Exhibit
4.4


 


FOR
ACCREDITED INVESTORS ONLY


 


MEDICOR
LTD.


FORM OF CONVERTIBLE DEBENTURE
AGREEMENT


 


THIS INVESTMENT AGREEMENT (the
“Agreement”)
is by and between
                                                 
(the “Holder”)
and MEDICOR LTD., a Delaware Corporation (the “Company”).


 


RECITALS:


 


WHEREAS:


 


A.                                    The
Holder agrees to purchase one of the Company’s Convertible Debenture,
convertible, at the Holder’s option on the first anniversary of the date of
original issuance thereof and thereafter at the 18-month, 24-month, 30-month
and 36-month anniversary of the issuance date, into the Company’s common stock,
$.001 par value per share (the “Common Stock”) on the terms set forth
below and in the Convertible Debenture; and


 


B.                                    The
Company and the Holder wish to enter into this Agreement to reflect the terms
of the investment.


 


AGREEMENT


 


NOW, THEREFORE, intending
to be legally bound, the parties hereto agree as follows:


 


1.                                      INVESTMENT.             The
Holder hereby agrees to purchase
                                                      DOLLARS
($                    
USD) in principal amount of Convertible Debentures, convertible into
shares of the Common Stock of the Company (the “Debenture Shares”), at the
Holder’s option on the first anniversary date of original issuance thereof and
thereafter at the 18-month, 24-month, 30-month and 36-month anniversary of the
issuance date (each a “Conversion Date”), at a price per share
equal to the greater of: a) Five Dollars ($5.00) per share; or b) Seventy-Five
Percent (75%) of the daily weighted average trading price per share of the
Company’s Common Stock over a period of Twenty (20) trading days prior to the
Conversion Date (the “Conversion Price”) as noticed to the
Company in writing by the Holder not less than ten (10) business days prior to
the Conversion Date.


 


2.                                      HOLDER’S
OPTIONS AT CONVERSION DATES.          In the sole
discretion of the Holder, not more than twenty (20) business days nor less than
ten (10) business days prior to the first anniversary of the date of original
issuance of the Convertible Debenture or thereafter at the 18-month, 24-month,
30-month and 36-month anniversary of the issuance date, the Holder may elect
to: (a) have the entire outstanding principal amount of the Convertible
Debenture repaid to the Holder, along with any accrued and unpaid interest
thereon; (b) covert the entire outstanding principal amount of the Convertible
Debenture into the Debenture Shares at the Conversion Price; or (c) continue to
hold the Convertible Debenture until the third anniversary of the date of
original issuance thereof (the “Maturity Date”). If the Holder does not
so notify the Company prior to the first anniversary of the issuance date or
thereafter at the 18-month, 24-month, 30-month and 36-month anniversary of the
issuance date, the


 


1

















 


Company will continue to record the Convertible Debenture as
outstanding. In the sole discretion of the Holder, not more than twenty (20)
business days nor less than ten (10) business days prior to the Maturity Date
as defined above, the Holder may elect to: (a) have the entire outstanding
principal amount of the Convertible Debenture repaid to the Holder, along with
any accrued and unpaid interest thereon; or (b) convert the entire outstanding
principal amount of the Convertible Debenture into the Debenture Shares at the
Conversion Price on the Maturity Date. If the Holder does not so notify the
Company prior to the Maturity Date, the Convertible Debenture will
automatically convert into the Debenture Shares at the Conversion Price and,
upon such conversion, any and all obligations of the Company to the Holder in
respect of the Convertible Debenture shall be satisfied.


 


3.                                      INTEREST.                                 The
Company agrees to pay interest to the Holder on the outstanding principal
amount of the Convertible Debenture at a rate of Eight Percent (8%) per annum
for as long as the Convertible Debenture is outstanding. Interest shall be paid
to the Holder by the Company on a quarterly basis, payable within thirty (30)
days from the end of each calendar quarter. If the Holder converts the
Convertible Debenture into the Debenture Shares or elects to have the
outstanding principal amount of the Convertible Debenture repaid to the Holder
as described in Section 2 above, the Company will pay any accrued and
unpaid interest due the Holder and no further interest past the Conversion Date
will be due to the Holder by the Company.


