Document:

Exhibit 4.4

 

WSB Holdings Inc. 2011 Equity Incentive Plan

 

Incentive Stock Option Grant Agreement

 

This Incentive Stock Option Grant Agreement (the “Agreement”) is entered into on [INSERT DATE], by and between WSB Holdings, Inc., a Delaware corporation (the “Company”), and [INSERT OPTIONEE NAME] (the “Optionee”), effective as of [INSERT GRANT DATE] (the “Grant Date”).

 

In consideration of the premises, mutual covenants and agreements herein, the Company and the Optionee agree as follows:

 

1. Grant of Options.  The Company hereby grants to the Optionee, pursuant to the WSB Holdings, Inc. 2011 Equity Incentive Plan (the “Plan”), a stock option to purchase from the Company, at a price of $[INSERT PRICE] per share (the “Exercise Price”), up to [INSERT GRANT AMOUNT] shares of Common Stock of the Company, $.01 par value, subject to the provisions of this Agreement and the Plan (the “Options”).  The Options shall expire at 5:00 p.m. Eastern Time on the last business day preceding the tenth anniversary of the Grant Date, or, if the Optionee is a Ten-Percent Stockholder, the fifth anniversary of the Grant Date (in either case, the “Expiration Date”), unless fully exercised or terminated earlier.

 

2. Terminology.  Unless stated otherwise in this Agreement, capitalized terms in this Agreement shall have the meaning set forth in the Plan.

 

3. Exercise of Options.

 

(a)  Vesting.  Subject to the terms of the Plan with respect to vesting, the Options granted shall vest in accordance with the schedule attached hereto as Exhibit A, provided that the Optionee is in the continuous employ of, or in a service relationship with, the Company from the Grant Date through the applicable date upon which such Options become vested.  The extent to which the Options are vested as of a particular vesting date shall be rounded down to the nearest whole share.  However, vesting is rounded up to the nearest whole share on the last vesting date.

 

(b)  Right to Exercise. The Optionee shall have the right to exercise the Options, whether or not vested, in whole or in part at any time prior to the Expiration Date or earlier termination of the Options in accordance with the Plan and this Agreement; provided, that to the extent, if any, that the aggregate Fair Market Value of the Common Stock subject to the Options as of the Grant Date, plus the aggregate fair market value (determined as of the date of grant) of all other stock with respect to which incentive stock options granted to the Optionee prior to the Grant Date under all plans of the Company and its parent and subsidiary corporations first become exercisable during any calendar year exceeds $100,000 (the “Annual Limitation”), then except as otherwise provided in this Agreement the Options shall be exercisable during that year only to the extent, if any, that their exercisability does not cause the Annual Limitation to be exceeded.  Any Options that are not exercisable due to the proviso in the preceding sentence shall be exercisable during the next calendar year, subject again to the application of that proviso.  To the extent not exercised, the number of shares as to which

 

 

the Options are exercisable shall accumulate and remain exercisable, in whole or in part, at any time after becoming exercisable, but not later than the Expiration Date or other termination of the Options.  In the event of the Optionee’s termination of employment, the exercisability is governed by Section 4.  If an unvested Option is exercised, the Optionee will receive restricted stock subject to the same vesting terms and conditions as that Option.

 

(c) Exercise Procedure.  Subject to the conditions set forth in this Agreement, the Options shall be exercised (to the extent then exercisable) by delivery of written notice of exercise on any business day to the Corporate Secretary of the Company in such form as the Administrator may require from time to time.  Such notice shall specify the number of shares in respect to which the Options are being exercised and shall be accompanied by full payment of the Exercise Price for such shares in accordance with Section 3(e) of this Agreement.  The exercise shall be effective upon receipt by the Corporate Secretary of the Company of such written notice accompanied by the required payment.  The Options may be exercised only in multiples of whole shares and may not be exercised at any one time as to fewer than one hundred shares (or such lesser number of shares as to which the Options are then exercisable).  No fractional shares shall be issued pursuant to the Options.

