Exhibit
4.2


 


THE DEBENTURES OFFERED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”),
AND HAVE NOT BEEN QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER STATE.  THE DEBENTURES CANNOT BE SOLD OR TRANSFERRED
WITHOUT SUCH REGISTRATION OR QUALIFICATION UNLESS AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS THEN AVAILABLE.


 


MEDICOR LTD.


FORM OF 10% CONVERTIBLE DEBENTURE DUE
2006


 


	
  DEBENTURE
  #:

  	
   

  	
  DATE
  OF ISSUANCE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL
  AMOUNT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  



 


FOR VALUE RECEIVED,
the undersigned, MEDICOR LTD., a
Delaware corporation (the “Company”)
promises to pay to the order of
                                                 
(the “Holder”), as
defined in the MediCor Investment Agreement for 10% Convertible Debentures due
2006 dated as of the Date of Issuance set forth above between the Company and
the Holder and hereby incorporated herein by this reference (the “Agreement”), or order, at Holder's
address as designated on the signature page of the Agreement, or at such other
address as the Holder designates, the entire outstanding principal amount of
this Debenture or to issue to the Holder the Debenture Securities at the price
and on the terms and conditions set forth in the Agreement, at the Holder's
option, upon on conversion of this Debenture.


 


1.         PAYMENTS
AND INTEREST.     The
outstanding principal amount of this Debenture shall bear interest at a rate of
Ten Percent (10%) per annum, for as long as the 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 this Debenture into the Debenture Securities or elects to have
the outstanding principal amount of this Debenture repaid to the Holder as
described in Section 2 of the Agreement, the Company will pay any accrued and
unpaid interest, pro-rated to the Conversion Date (or the effective date of any
exercise of the Institutional Conversion Right) on the basis of a 365 day year,
due the Holder and no further interest past the


 


MEDICOR
LTD.


10% Convertible Debenture
due 2006#    


 


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Conversion Date (or the
effective date of any exercise of the Institutional Conversion Right) will be
due to the Holder by the Company with respect to the principal amount of this
Debenture so converted. This Debenture is payable only by the either: (i) the
payment to the Holder by the Company of the outstanding principal amount of
this Debenture; or (ii) by the issuance by the Company of the Debenture
Securities, with the exception of any fractional shares which may be issuable
hereunder, which will be paid in cash by the Company.


 


2.         SECURITY.     This
Debenture is an unsecured obligation of the Company.


 


3.         SEVERABILITY.     If
any provision of this Debenture is invalid by operation of any law or
interpretation placed thereon by any court, this Debenture shall be construed
as not containing such provision and all other provisions of this Debenture
which are otherwise lawful shall remain in full force and effect, and to this
end the provisions of this Debenture are declared to be severable.


 


4.         GOVERNING
LAW.     THIS DEBENTURE AND ALL AMENDMENTS,
SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW 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.


 


5.         ASSIGNMENT.     With
respect to any offer, sale or other disposition of this Debenture, the Holder
will give written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of Holder's counsel in form and
substance acceptable to the Company, 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 this
Debenture, all in accordance with the terms of the notice delivered to the
Company.


 


6.         FORBEARANCE
NOT A WAIVER.     No delay or
omission on the part of the Holder in exercising any rights under this
Debenture or under the Agreement as defined herein, on default by the Company,
shall operate as a waiver of such right or of any other right under this
Debenture, for the same default or any other default.


 


7.         MANNER
OF NOTIFICATION.     Any notice
or surrender to the Company provided for in this Debenture shall be given by
personal delivery or by mailing such notice or making such surrender 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 for such purpose 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


 


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courier service, and any
notices transmitted by confirmed facsimile transmission will be deemed
delivered and received as of the date of the transmission.


 


8.         CONVERSION
RIGHTS OF HOLDER.


 


8.1       Institutional
Conversion Right. As soon as practicable but in any event
not less than five (5) business days prior to the proposed closing date of the
Institutional Offering (as defined in the Agreement), the Company shall give
notice to the Holder of the proposed terms and closing date of the
Institutional Offering.  Not less than
two (2) business days prior to the scheduled closing date of the Institutional
Offering, the Holder shall, if it elects to exercise the Institutional
Conversion Right, give notice thereof to the Company of the Holder's election
to convert the Convertible Debenture. The Holder may elect to convert all or
part (but in any event in integral multiples of $100,000 of this Debenture)
into a like amount of the securities offered in the Institutional Offering.  If the Holder so elects to convert all or
part of this Debenture, then, subject to and with the consent of the
Institutional Investors, this Debenture (based on the outstanding principal
amount) shall be converted into the securities sold to the Institutional
Investors in the Institutional Offering. 
If more than one security is sold in the Institutional Offering, then
the Holder may, subject to and with the consent of the Institutional Investors,
convert this Debenture (in integral multiples of $100,000) into each such
security.  If the Institutional
Investors do not consent to such conversion (or part thereof), then this
Debenture (or part hereof) as to which consent is not given shall not be
converted and shall remain outstanding. 
If the Holder does not so notify the Company prior to the second
business day prior to the closing date of the Institutional Offering, then this
Debenture will not be converted and will continue to be outstanding.