 


4.                                      COMPANY’S
REPRESENTATIONS AND WARRANTIES. The Company hereby makes the following
representations and warranties to the Holder:


 


4.1                               Organization,
Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate powers to own its properties, and to
carry on its business as now owned and operated by it, and is qualified to do
intrastate business, and is in good standing in the State of Delaware and in
all other jurisdictions in which the nature of the Company’s business, or of
its properties, makes such qualification necessary, except jurisdictions where
failure to so qualify would not have a material adverse effect on the business
of the Company.


 


4.2                               Capital
Structure.  The authorized
number of shares of the Company is One Hundred Million (100,000,000) shares of
Common Stock. In addition, the Company has authorized Twenty Million
(20,000,000) shares of Preferred Stock. The Debenture Shares to be issued to
the Holder shall be validly issued, fully paid and non-assessable, and will be
issued pursuant to applicable exemptions from the registration provisions of
all federal and state securities laws.


 


4.3                               Compliance
with Laws.


 


4.3.1                     To
the best of the Company’s knowledge, the Company has complied in all material
respects with, and the Company has not been cited for any violation of,
federal, state or local environmental protection laws and/or regulations,
including specifically, without limitation, all laws and regulations related to
the sale of its products by the Company to state or local or federal government
purchasers or contracts to those governmental agencies, and the Company has not
received notice of any past, present or future events which would reasonably be
expected to give rise to any  liability
for failure to comply with any federal, state, or local laws or regulations now
in force relating to the protection of the environment.


 


2

















 


4.3.2                     To the best of the Company’s
knowledge, the Company is not, and has not received notice from any governmental
agency that it is currently in violation of any other applicable federal, state
or local statute, law or regulation (including, without limitation, any
applicable building, or other law, ordinance, or regulation) affecting its
assets or the operation of its business, except for possible instances of
non-compliance which individually would not be expected to have a material
adverse effect on the business of the Company.


 


4.3.3                     To the best of the Company’s
knowledge, the Company and all of the products which it manufactures, marshals,
sells, licenses, imports or distributes have been at all times and continue to
be in substantial compliance with the Food, Drug and Cosmetic Act and all
regulations promulgated thereunder by the U.S. Food and Drug Administration.


 


4.3.4                     Subject to the truth and accuracy
of the representations of the Holder set forth in Section 6 hereof, the
offer, sale and issuance of the Convertible Debenture and the Debenture Shares
are or will be exempt from the registration requirements of the Securities Act
of 1933, as amended (the “Act”). The Company has complied with all
applicable state “blue sky” or securities laws in connection with the offer,
sale and issuance of this Convertible Debenture as contemplated by this
Agreement.


 


4.4                               Full
and Correct Disclosure. No representation or warranty made by the
Company contained in this Agreement or other information provided, and to be
provided by the Company in any other writing furnished pursuant hereto contains
or will contain an untrue statement of a material fact or fails or will fail to
state a material fact required to be stated herein or therein necessary to make
the statements and facts contained herein or therein, in light of the
circumstances which they were or are made, not false nor misleading.


 


4.5                               Non-Contravention.
The execution and delivery of the Agreement by the Company, and the
consummations of the transactions contemplated hereby, does not conflict with
any material terms or provisions of any contract, agreement or indenture to
which the Company is a party, or by which the Company or any of its properties
is subject, or the Company’s Certificate of Incorporation and By-Laws, each as
amended to date.


 


4.6                               Authority;
Binding Effect.  The Company has
obtained all necessary authorizations and approvals from its Board of Directors
and stockholders, if any, required for the execution and delivery of this
Agreement and the consummations of the transactions contemplated hereby.  This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.


 


5.                                      COVENANTS
OF THE COMPANY.  The Company
hereby makes the following covenants, intending to be bound hereby.