 

(d) Effect.  The exercise, in whole or in part, of the Options shall cause a reduction in the number of shares of Common Stock subject to the remaining Options equal to the number of shares of Common Stock with respect to which the Options are exercised.

 

(e) Method of Payment.  In addition to any other method approved by the Administrator, if any, payment of the Exercise Price shall be by any of the following, or a combination thereof, as determined by the Administrator in its discretion at the time of exercise:

 

(i) by delivery of cash, certified or cashier’s check, or money order or other cash equivalent acceptable to Administrator in its sole discretion; or

 

(ii) by a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System and the following provisions. Subject to such limitations as the Administrator may determine, at any time during which the Common Stock is publicly traded on a national securities exchange, the Exercise Price shall be deemed to be paid, in whole or in part, if the Optionee delivers a properly executed exercise notice, together with irrevocable instructions: (i) to a brokerage firm approved by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Exercise Price and any withholding tax obligations that may arise in connection with the exercise; and (ii) to the Company to deliver the certificates for such purchased shares directly to such brokerage firm.

 

(f) Issuance of Shares Upon Exercise. Upon due exercise of the Options, in whole or in part, in accordance with the terms of this Agreement, the Company shall issue to the Optionee, the brokerage firm specified in the Optionee’s delivery instructions pursuant to a broker-assisted cashless exercise, or such other person exercising the

 

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Options, as the case may be, the number of shares of Common Stock so paid for, in the form of fully paid and non-assessable stock and shall deliver certificates therefor as soon as practicable thereafter.

 

(g) Restrictions on Exercise and Upon Shares Issued upon Exercise. Notwithstanding any other provision of the Agreement, the Options may not be exercised at any time that the Company does not have in effect a registration statement under the Securities Act of 1933, as amended, relating to the offer of Common Stock to the Optionee under the Plan, unless the Company agrees to permit such exercise.  Upon the issuance of any shares of Common Stock pursuant to the exercise of the Options, the Optionee will, upon the request of the Company, agree in writing that the Optionee is acquiring such shares for investment only and not with a view to resale, and that the Optionee will not sell, pledge or otherwise dispose of such shares so issued unless: (i) the Company is furnished with an opinion of counsel to the effect that registration of such shares pursuant to the Securities Act of 1933, as amended, is not required by that Act or by the rules and regulations thereunder; (ii) the staff of the Securities and Exchange Commission has issued a “no-action” letter with respect to such disposition; or (iii) such registration or notification as is, in the opinion of counsel for the Company, required for the lawful disposition of such shares has been filed by the Company and has become effective; provided, however, that the Company is not obligated hereby to file any such registration or notification.  In addition, the Common Stock issued upon the exercise of any Options shall be subject to repurchase by the Company for an amount equal to the Exercise Price of such Options (i) upon the occurrence of an event described in Section 4(d) of this Agreement, or (ii) if the Options were not vested when they were exercised, upon the occurrence of any event that would have resulted in the termination of those Options under the Plan and this Agreement if those Options had not been exercised.  The Company may place a legend embodying such restrictions on the certificates evidencing such shares.

 

4.  Termination of Employment or Service.

 

(a)  Exercise Period Following Cessation of Employment or Other Service Relationship, In General.  If Optionee ceases to be employed by, or in a service relationship with, the Bank for any reason other than death, Disability, discharge for Cause or in connection with a Change of Control, (i) the unvested Options shall terminate immediately upon such cessation, and (ii) the vested Options shall remain exercisable during the 30-day period following such cessation, but in no event after the Expiration Date.  Unless sooner terminated, any unexercised vested Options shall terminate upon the expiration of such 30-day period.

 

(b)  Death of Optionee.  If Optionee dies prior to the expiration or other termination of the Options, (i) the unvested Options shall vest immediately upon Optionee’s death, and (ii) the Options shall remain exercisable following Optionee’s death by Optionee’s executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws of descent and distribution until the Expiration Date.

