five year warrants to purchase 100% of the shares of the
Company’s common stock underlying this Debenture at an exercise price of $0.60
per share, and (ii) five year warrants to purchase 100% of the shares of the
Company’s common stock underlying this Debenture at an exercise price of $0.40
per share (the “Warrants”) as set forth in the Company’s Confidential Term Sheet
dated February 17, 2009 (the “Offering”).

This Debenture is subject to the following additional provisions:
 
 
 
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1.      Voluntary Conversion. At any time from the original Issue Date until any
and all amounts owed to Holder pursuant to this Debenture have been paid in
full, this Debenture shall be convertible into shares of Common Stock at the
option of the Holder, in whole or in part (subject to any limitations on
conversion).  The Holder shall effect conversions by delivering to the Company
the form of Notice of Conversion attached hereto as Exhibit A (a “Notice of
Conversion”), specifying therein the Principal Amount of this Debenture to be
converted and the date on which such conversion is to be effected (a “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is provided
hereunder. To effect conversions hereunder, the 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. Conversions hereunder shall have
the effect of lowering the outstanding Principal Amount of this Debenture in an
amount equal to the applicable conversion amount. The Company shall maintain
records showing the Principal Amount converted and the date of such conversions.
The Holder and any assignee, by acceptance of this Debenture, acknowledge and
agree that, by reason of the provisions of this paragraph, following conversion
of a portion of this Debenture, the unpaid and unconverted Principal Amount of
this Debenture may be less than the amount stated on the face hereof.

A. Conversion Price. On any Conversion Date, the Principal Amount is convertible
into shares of the Company’s common stock (the “Common Shares”) at a conversion
price of $0.40 per share.

B. Mechanism of Conversion.

i. Conversion Shares Issuable Upon Conversion of Principal Amount. The number of
Common Shares issuable upon a conversion hereunder shall be determined by the
quotient obtained by dividing the outstanding principal amount of this Debenture
to be converted by the Conversion Price.

ii. Delivery of Certificate Upon Conversion. In the event of any conversion of
this Debenture in accordance with and subject to the terms and conditions
hereof, certificates for the Common Shares shall be dated the Conversion Date
and delivered to the Holder hereof within a reasonable time, not exceeding five
(5) Business Days after any Conversion Date, or, at the request of the Holder
(provided that a registration statement under the Securities Act providing for
the resale of the Common Shares is then in effect or that the Common Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) within a reasonable time, not exceeding five
(5) Business Days after such conversion, and the Holder hereof shall be deemed
for all purpose to be the holder of the Common Shares so purchased as of the
date of such conversion. The Company will deliver or cause to be delivered to
the Holder a certificate or certificates representing the number of Common
Shares being acquired upon the conversion of this Debenture. Notwithstanding the
foregoing to the contrary, the Company or its transfer agent shall only be
obligated to issue and deliver the shares to the DTC on a holder’s behalf via
DWAC if such exercise is in connection with a sale or other exemption from
registration by which the shares may be issued without a restrictive legend and
the Holder and its transfer agent are participating in DTC through the DWAC
system. The Holder shall deliver this original Debenture, or an indemnification
undertaking with respect to such Debenture in the case of its loss, theft or
destruction, at such time that this Debenture is fully exercised.
 
 
 
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iii. Failure to Deliver Certificate. If in the case of any Notice of Conversion
such certificate or certificates are not delivered to or as directed by the
applicable Holder by the tenth Business Day after a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of this Debenture tendered for conversion.

iv. 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 solely for the purpose of issuance upon any
conversion of this Debenture 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 100% of the Common
Shares as shall be issuable upon the conversion of the Principal Amount. The
Company covenants that all shares of common stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued, and fully paid,
nonassessible.

v. Fractional Shares. Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of the
common stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the closing bid price of the Company’s
common stock as quoted by Bloomberg on the day prior to the Company’s receipt of
the Conversion Notice. If the Company elects not, or is unable, to make such
cash payment, the Holder shall be entitled to receive, in lieu of the financial
fraction of a share, one whole share of common stock.

vi. Transfer Taxes. The issuance of certificates for Common Shares upon
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 certificate, 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 certificate 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 certificates 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.