 


5.1                               The Company agrees to
make and keep public information regarding the Company available as those terms
are understood and defined in Rule 144 promulgated under the Act (“Rule 144”),
at all times from and after ninety (90) days following the date of the Company’s
initial


 


3

















 


public offering or the Company’s Common Stock becoming publicly traded,
and to file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the Securities Exchange Act of 1934
(the “1934
Act”), at any time after it has become subject to such reporting
requirements.


 


5.2                               The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, for the purpose of complying with the terms of Section 1 of
this Agreement, such number of its duly authorized shares of Common Stock as
shall be sufficient to issue the Debenture Shares to the Holder pursuant to,
and in accordance with, the terms of Section 1 hereof.  If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient for the Company to
issue additional shares of Common Stock to the Holder pursuant to, and in
accordance with, the terms of Section 1 hereof, the Company will forthwith
take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes.


 


6.                                      HOLDER’S
REPRESENTATIONS, WARRANTS AND COVENANTS.  The Holder hereby makes the following representations, warrants
and covenants to the Company:


 


6.1                               The
Holder represents and warrants that the Holder is an “accredited investor”
within the meaning of Regulation D promulgated under the Act, and as more specifically
described in Exhibit A hereto.


 


6.2                               The
Holder is, by reason of the Holder’s business or financial experience, or by
reason of the business or financial experience of the Holder’s professional
adviser, who is not affiliated with and is not compensated directly or
indirectly by the Company, or any affiliate or selling agent of the Company, is
capable of evaluating the merits and risks of the purchase of the Convertible
Debenture and the Debenture Shares and of protecting the Holder’s own interests
in connection with the investment contemplated herein.


 


6.3                               The
Holder acknowledges that it has received and carefully reviewed this Agreement
and the form of Convertible Debenture attached hereto as Exhibit “B.” This
Agreement and the form of Convertible Debenture are hereinafter collectively
referred to as the “Materials,” and the Holder further
acknowledges that it has read all of the disclosures set forth in the
Materials. The Holder has had the opportunity to ask questions and receive
answers from the Company concerning the terms and conditions of this Agreement.
The Holder recognizes that the Company has a limited operating history and is a
speculative venture, and that if the Holder invests therein, the Holder may
lose the entire amount of its investment. The Holder acknowledges that its
representatives and the Holder have been provided with the opportunity to
obtain any additional information necessary to verify the accuracy of all
information provided to the Holder in the Materials.


 


6.4                               In
deciding whether to acquire the Convertible Debenture or the Debenture Shares,
the Holder has relied or will rely exclusively upon consultations with its
legal, financial and tax advisers with respect to the nature of the investment
and the information provided by the Company in the Materials and this
Agreement. None of the Holder’s advisors are affiliated with, or compensated
directly or indirectly by, the Company or any affiliate or selling agent of the
Company.


 


4

















 


6.5                               The
Holder understands that neither the Securities and Exchange Commission (the “SEC”),
nor any other governmental agency having jurisdiction over the sale and
issuance of the Convertible Debenture or the Debenture Shares will make any
finding or determination relating to the appropriateness for investment of the
Convertible Debenture or the Debenture Shares and that none of them has or will
recommend or endorse the Convertible Debenture or the Debenture Shares.


 


6.6                               The
Holder represents that the Convertible Debenture is purchased and the Debenture
Shares will be purchased for its own account for investment and is not being
purchased and will not be purchased with a view to the resale or distribution
thereof, and that the Holder does not have and will not have a present
intention of distributing or reselling any portion of the Convertible Debenture
or the Debenture Shares. The Holder acknowledges that it has been informed by
the Company that the Convertible Debenture, and the Debenture Shares to be issued
and delivered, have not been registered under the Act and that the Convertible
Debenture and Debenture Shares must be held indefinitely unless subsequently
registered under the Act or an exemption for such registration is available.
The Holder acknowledges that, other than as may be set forth in the Materials,
the Company has no obligation to register the Convertible Debenture or the
Debenture Shares under the Act. The Holder also acknowledges that it is fully
aware of the restrictions on disposing of the Convertible Debenture and the
Debenture Shares resulting from the provisions of the Act and the rules and
regulations of the SEC thereunder.


 


6.7                               The
Holder understands that the Convertible Debenture is not and the Debenture
Shares upon issuance will not be freely transferable.