 

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(c)  Disability of Optionee.  If Optionee ceases to be employed by, or in a service relationship with, the Bank as a result of Optionee’s Disability, (i) the unvested Options shall vest immediately upon such cessation, and (ii) the Options shall remain exercisable during the 3-month period following such cessation (or the one-year period following such cessation, if the Optionee is disabled within the meaning of Section 22(e)(3) of the Code), but in no event after the Expiration Date.

 

(d)  Misconduct.  Notwithstanding anything to the contrary in this Agreement, the Options shall terminate in their entirety, regardless of whether the Options are vested, immediately upon Optionee’s discharge of employment or other service relationship for Cause or upon Optionee’s commission of any of the following acts during any period following the cessation of Optionee’s employment or other service relationship during which the Options otherwise would be exercisable: (i) fraud on or misappropriation of any funds or property of the Bank; or (ii) breach by Optionee of any provision of any employment, non-disclosure, non-competition, non-solicitation, assignment of inventions, or other similar agreement executed by Optionee for the benefit of the Bank or the Company, as determined by the Administrator, which determination will be conclusive.

 

5.  Adjustments and Business Combinations.

 

(a) Adjustments for Events Affecting Common Stock.  In the event of changes in the Common Stock of the Company by reason of any stock dividend, spin-off, split-up, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares and the like, the exercise price of, number of shares covered by and the other terms of the Options shall adjust as provided in the Plan, and the Administrator shall, in its discretion, in its discretion and without the consent of the Optionee, make any other substitutions for or adjustments in the Options, including but not limited to providing or mandating alternative settlement methods such as settlement of the Options in cash or in shares of Common Stock or other securities of the Company or of any other entity, or in any other matters which relate to the Options as the Administrator shall, in its sole discretion, determine to be necessary or appropriate.

 

(b) Pooling of Interests Transaction.  Notwithstanding anything in the Plan or this Agreement to the contrary and without the consent of the Optionee, the Administrator, in its sole discretion, may make any modifications to the Options, including but not limited to cancellation, forfeiture, surrender or other termination of the Options in whole or in part regardless of the vested status of the Options, in order to facilitate any business combination that is authorized by the Board to comply with requirements for treatment as a pooling of interests transaction for accounting purposes under generally accepted accounting principles.

 

(c) Adjustments for Other Events.  The Administrator is authorized to make, in its discretion and without the consent of the Optionee, adjustments in the terms and conditions of, and the criteria included in, the Options in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company,

 

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or of changes in applicable laws, regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Options or the Plan.

 

(d) Binding Nature of Adjustments.  Adjustments under this Section 5 will be made by the Administrator, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive.  No fractional shares will be issued pursuant to the Options on account of any such adjustments.

 

(e) Effect of Change of Control Event.  All outstanding portions of the Options, if any, shall become fully vested upon the occurrence of any Change of Control Event and shall be exercisable in accordance with the Plan; provided, that unless otherwise decided in the sole discretion of the Administrator, the acceleration of vesting in connection with a Change of Control Event shall be limited as provided in the Plan.

 

6. Non-Guarantee of Employment.  Nothing in the Plan or in this Agreement shall confer on an individual any legal or equitable right against the Company or the Administrator, except as expressly provided in the Plan or this Agreement.  Nothing in the Plan or in this Agreement shall: (a) constitute an inducement, consideration, or a contract for employment or service between an individual and the Company or the Bank; (b) confer any right on an individual to continue in the service of the Company or the Bank; or (c) interfere in any way with the right of the Company or the Bank to terminate such service at any time with or without cause or notice, or to increase or decrease compensation for such service.