C.           Injunction Posting of Bond.  In the event Holder shall elect to
convert a Debenture or part thereof, the Company may not refuse conversion based
on any claim that Holder or anyone associated or affiliated with Holder has been
engaged in any violation of law, or for any other reason, unless, a final
non-appealable injunction from a court made on notice to Holder, restraining and
or enjoining conversion of all or part of such Debenture shall have been sought
and obtained by the Company or the Company has posted a surety bond for the
benefit of Holder in the amount of 120% of the outstanding principal and accrued
but unpaid interest of the Debenture, or aggregate purchase price of the Shares
which are sought to be subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to Holder to the extent the judgment or
decision is in Holder’s favor.

2.           Adjustment of Conversion Price.  The Conversion Price shall be
subject to adjustment from time to time as set forth in this Section 2. The
Company shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 2 in accordance with the notice
provisions set forth in Section 7D.
 
 
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A.           Issuance of Additional Shares of Common Stock.  In the event the
Company shall at any time following the Issuance Date issue any additional
shares of Common Stock or securities convertible into shares of Common Stock
(except for the issuance of Common Stock upon exercise of the Warrants or
employee stock options) at a price per share less than the Conversion Price then
in effect or without consideration, then the Conversion Price upon each such
issuance shall be adjusted to the price equal to the consideration per share
paid for such additional shares of Common Stock.

B.           Stock Dividends, Subdivisions and Combinations.  If at any time the
Company shall:

                                i.           make or issue or set a record date
for the holders of the Common Stock for the purpose of entitling them to receive
a dividend payable in, or other distribution of, shares of Common Stock,

                                ii.           subdivide its outstanding shares
of Common Stock into a larger number of shares of Common Stock, or

                                iii           combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Debenture is
convertible immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Debenture is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Conversion Price then in
effect shall be adjusted to equal (A) the Conversion Price then in effect
multiplied by the number of shares of Common Stock for which this Debenture is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Debenture is exercisable immediately after
such adjustment.

                3.           Prepayment.  This Debenture may be prepaid, in
whole or in part, without penalty and without the prior written consent of the
Holder, provided that the Registration Statement as set forth in Section 6
herein has been declared effective by the Securities and Exchange Commission and
provide that the Holder has been given thirty (30) days prior written notice of
such prepayment.

4.           Holder’s Representations and Warranties.  The Holder represents and
warrants that:

A.           Restrictions on Transfer or Resale. The Holder understands that (i)
the Debenture and any Common Shares upon conversion of the Debenture have not
been registered under the Securities Act of 1933 or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A) the
Debenture or the underlying Common Shares are subsequently registered
thereunder, or (B) Holder shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration; and (ii) Holder is acquiring the
Debenture and the underlying Common Shares for its own account and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act, and
(iii) Holder does not presently have any agreement or understanding, directly or
indirectly, with any party to distribute any of the securities.
 
 
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B.           Accredited Investor Status.  Holder is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D.

C.           Reliance on Exemptions.  The Holder understands that the Debenture
and any Common Shares upon voluntary conversion are being offered and sold to it
in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and Holder’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of Holder to acquire the securities.
 
D.           Information.  Holder and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the securities that have
been requested by Holder.  Holder and its advisors, if any, have been afforded
the opportunity to ask questions of the Company.  Neither such inquiries nor any
other due diligence investigations conducted by Holder or its advisors, if any,
or its representatives shall modify, amend or affect Holder's right to rely on
the Company's representations and warranties contained herein. Holder
understands that its investment in the Debenture and any Common Shares upon
voluntary conversion involve a high degree of risk and is able to afford a
complete loss of such investment. Holder has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the securities.
 
E.           No Governmental Review.  Holder understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the securities or the
fairness or suitability of the investment in the securities nor have such
authorities passed upon or endorsed the merits of the offering of the
securities.
 