 


6.8                               The
Holder recognizes that there is not a public market for the Convertible
Debenture and that there is no assurance that there will be such a market for
these securities.  The Holder
understands that it may have to hold the Debenture Shares indefinitely due to
the lack of such a market.


 


6.9                               The
Holder recognizes that no escrow or minimum amount has been established for the
sale of the Convertible Debenture and that the proceeds will be immediately
received by the Company.  The Holder
recognizes that the Company’s inability to raise such funds, or additional
funds, promptly may significantly and adversely affect the Company’s ability to
achieve its financial objectives, although the Company believes it could
maintain its current operations.


 


6.10                        The
Holder represents that it possesses such knowledge and experience in business
and financial matters that it is capable of evaluating the merits and risks of
its investment in the Convertible Debenture and the Debenture Shares. The Holder
also has the degree of sophistication in these matters necessary to understand
(1) the financial and operational information provided to it relating to the
Company, and (2) the potential risk of losing all or a portion of its
investment in the Convertible Debenture and the Debenture Shares.  The Holder represents that it is able to
bear the economic risk of a loss of its investment in the securities that it
has funds adequate to meet personal needs and contingencies and that it has no
need for liquidity of the investment in the Convertible Debenture or the
Debenture Shares.


 


5

















 


6.11                        The
Holder recognizes that “stop transfer” instructions will be issued against the
Convertible Debenture and the Debenture Shares and that the following legend
will be placed on the Convertible Debenture and the Debenture Shares issued:


 


THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  THE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.


 


6.12                        The Holder hereby agrees that
commencing thirty (30) trading days prior to any Conversion Date as defined
above and ending on the Conversion Date, Holder and any representative under
Holder’s direction, will refrain from any direct or indirect trading in the
Company’s Common Stock, including trading of any options or derivative
securities and lending of any Common Stock or related derivative securities, in
order that the Conversion Price not be influenced in any way by the Holder.


 


7.                                      TRANSFER.  With respect to any offer, sale or other
disposition of the Convertible Debenture or the Debenture Shares, the Holder
will give written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of such Holder’s counsel, to
the effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice, the Company shall notify such
Holder whether such Holder may sell or otherwise dispose of the Convertible
Debenture or the Debenture Shares, all in accordance with the terms of the
notice delivered to the Company.


 


8.                                      CERTAIN CORPORATE TRANSACTIONS.  Nothing in this Agreement shall in any way
prohibit the Company from merging with or consolidating into another
corporation, or from selling or transferring all or substantially all of its
assets, or from distributing all or substantially all of its assets to its
stockholders in liquidation, or from dissolving and terminating its corporate
existence, and, in any such event (other than a merger in which the Company is
the surviving corporation and under the terms of which the shares of Common
Stock outstanding immediately prior to the merger remain outstanding and
unchanged), Holder shall have the right exercisable not less than ten (10)
business days prior to the completion of such merger, consolidation, sale or
transfer of assets, liquidation or dissolution, to elect to: (a) have the
outstanding principal amount of the Convertible Debenture repaid to Holder; or
(b) have the entire outstanding principal amount of the Convertible Debenture
converted into the Debenture Shares at a price equal to Seventy Five Percent
(75%) of the daily weighted average trading price per share of the Company’s
Common Stock for a period of twenty (20) trading days prior to the announcement
by the Company of such transaction as noticed to the Company in writing by the
Holder. To the extent that Holder’s right to convert the Convertible Debenture
into the Debenture Shares is accelerated under this Section 8, the
conversion or payment of the entire outstanding principal amount of the
Convertible Debenture shall be contingent upon the consummation of such merger,
consolidation, sale or transfer of assets, liquidation or dissolution.


 


6

















 


9.                                      GENERAL
PROVISIONS.


 


9.1                               Survival
of Representations and Warranties. 
All representations and warranties of the parties hereto contained in
this Agreement will survive the Closing, are material and have been or will be
relied upon by the other parties.