 

7. No Rights as Stockholder.  The Optionee shall not have any of the rights of a stockholder with respect to the shares of Common Stock that may be issued upon the exercise of the Options (including, without limitation, any rights to receive dividends or noncash distributions with respect to such shares) until such shares of Common Stock have been issued to him or her upon the due exercise of the Options.  No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued.

 

8. Incentive/Nonqualified Nature of the Options.  The Options are intended to qualify as an incentive stock option within the meaning of Section 422A of the Code to the extent set forth herein, and this Agreement shall be so construed; provided, however, to the extent that the aggregate Fair Market Value as of the date of this grant, of the shares into which the Options become exercisable for the first time by the Optionee during any calendar year exceeds $100,000, the portion of the Options which are in excess of the $100,000 limitation will be treated as a nonqualified stock option.

 

9. Withholding of Taxes.

 

(a) In General.  At the time the Options are exercised in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll or any other payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the Options

 

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(including, without limitation, upon a disqualifying disposition with the meaning of Code section 421(b)).  The Company may require the Optionee to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options.  If the Optionee does not make such payment when requested, the Company may refuse to issue any stock certificate under the Plan until arrangements satisfactory to the Administrator for such payment have been made.

 

(b) Means of Payment.  The Administrator may, in its sole discretion, permit the Optionee to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options by any of the following means or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to deduct any such tax obligations from any payment of any kind otherwise due to the Optionee; (iii) authorizing the Company to withhold shares of Common Stock otherwise issuable to the Optionee pursuant to the exercise of the Options; or (iv) delivering to the Company unencumbered shares of Common Stock already owned by the Optionee.

 

(c) Disposition of Shares.  The acceptance of shares of Common Stock upon exercise of the Options shall constitute an agreement by the Optionee (i) to notify the Company if any of such shares are disposed of by the Optionee within two years from the Grant Date or within one year from the date the shares were issued to the Optionee pursuant to the exercise of the Options, and (ii) if required by law, to remit to the Company, at the time of any such disposition, an amount sufficient to satisfy the Company’s withholding tax obligations with respect to such disposition, whether or not, as to both (i) and (ii), the Optionee is employed by or has any other relationship with the Company at the time of such disposition.

 

10.                                 Regulatory Compliance; Forfeiture.  Subject to the terms of the Plan, the grant of Options made hereby are subject to applicable rules, policies and regulations promulgated by regulatory bodies (“Regulators”) with jurisdiction over the Company and its Affiliates including The Washington Savings Bank.  In accordance with such policies and regulations, the Options granted hereby may be required by Regulators to be exercised or forfeited in the event the Company or its affiliates, including the Bank, does not maintain certain capital levels or as otherwise ordered or directed by the Regulators.

 

11. The Company’s Rights.  The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

12. Optionee.  Whenever the word “Optionee” is used in any provision of this Agreement under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to the estate, personal representative or beneficiary to whom the Options may be transferred by will, by the laws of descent and

 

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distribution, or pursuant to a qualified domestic relations order as defined in Code section 414(p), the word “Optionee” shall be deemed to include such person.

 

13. Transferability of Options.  The Options are not transferable other than by will or the laws of descent and distribution, pursuant to a qualified domestic relations order as defined in Code section 414(p), or as otherwise permitted by the Administrator, in its sole discretion.  During the lifetime of the Optionee, the Options may be exercised only by the Optionee, by such permitted transferees or, during the period the Optionee is under a legal disability, by the Optionee’s guardian or legal representative. Except as provided above, the Options may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

 

14. Notices.  All notices and other communications made or given pursuant to this Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by certified mail, addressed to the Optionee at the address contained in the records of the Company, or addressed to the Administrator, care of the Company for the attention of its Corporate Secretary at its principal office or, if the receiving party consents in advance, transmitted and received via telecopy or via such other electronic transmission mechanism as may be available to the parties.

 

15. Entire Agreement.  This Agreement and the Plan contain the entire agreement between the parties with respect to the Options granted hereunder.  Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options granted hereunder shall be void and ineffective for all purposes.

