PAYABLE IN COMMON STOCK, OR IN ANY RIGHTS, OPTIONS OR
WARRANTS TO SUBSCRIBE FOR OR TO PURCHASE COMMON STOCK (SUCH RIGHTS OR OPTIONS OR
WARRANTS BEING HEREIN CALLED "OPTIONS") OR IN ANY STOCK OR OTHER SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR COMMON STOCK (SUCH CONVERTIBLE OR
EXCHANGEABLE STOCK OR SECURITIES BEING HEREIN CALLED "CONVERTIBLE SECURITIES")
OR (II) TO SUBSCRIBE FOR OR PURCHASE COMMON STOCK, OPTIONS OR CONVERTIBLE
SECURITIES, THEN SUCH RECORD DATE SHALL BE DEEMED TO BE THE DATE OF THE ISSUE OR
SALE OF THE SHARES OF COMMON STOCK DEEMED TO HAVE BEEN ISSUED OR SOLD UPON THE
DECLARATION OF SUCH DIVIDEND OR THE MAKING OF SUCH OTHER DISTRIBUTION OR THE
DATE OF THE GRANTING OF SUCH RIGHT OF SUBSCRIPTION OR PURCHASE, AS THE CASE MAY
BE.
(VII)
ACTIONS TO MAINTAIN CONVERSION PRICE ABOVE PAR VALUE.
BEFORE TAKING
ANY ACTION WHICH WOULD CAUSE AN ADJUSTMENT IN THE CONVERSION PRICE SUCH THAT,
UPON CONVERSION OF THIS DEBENTURE, SHARES OF COMMON STOCK WITH PAR VALUE, IF
ANY, WOULD BE DEEMED TO BE ISSUED BELOW THE THEN PAR VALUE OF THE COMMON STOCK,
THE COMPANY WILL TAKE ANY CORPORATE ACTION WHICH MAY, IN THE OPINION OF ITS
COUNSEL, BE REASONABLE NECESSARY IN ORDER THAT THE COMPANY MAY VALIDLY AND
LEGALLY ISSUE FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK AT THE
CONVERSION PRICE AS SO ADJUSTED.
14
(VIII)
CERTIFICATE OF ADJUSTMENT.
IN ANY CASE OF AN ADJUSTMENT OF THE
NUMBER OF SHARES OF COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON CONVERSION OF
THIS DEBENTURE, THE CHIEF FINANCIAL OFFICER OR THE PRESIDENT OF THE COMPANY
SHALL COMPUTE SUCH ADJUSTMENT IN ACCORDANCE WITH THE PROVISIONS HEREOF AND
PREPARE AND SIGN A CERTIFICATE SHOWING SUCH ADJUSTMENT, AND SHALL MAIL SUCH
CERTIFICATE, BY FIRST CLASS MAIL, POSTAGE PREPAID, TO THE HOLDER OF THIS
DEBENTURE AT THE HOLDER'S ADDRESS AS SHOWN IN THE COMPANY'S BOOKS.
THE
CERTIFICATE SHALL SET FORTH SUCH ADJUSTMENT, SHOWING IN DETAIL THE FACTS UPON
WHICH SUCH ADJUSTMENT IS BASED, INCLUDING A STATEMENT OF THAT THE TIME WOULD BE
RECEIVED UPON CONVERSION OF THIS DEBENTURE.
(IX)
NOTICES OF RECORD DATE.
IN THE EVENT OF (I) ANY TAKING BY THE
COMPANY OF A RECORD OF THE HOLDERS OF ANY CLASS OF SECURITIES FOR THE PURPOSE OF
DETERMINING THE HOLDERS THEREOF WHO ARE ENTITLED TO RECEIVE ANY DIVIDEND OR
OTHER DISTRIBUTION, (II) ANY RECLASSIFICATION OR RECAPITALIZATION OF COMMON
STOCK OUTSTANDING INVOLVING A CHANGE IN COMMON STOCK OR (III) ANY CONSOLIDATION,
MERGER, SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS TO ANOTHER
PERSON (AS DEFINED IN SECTION 4.1 HEREOF) AND ANY TRANSACTION WHICH IS EFFECTED
IN SUCH A WAY THAT HOLDERS OF MORE THAN FIFTY PERCENT (50%) OF THE SHARES OF
COMMON STOCK THEN OUTSTANDING ARE ENTITLED TO RECEIVE (EITHER DIRECTLY OR UPON
SUBSEQUENT LIQUIDATION) STOCK, SECURITIES OR ASSETS OF ANOTHER PERSON WITH
RESPECT TO OR IN EXCHANGE FOR COMMON STOCK (BEING HEREIN CALLED A "CHANGE OF
CONTROL") OR VOLUNTARY OR INVOLUNTARY DISSOLUTION, LIQUIDATION OR WINDING UP OF
THE COMPANY, THE COMPANY SHALL MAIL