 


9.2                               No
Third Parties Benefited.  This
Agreement is made for the purpose of defining and setting forth certain
obligations, rights and duties of the Company and the Holder in connection with
the obligations under this Agreement. 
This Agreement is made for the sole protection of the Company and the
Holder.  No other person shall have any
rights of any nature hereunder or by reason hereof.


 


9.3                               Binding
Effect.  This Agreement shall
bind, and shall inure to the benefit of, the Company and the Holder, and their
respective heirs, successors, personal representatives and assigns.


 


9.4                               Execution
in Counterparts.  This Agreement
may be executed in any number of counterparts and any party hereto or thereto
may execute any counterpart, each of which when executed and delivered will be
deemed to be an original and all of which counterparts of this Agreement taken
together will be deemed to be but one and the same instrument.  The execution of this Agreement by any party
hereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto, and
transmitted by facsimile copy with overnight delivery of manually executed
copies.


 


9.5                               Prior
Agreements; Amendments; Consents. 
This Agreement contains the entire agreement between the Holder and the
Company in regards to the Convertible Debenture and the Debenture Shares and
all prior negotiations, understandings and agreements with regards to the
offering thereof are superseded by this Agreement.  No amendment, modification, supplement, termination or waiver of
any provision of this Agreement, and no consent to any departure by the Company
therefrom, shall be effective unless in writing and signed by the Holder, and
then only in the specific instance and for the specific purpose given.  “Including” as used herein means “including,
but not limited to.”


 


9.6                               Governing
Law.           THIS AGREEMENT AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  EACH PARTY HEREBY IRREVOCABLY SUBMITS ITSELF
TO THE JURISDICTION OF THE COURTS SITTING IN THE STATE OF DELAWARE AND AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER DELAWARE LAW.


 


9.7                               Mandatory
Arbitration.                  Any dispute
arising in connection with the interpretation or enforcement of the provisions
of this Agreement, or its application or validity, will be submitted to
arbitration. Such arbitration proceedings will be held in the State of
Delaware. This


 


7

















 


agreement to arbitrate is specifically enforceable. Any award rendered
in any such arbitration proceeding will be final and binding on each of the
parties, and judgment may be entered thereon in any court of competent
jurisdiction. The costs and fees of any such arbitration proceeding will be
borne by the respective parties. The arbitrators may in their discretion award
costs and reasonable attorneys’ fees to the prevailing party.


 


9.8                               Severability
of Provisions; Conflict.  Any
provision in this Agreement that is held to be inoperative, unenforceable or
invalid shall be inoperative, unenforceable or invalid without affecting the
remaining provisions, and to this end the provisions of this Agreement are
declared to be severable.  In the event
of a conflict between this Agreement and the Materials as defined herein, the
terms of this Agreement shall prevail.


 


9.9                               Attorney’s
Fees.  In the event that any
action, proceeding, or arbitration is instituted by or against any of the
parties in order to enforce any of the terms or provisions hereof, to construe
the rights of the parties hereunder, then the prevailing party shall be
entitled to recover all costs thereof and reasonable attorneys’ fees as part of
the judgment, whether or not such action is prosecuted to judgment.


 


9.10                        Confidentiality.  The Holder acknowledges and agrees that the
non-public information it has received and will receive about the Company and
the Company’s financial performance is confidential, and agrees to use all
reasonable efforts to maintain the confidentiality thereof. Any confidentiality
agreement between the Holder and the Company, including the foregoing, is
hereby modified, only to the extent necessary, to permit the Holder to exercise
and protect its rights under this Agreement, or as a stockholder of the
Company.


 


10.                               NOTICES.  Any notice to the Company provided for
in the Convertible Debenture shall be given by personal delivery or by mailing
such notice by first class or certified mail, return receipt requested,
addressed to the Company at the property address stated below, or to such other
address as the Company may designate by written notice to the Holder. Any
notice to the Holder shall be given by personal delivery or by mailing such
notice by first class or certified mail, return receipt requested, to the
Holder at the address stated on the signature page of the Agreement, or at such
other address as may have been designated the Holder by written notice to the
Company. Mailed notices shall be deemed delivered and received on the delivery
date as shown on the postal return receipt or the receipt furnished by an
independent courier service, and any notices transmitted by confirmed facsimile
transmission will be deemed delivered and received as of the date of the
transmission.