 

16. Amendment.  This Agreement may not be modified, except as provided in the Plan or in a written document signed by each of the parties hereto.

 

17. Conformity with Plan.  This Agreement is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan, which is incorporated herein by reference. Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan.  In the event of any ambiguity in this Agreement or any matters as to which this Agreement is silent, the Plan shall govern.  A copy of the Plan is available upon request to the Administrator.

 

18. Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, other than the conflict of laws principles thereof.

 

19. Headings.  The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer as of the date first above written.

 

	
 
    	
WSB   Holdings, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Print   Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

The undersigned hereby acknowledges that he/she has carefully read this Agreement and the Plan and agrees to be bound by all of the provisions set forth in such documents.

 

	
 
    	
OPTIONEE:
    
	
 
    	
 
    
	
DATE:
    	
 
    	
 
    	
 
    
	
 
    	
Print   Name:
    	
 
    
					

 

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EXERCISE FORM

 

WSB Holdings, Inc.

4201 Mitchellville Road

Bowie, MD 20716

 

Gentlemen:

 

I hereby exercise, to the extent indicated below, the Options granted to me on                     , by WSB Holdings, Inc. (the “Company”), subject to all the terms and provisions thereof and of the WSB Holdings, Inc. 2011 Equity Incentive Plan (the “Plan”), and notify you of my desire to purchase        incentive shares and        non-qualified shares of Common Stock of the Company at a price of $                     per share pursuant to the exercise of said Options.

 

	
Payment   Amount: $
    	
 
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
Optionee   Signature
    
	
 
    	
 
    
	
 
    	
Received   by WSB Holdings, Inc. on
    
	
 
    	
 
    
					

 

 

	
Broker Information:
    	
 
    
	
 
    	
 
    
	
Firm   Name
    	
 
    
	
 
    	
 
    
	
Contact   Person
    	
 
    
	
 
    	
 
    
	
Broker   Address
    	
 
    
	
 
    	
 
    
	
City,   State, Zip Code
    	
Phone   Number
    
	
 
    	
 
    
	
Broker   Account Number
    	
 
    
	
 
    	
 
    
	
Electronic Transfer Number:ex4_1.htm

Exhibit 4.1

 

CONVERTIBLE DEBENTURE

THE DEBENTURE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY WHO IS A CITIZEN, RESIDENT OR DOMICILIARY OF THE UNITED STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS, OR OF THE COMMONWEALTH OF PUERTO RICO, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR AN OPINION OF COUNSEL TO THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.

	
$_______,000.00

	
____________________, 2011

FOR VALUE RECEIVED, TurkPower Corp. a Delaware corporation (the “Company”), promises to pay to the order of  or its registered assigns (the “Holder”), the principal sum of $___,000.00 or such other amount as shall then equal the outstanding principal amount hereof, together with interest from the date of issuance of this Debenture on the unpaid
principal balance hereof (the “Loan Amount”) at a rate equal to eighteen percent (18%) per annum, computed on the basis of the actual number of days elapsed in a year of 365 days.  All unpaid principal, together with any accrued but unpaid interest and other amounts payable hereunder, shall be due and payable on the earlier of (i) the One Year Anniversary from the date hereof (the “Maturity Date”), or (ii) when such amounts are declared due and payable by the Holder or made automatically due and payable upon or after the occurrence of an Event of Default (as defined below).  Any cash payment of principal or interest shall be paid in United States Dollars.  The Loan
Amount shall be convertible into a number of shares of the Company’s common stock, par value $.0001 per share (the “Common Stock”), equal to the Loan Amount at the Maturity Date, divided by the $0.25 (the “Conversion Price”).  Any payments of principal or interest not made in Common Stock shall be paid in United States Dollars.

This Debenture is issued pursuant to the Subscription Agreement (the “Subscription Agreement”) dated as of even date by and between the Company and the Holder.