F.           Legend. This Debenture and all certificates representing Common
Shares upon voluntary conversion shall be stamped or imprinted with a legend in
substantially the following form:
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144 A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
 
 
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5.           Events of Default

A.           The term “Event of Default” shall mean any of the events set forth
in this Section 4A (the term “Company” for this purpose shall include all
subsidiaries of the Company):

  i.           Non-Payment of Obligations.  The Company shall default in the
payment of the Principal Amount of this Debenture as and when the same shall
become due and payable, whether by acceleration or otherwise.

 ii.           Non-Performance of Covenants.  The Company shall default in the
due observance or performance of any covenant set forth herein, which default
shall continue uncured for fifteen (15) days after notice thereof.

 iii.           Bankruptcy, Insolvency, etc.  The Company shall:

(a)           admit in writing its inability to pay its debts as they become
due;

(b)           apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Company or any of its
property, or make a general assignment for the benefit of creditors;

(c)           in the absence of such application, consent or acquiesce in,
permit or suffer to exist the appointment of a trustee, receiver, sequestrator
or other custodian for the Company or for any part of its property and that is
not dismissed within sixty days;

(d)           permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Company, and, if such case or proceeding is not
commenced by the Company or converted to a voluntary case, such case or
proceeding is consented to or acquiesced in by the Company or results in the
entry of an order for relief; or

(e)           take any corporate or other action authorizing any of the
foregoing.

                iv.           Cross-Default.  The Company shall default in the
payment when due of any amount payable under any other obligation of the Company
for money borrowed in excess of $250,000.

B.           Action if Bankruptcy.  If any Event of Default described in clauses
(iii)(a) through (d) of Section 5A shall occur, the Principal Amount of this
Debenture and all other obligations hereunder shall automatically be and become
immediately due and payable, without notice or demand.
 
 
 
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C.           Action if Other Event of Default.  If any Event of Default (other
than any Event of Default described in clauses (iii)(a) through (d) of Section
5A shall occur for any reason, whether voluntary or involuntary, and be
continuing, for 15 days after notice by Holder, the Holder may, upon notice to
the Company, declare all or any portion of the outstanding principal amount of
the Debenture, to be due and payable and any or all other obligations hereunder
to be due and payable, whereupon the full unpaid principal amount hereof, and
any and all other such obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand,
or presentment.

D.           Specific Enforcement, Consent to Jurisdiction.  The Company and
Holder acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity.  The Company
hereby irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, that it is not personally subject to the jurisdiction in New York of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper.  Nothing
in this Section shall affect or limit any right to serve process in any other
manner permitted by law.

6.           Registration Rights.

A.           The Company shall register the Common Shares underlying the
Debenture and Warrants (the “Registrable Securities”) on a Form S-1 (or any
other applicable form exclusively for this offering) (the “Registration
Statement”) to be filed with the Securities and Exchange Commission (the “SEC”)
within sixty (60) days following the closing of the Subscription Period (the
“Required Filing Date”), as defined in the Company’s Confidential Term Sheet
dated February 17, 2009 (the “Term Sheet”) and have it declared effective within
120 days (150 days in the event of a full review by the SEC) after the closing
of the Subscription Period (the “Required Effective Date”). The Company shall
use its commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act until the date when all
Registrable Securities covered by the Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144 (the “Effectiveness
Period”). The Company shall prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
and the prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities.
 
B.           If the Registration Statement is not filed by the Required Filing
Date or declared effective by the Required Effective Date or kept effective
during the Effectiveness Period, the Company shall pay to each Investor as
liquidated damages a cash payment equal to 1.0% of the aggregate amount invested
by such Holder in the Offering for every 30-day period, or portion thereof until
the Registration Statement has been filed or declared effective.  The total cash
payments for not meeting the Required Filing Date and/or Required Effective Date
shall not exceed 9% of the purchase price of the Offering.
 