 


 


SIGNATURES ON NEXT PAGE


 


8

















 


IN WITNESS WHEREOF, the parties have signed
this Agreement as of
                    ,
2003
at Las Vegas, Nevada.


 


	
   

  	
   

  	
  “HOLDER”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signed

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Phone:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FAX:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tax I.D. or Social Security Number:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
					



 


 


THIS
AGREEMENT IS NOT EFFECTIVE UNTIL AFTER THE RECEIPT AND VERIFICATION OF GOOD
FUNDS FROM THE HOLDER TO THE BANK ACCOUNT LISTED BELOW AND ACCEPTANCE BY THE
COMPANY AS WITNESSED BY THE SIGNATURE ON THE NEXT PAGE


 


Wires should be sent via the Fed Wire
system to:


U.S. Bank of
Nevada


Nevada Financial
Center


2300 West Sahara
Avenue


Las Vegas,
NV.  89102


ABA #121201694


Credit to the
Account of:


MediCor Ltd.


Account
#153790902537


 


(continued on next
page)


 


9

















 


Checks should be made payable to
MediCor Ltd.

and sent, via Federal Express, to:


MediCor Ltd.


4560 South Decatur
Blvd. Suite 300


Las Vegas,
NV.  89103


Phone:
702/731-2519


FAX: 702/791-5365


 


THE COMPANY:


 


	
  MediCor Ltd.

  	
  The Effective Date:

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
                                    ,
  2003

  
	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Management Office
  Address and Address for Notices:

  	
   

  
	
  MediCor Ltd.

  	
   

  
	
  4560 South Decatur
  Blvd.

  	
   

  
	
  Suite 300

  	
   

  
	
  Las Vegas, NV.  89103

  	
   

  
	
  Phone: 702/731-2519

  	
   

  
	
  FAX: 702/791-5365

  	
   

  



 


10

















 


LIST OF EXHIBITS

TO

INVESTMENT AGREEMENT


 


 


	
  EXHIBIT A

  	
   

  	
  -

  	
   

  	
  DEFINITION OF AN “ACCREDITED
  INVESTOR”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  -

  	
   

  	
  FORM OF CONVERTIBLE
  DEBENTURE

  



 


11

















 


EXHIBIT A TO AGREEMENT


 


DEFINITION OF ACCREDITED HOLDER

REGULATION D


 


To be eligible to
purchase the Convertible Debenture, prospective investors must meet the
Accredited Investor requirements described below.


 


Under Regulation D an
“Accredited Investor” shall mean any person who comes within any of the
following categories, or who the issuer reasonably believes comes within any of
the following categories at the time of the sale of the securities to that
person:


 


(1)               any bank as defined
in section 3(a)(2) of the Act, or any savings and loan association or
other institution as defined in section 3(a)(5)(A) of the Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to section 15 of the Exchange Act; any insurance company as
defined in section 2(13) of the Act; any investment company registered
under the Investment Company Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or
(d) of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited Holders;


 


(2)               any private
business development company as defined in section 202(a)(22) of the
Investment Advisors Act of 1940;


 


(3)               any organization
described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership not formed for the
specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;


 


(4)               any director,
executive officer or general partner of the issuer of the securities being
offered or sold, or any director, executive officer, or general partner of that
issuer;


 


(5)               any natural person
whose individual net worth, or joint net worth with that person’s spouse, at
the time of his purchase exceeds $1,000,000;


 


(6)               any natural person
who had an individual income in excess of $200,000 in each of the two most
recent years or joint income with that person’s spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the same
income level in the current year;


 


(7)               any trust with
total assets in excess of $5,000,000 not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a sophisticated
person as described in Section 230.506(b)(2)(ii); or


 


(8)               any entity in which
all of the equity owners are Accredited Investors.


 


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EXHIBIT B

TO INVESTMENT AGREEMENT


 


 


FORM OF CONVERTIBLE DEBENTURE


 


 


CONFIDENTIAL


 


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