The following is a statement of the rights of the Holder and the conditions to which this Debenture is subject, and to which the Holder hereof, by the acceptance of this Debenture, agrees:

1.             Definitions.  As used in this Debenture, the following capitalized terms have the following meanings:

(a)           “Business Day” means any day on which the national or state banks located in the State of New York are open to transact business.

(b)           “Obligations” means the principal, interest and other amounts payable under this Debenture.

  

  

  

 

(c)           “Transaction Documents” shall mean this Debenture and the Subscription Agreement.

2.             Events of Default.  The occurrence of any of the following shall constitute an “Event of Default” under this Debenture:

(a)           Failure to Pay.  The Company shall fail to pay (i) when due any principal payment on this Debenture or (ii) any interest or other payment required under the terms of this Debenture or any other Transaction Document within five (5) Business Days of its due date; or

(b)           Breaches of Other Covenants.  The Company shall fail to observe or to perform any other covenant, obligation, condition or agreement contained in this Debenture or the other Transaction Documents, other than those specified in Section 2(a) hereof, and such failure shall continue for thirty (30) days; or

(c)           Voluntary Bankruptcy or Insolvency Proceedings.  The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v) become insolvent (as such term may be defined or interpreted under any applicable statute), (vi) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it or (vii) take any action for the purpose of effecting any of the foregoing; or

(d)           Involuntary Bankruptcy or Insolvency Proceedings.  Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered, or such case or proceeding shall not be dismissed or discharged within forty-five
(45) days of commencement.

3.             Rights of Holder Upon Default.  Upon the occurrence or existence of any Event of Default (other than an Event of Default referred to in Sections 2(c) and 2(d) hereof) and at any time thereafter during the continuance of such Event of Default, the Holder may declare all outstanding Obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary
notwithstanding.  Upon the occurrence or existence of any Event of Default described in Sections 2(c) and 2(d) hereof, immediately and without notice, all outstanding Obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding.  In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, the Holder may exercise any other right, power or remedy granted to it by the Transaction Documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.  After an Event of Default, interest shall accrue on the Loan Amount at the rate of twenty percent
(20%) per annum, or the highest lawful rate, whichever is lower, until all amounts owed to the Borrower are repaid.

  

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4.             Prepayment.  This Debenture may be prepaid by Company at any time.  The Company agrees to pay a 5% Penalty Fee.

5.             Conversion.

(a)           Conversion by the Holder.  At any time following the Maturity Date, the Holder shall have the right from time to time to convert all or any part of the outstanding principal and accrued but unpaid interest on the Debenture (the “Loan Amount”) by submitting a Notice of Conversion to the Company on such conversion date (the “Conversion Date”) (by facsimile or other
reasonable means of communication on the Conversion Date) into a number of shares of Common Stock equal to the Loan Amount, divided by $0.25 (the “Conversion Price”) subject to adjustment as set forth in Section 6 herein.

(b)           Mechanics and Effect of Conversion.  No fractional shares of Common Stock shall be issued upon conversion of this Debenture.  Upon the conversion of all of the principal outstanding under this Debenture, in lieu of the Company issuing any fractional shares to the Holder, the Company shall round all shares to the next whole share.  Upon conversion of this Debenture pursuant to this Section, the Holder shall surrender this Debenture, duly endorsed, at the principal office of the Company.  At its expense, the Company shall, as
soon as practicable thereafter, issue and deliver to such Holder at such principal office a certificate or certificates for the number of shares of such Common Stock to which the Holder shall be entitled upon such conversion (bearing such legends as are required by the Subscription Agreement and applicable state and federal securities laws in the opinion of counsel to Company), together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Debenture.  Upon full conversion of this Debenture, the Company shall be forever released from all its obligations and liabilities under this Debenture.