 
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C.           Cutback.  In connection with filing the Registration Statement, if
the Commission limits the amount of Registrable Securities to be registered for
resale pursuant to Rule 415 under the Securities Act, then the Company shall be
entitled to exclude such disallowed Registrable Securities on a pro rata basis
among the Holders thereof (the “Cutback Shares”), with a first priority given to
the shares of Common Stock underlying the Debentures.  The Company shall
prepare, and, as soon as practicable but in no event later than the six months
from the date the Company’s Registration Statement was declared effective, file
with the SEC an additional Registration Statement (“Additional Registration
Statement”) on Form S-1 covering the resale of all of the disallowed Registrable
Securities not previously registered on an Additional Registration Statement
hereunder.  In the event that Form S-1 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration on
another appropriate form.  The Company shall use its best efforts to have each
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the ninety (90) days from the filing
date of the Additional Registration Statement.  The Company shall not be subject
to liquidated damages as set forth in Section 6B with respect to the Cutback
Shares or in connection with the filing and effectiveness of any of the
Additional Registration Statement registering the disallowed Registrable
Securities.
 
7.           Miscellaneous.

A.           Parties in Interest.  All covenants, agreements and undertakings in
this Debenture binding upon the Company or the Holder shall bind and inure to
the benefit of the successors and permitted assigns of the Company and the
Holder, respectively, whether so expressed or not.

B.           Governing Law.   This Debenture shall be governed by the laws of
the State of New York as applied to contracts entered into and to be performed
entirely within the State of New York.

C.           Waiver of Jury Trial.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS DEBENTURE OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE PAYEE OR THE COMPANY.  THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE'S PURCHASING THIS DEBENTURE.

                                D.           Notices.

   (i)           Any notice pursuant to this Debenture to be given or made by
the Holder to or upon the Company shall be sufficiently given or made if sent by
certified or registered mail, postage prepaid, addressed (until another address
is sent by the Company to the Holder) as follows:
 
 
 
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To the Company:
NXT Nutritionals Holdings, Inc.
 
Attn:  Francis McCarthy, President
 
56 Jackson Street
 
Holyoke, MA 01040
   
With a copy to:
Anslow & Jaclin, LLP
 
Attn:  Kristina Trauger, Esq.
 
195 Route 9 South, Suite 204
 
Manalapan, NJ 07726
   
To the Holder:
   
 [Insert Address]

   (ii)           Any notice pursuant to this Debenture to be given or made by
the Company to or upon the Holder shall be sufficiently given or made if sent by
certified or registered mail, postage prepaid, addressed (until another address
is sent by the Holder to the Company) to the address of the Holder set forth
above.

E.           No Waiver.  No delay in exercising any right hereunder shall be
deemed a waiver thereof, and no waiver shall be deemed to have any application
to any future default or exercise of rights hereunder.

F.           Modification and Severability.  If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Debenture, but this Debenture shall be construed as if such
unenforceable provision had never been contained herein.
 
G.           Holder not deemed a Stockholder. Except as otherwise specifically
provided herein, the Holder, solely in such Person's capacity as a holder of
this Debenture, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Debenture be construed to confer upon the Holder, solely in
such Person's capacity as the Holder of this Debenture, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the conversion shares which such Person is then
entitled to receive upon the due conversion of this Debenture. In addition,
nothing contained in this Debenture shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon conversion of this
Debenture or otherwise) or as a shareholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 
 
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IN WITNESS WHEREOF, this Debenture has been executed and delivered on the date
specified above by the duly authorized representative of the Company.

                                                                                  NXT
Nutritionals Holdings, Inc.

By:  __________________________
                                                                                     
 Name: Francis McCarthy
       Title: Chief Executive Officer

       Holder

By:  __________________________

 
 
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Exhibit A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the Convertible
Debenture of NXT Nutritionals Holdings, Inc., a Delaware corporation (the
“Company”) due on [________], 2012 if not previously repaid by the Company, into
shares of common stock (the “Common Shares”), of the Company according to the
conditions hereof, as of the date written below.  If the Common Shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
Common Shares.  

Conversion calculations:

Date to Effect
Conversion:_________________________________________________________

Principal Amount of Debenture
to be Converted:________________________________________

Number of Common Shares to be issued:
______________________________________________

Signature:   _________________________________________

 
Name:   ____________________________________________

Address:  __________________________________________

  __________________________________________
 
 
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