 


8.2       Extended
Conversion Right.  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 Issuance set forth
above or thereafter at the 18-month, 24-month, 30-month and 36-month
anniversary of the Date of Issuance, the Holder may elect to: (a) have the
entire outstanding principal amount of this Debenture repaid to the Holder,
along with any accrued and unpaid interest thereon; (b) covert the entire
outstanding principal amount of this 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 Issuance (the “Maturity Date”).  If
the Holder does not so notify the Company prior to the first anniversary of the
Date of Issuance or thereafter at the 18-month, 24-month, 30-month or 36-month
anniversary of the Date of Issuance, this Debenture will remain
outstanding.  If the Holder does not so
notify the Company prior to the Maturity Date, this 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 this Debenture shall be satisfied.


 


8.3       Conversion
Procedure; Notice of Conversion.    Before
the Holder shall be entitled to convert this Debenture into the Debenture
Securities, the Holder shall surrender this Debenture to the Company at the
address of the Company provided for such purpose pursuant to Section 7 and
shall give written notice by mail, postage prepaid, to the Company, of the
election to convert the same, all as described in the Agreement and in Section
8 hereof.  The Company shall, as soon as
practicable thereafter, issue and deliver to the Holder pursuant to Section 8.4
a certificate or certificates for the Debenture Securities to which the Holder
shall be entitled as aforesaid (bearing such legends as are required by
applicable state and federal securities laws in the opinion of counsel to the
Company), including a check payable to the Holder for any cash amounts payable
as described in Section 8.4. Such


 


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conversion shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date as defined in Section 1 of the Agreement (or the effective date
of any exercise of the Institutional Conversion Right), and the Holder shall be
treated for all purposes as the record holder or holders of the Conversion
Securities issuable on conversion as of such date.


 


8.4       Mechanics
and Effect of Conversion.  No fractional
Conversion Securities shall be issued upon conversion of this Debenture.  In lieu of the Company issuing any
fractional securities to the Holder upon the conversion of this Debenture, the
Company shall pay to the Holder the amount of outstanding principal that is not
so converted because of a fractional share, such payment to be in the form as
provided below.  Upon the conversion of
this Debenture pursuant to Section 8, the Holder shall surrender this
Debenture, duly endorsed, at the Company's address provided for such purpose
pursuant to Section 7.  At is expense,
the Company shall, as soon as practicable thereafter, issue and deliver to such
Holder by mail a certificate or certificates for the number of whole Debenture
Securities to which the Holder shall be entitled upon such conversion (bearing
such legends as are required by applicable state and federal securities laws in
the opinion of counsel to the Company). 
Upon conversion of this Debenture or repayment of the entire principal
amount of this Debenture to the Holder, the Company shall be forever released
from all of its obligations and liabilities under this Debenture and under the
Agreement.


 


9.         HEADING;
REFERENCES.       All
headings used herein are used for convenience only and shall not be used to
construe or interpret this Debenture. 
Except where otherwise indicated, all references herein to Sections
refer to the numbered and lettered sections hereof.


 


IN WITNESS WHEREOF, the undersigned has caused this
Debenture to be signed by its duly authorized officer.


 


	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  MEDICOR
  LTD.

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
    

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
  4560
  South Decatur Boulevard

  
	
   

  	
  Suite
  300

  
	
   

  	
  Las
  Vegas, NV 89103-5253

  



 


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NOTICE OF CONVERSION


 


(To be signed only upon Conversion of
Debenture)


 


TO:        MEDICOR
LTD.


4560 South Decatur Boulevard


Suite 300


Las Vegas, NV 89103-5253


 


The undersigned, the Holder of the foregoing 10%
Convertible Debenture due 2006, hereby surrenders such Debenture for conversion
into the Conversion Securities issuable upon conversion thereof in accordance
with the terms thereof and of the Agreement (as defined therein), to the extent
of the outstanding principal amount of the Debenture set forth below (in
integral multiples of $100,000), and requests that the certificates for such
securities be issued in the name of, and delivered to:


 


	
   

  
	
  whose address
  is:

  
	
   

  
	
   

  



 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signed:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature must
  conform in all respects to the name of

  the Holder as specified on the face of the Debenture)

  



 


	
  Principal Amount
  Converted:

  	
   

  
	
   

  	
   

  
	
  $

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  



 


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