(c)           Reservation of Stock Issuable Upon Conversion.  The Company shall at all times, reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Debenture, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of this Debenture; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of this Debenture, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

(d)           Payment of Taxes.  The Company will pay all transfer taxes or charges that may be imposed with respect to the issue or delivery of shares of Common Stock upon conversion of this Debenture, except for any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which this Debenture was registered.

  

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6.             Conversion Price Adjustments.

(a)           Adjustment for Stock Splits and Combinations.  If the Company shall at any time or from time to time after date of first issuance of this Debenture (the “Date of Original Issue”) effect a stock split or subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased, and, conversely, if the Company shall at any time or from time to time after the Date of Original Issue combine the
outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately before the combination shall be proportionately increased.  Any adjustment under this Section 6(a) shall become effective at the close of business on the date the stock split, subdivision or combination becomes effective.

(b)           Dividends and Distributions.  The Company at any time or from time to time after the Date of Original Issue to the Maturity Date shall not issue a dividend or other distribution payable in securities of the Company or other property.  As used herein, the term “other property” does not include cash.

(c)           Adjustment for Reclassification, Exchange and Substitution.  If at any time or from time to time after the Date of Original Issue, the Common Stock issuable upon the conversion of this Debenture is changed into the same or a different number of shares of any class or series of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 6), then in any such event the Holder shall have
the right thereafter to convert this Debenture into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which this Debenture could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

(d)           Reorganizations.  If at any time or from time to time after the Date of Original Issue there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 6), as a part of such capital reorganization provision shall be made so that the Holder shall thereafter be entitled to receive upon conversion of this Debenture the number of shares of stock or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon such conversion would have been entitled on such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof.  In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 6 with respect to the rights of the Holders after such capital reorganization to the end that the provisions of this Section 6 (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of this Debenture) shall be applicable after that event and be as nearly equivalent as practicable.

  

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(e)           No Impairment.  The Company shall not amend its Certificate of Incorporation or participate in any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the conversion rights of the Holders of
this Debenture against dilution or other impairment as provided herein.

7.             Successors and Assigns.  Subject to the restrictions on transfer described in Sections 8 and 9 hereof, the rights and obligations of the Company and the Holder of this Debenture shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

8.             Waiver and Amendment.  Any provision of this Debenture may be amended, waived or modified only as to the Holder of this Debenture upon the written consent of the Company and the Holder.

9.            Transfer of this Debenture or Securities Issuable on Conversion Hereof.  This Debenture may not be transferred in violation of any restrictive legend set forth hereon.  Each new Debenture issued upon transfer of this Debenture shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Securities Act.  The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions.  Subject to the foregoing, transfers of this Debenture shall be registered upon registration books maintained for such purpose by or on behalf of the Company.  Prior to presentation of this Debenture for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Debenture for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Debenture shall be overdue and the Company shall not be affected by notice to the contrary.

10.           Assignment by the Company.  Neither this Debenture nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company, without the prior written consent of the Holder.

11.           Notices.  Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier, personal delivery or facsimile transmission at the respective addresses or facsimile number of the parties as set forth in the Subscription Agreement or on the register maintained by the Company.  Any party hereto may by notice so given change its address or facsimile number for
future notice hereunder.  Notice shall conclusively be deemed to have been given when received.

12.           Expenses; Waivers.  If action is instituted to collect this Debenture, the Company promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred in connection with such action.  The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

  

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13.           Governing Law.  This Debenture and all actions arising out of or in connection with this Debenture shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws provisions thereof.  In the event of any dispute among or between any of the parties to this Debenture arising out of the terms of this Debenture, the parties hereby consent to the exclusive jurisdiction of the federal and state courts located in the State of Delaware for resolution of such dispute, and agree not to contest
such exclusive jurisdiction or seek to transfer any action relating to such dispute to any other jurisdiction.

IN WITNESS WHEREOF, the Company has caused this Debenture to be issued as of the date first written above.

	  	
TURKPOWER CORP

	 	 	 
	  	  	  
	  	
By:

	 

 

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