Document:

Exhibit 10.1

THIRD AMENDMENT
 TO AMENDED AND RESTATED CREDIT AGREEMENT

          This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of April 26, 2005, is by and among LINCARE HOLDINGS INC., a Delaware corporation (the “Borrower’’), each of the Borrower’s Subsidiaries (individually a “Guarantor” and collectively the “Guarantors”; together with the Borrower, individually a “Credit Party”, and collectively the “Credit Parties”‘), the Required Lenders signatory hereto and BANK OF AMERICA, N. A., as Agent for the Lenders (in such capacity, the “Agent”).

W I T N E S S E T H

          WHEREAS, the Credit Parties, the Lenders and the Agent have entered into that certain Amended and Restated Credit Agreement dated as of April 25, 2002, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of June 4, 2003, as amended by that certain Second Amendment to Amended and Restated Credit Agreement dated as of December 10, 2004 (collectively, the “Existing Credit Agreement”);

          WHEREAS, the Borrower has requested, and the Required Lenders have agreed, to amend certain provisions of the Existing Credit Agreement as set forth hereinbelow.

          NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

PART I
 DEFINITIONS

          SUBPART 1.1      Certain
Definitions.     Unless otherwise defined herein or the context otherwise requires, the following terms used in this Amendment, including its preamble and recitals, have the following meanings:

	
  
 
  	
  
“Amended   Credit Agreement” means the Existing Credit   Agreement as amended hereby.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
“Amendment   No. 3 Effective Date” is defined in Subpart 3.1.
  

          SUBPART 1.2     Other
Definitions.     Unless otherwise defined herein or the context otherwise requires, terms used in this Amendment, including its preamble and recitals, have the meanings provided in the Existing Credit Agreement.

PART II
 AMENDMENTS TO EXISTING CREDIT AGREEMENT

          Effective on (and subject to the occurrence of) the Amendment No. 3 Effective Date, the Existing Credit Agreement is hereby amended in accordance with this Part
II.

          SUBPART 2.1     Amendments to Section
1.1.     Section 1.1  of the Existing Credit Agreement is hereby amended in the following respects:

	
  
 
  	
  
(a)     The   definition of
“Cash Equivalents” is hereby amended and restated in its   entirety to read as follows:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Cash   Equivalents” means (a) securities issued or directly and fully guaranteed   or insured by the United States of America or any agency or instrumentality   thereof (provided that the full faith and credit of the United States of   America is pledged in support thereof) having maturities of not more than   twelve months from the date of acquisition, (b) U.S. dollar denominated time   deposits and certificates of deposit of (i) any Lender, (ii) any domestic   commercial bank of recognized standing having capital and surplus in excess   of $500,000,000 or (iii) any bank whose short-term commercial paper rating   from S&P is at least A-l or the equivalent thereof or from Moody’s is at   least P-l or the  equivalent thereof   (any such bank being an “Approved Bank”), in each case with maturities of not   more than 270 days from the date of acquisition, (c)
commercial paper and   variable or fixed rate notes issued by any Approved Bank (or by the parent   company thereof) or any variable rate notes issued by, or guaranteed by, any   domestic corporation rated A-l (or the equivalent thereof) or better by   S&P or P-l (or the equivalent thereof) or better by Moody’s and maturing   within six months of the date of acquisition, (d) repurchase agreements with   a bank or trust company (including any of the Lenders) or recognized   securities dealer having capital and surplus in excess of $500,000,000 for   direct obligations issued by or fully guaranteed by the United States of   America in which any Credit Party shall have a perfected first priority   security interest (subject to no other Liens) and having, on the date of   purchase thereof, a fair market value of at least 100% of the amount of the   repurchase obligations, (e) Investments, classified in accordance with GAAP   as current assets, in money market investment programs registered under
the   Investment Company Act of 1940, as amended, which are administered by   reputable financial institutions having capital of at least $500,000,000 and   the portfolios of which are limited to Investments of the character described   in the foregoing subdivisions (a) through (d) and (f) auction rate securities   rated AA (or the equivalent thereof) or better by S&P or Aa2 (or the   equivalent thereof) or better by Moody’s and with reset periods not to exceed   49 days between auctions.
  
	
   
  	
  
 
  
	
  
 
  	
  
(b)     Clause   (ix) of the definition of
“Permitted Investments” is hereby amended   and restated in its entirety to read as follows:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (ix)     advances   in respect of repurchases by the Borrower of its Capital Stock following the   Closing Date to the extent permitted by Section 8.7(c);
  

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PART III
 CONDITIONS TO EFFECTIVENESS

          SUBPART 3.1     Amendment No. 3 Effective
Date.     This Amendment shall be and become effective as of the date hereof (the
“Amendment No. 3 Effective Date”) when all of the conditions set forth in this Part III shall have been satisfied, and thereafter this Amendment shall be known, and may be referred to, as
“Amendment No. 3.”

          SUBPART 3.2      Execution of Counterparts of
Amendment.     The Agent shall have received counterparts of this Amendment, which collectively shall have been duly executed on behalf of each of the Borrower, the Guarantors and the Required Lenders.

          SUBPART 3.3      Fees and
Expenses.     The Borrower has paid all fees and expenses incurred in connection with the negotiation, preparation, execution and delivery of this Amendment and the other transactions contemplated herein including, without limitation, the legal fees and expenses of Moore & Van Allen PLLC, counsel to the Agent provided an invoice therefore has been submitted to Borrower on or prior to the Amendment No. 3 Effective Date.

          SUBPART 3.4      Other
Items.      The Agent shall have received such other documents, agreements or information which may be reasonably requested by the Agent.

PART IV
 MISCELLANEOUS

          SUBPART 4.1      Representations and
Warranties.     The Borrower hereby represents and warrants to the Agent and the Lenders that, after giving effect to this Amendment, (a) no Default or Event of Default exists under the Credit Agreement or any of the other Credit Documents and (b) the representations and warranties set forth in Section 6 of the Existing Credit Agreement are, subject to the limitations set forth therein, true and correct in all material respects as of the date hereof (except for those which expressly relate to an earlier date).

          SUBPART 4.2      Reaffirmation of Credit Party
Obligations.     Each Credit Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.

          SUBPART 4.3      Cross-References.      References in this Amendment to any Part or Subpart are, unless otherwise specified, to such Part or Subpart of this Amendment.

          SUBPART 4.4      Instrument Pursuant to Existing Credit
Agreement.     This Amendment is a Credit Document executed pursuant to the Existing Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Existing Credit Agreement.

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          SUBPART 4.5     References in Other Credit
Documents.     At such time as this Amendment No. 3 shall become effective pursuant to the terms of Subpart
3.1, all references in the Credit Documents to the “Credit Agreement” shall be deemed to refer to the Credit Agreement as amended by this Amendment No. 3.

          SUBPART 4.6     Counterparts/Telecopy.      This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of executed counterparts of the Amendment by telecopy shall be effective as an original and shall constitute a representation that an original shall be delivered.

          SUBPART 4.7     
Governing Law.     THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

          SUBPART 4.8      Successors and
Assigns.     This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

          SUBPART 4.9      General.      Except as amended hereby, the Existing Credit Agreement and all other Credit Documents shall continue in full force and effect.

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          IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

 

	
  
BORROWER:
  	
  
LINCARE HOLDINGS INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name: 
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
GUARANTORS:
  	
  
LINCARE INC.,
  
	
  
 
  	
  
a Delaware corporation
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name: 
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
LINCARE PROCUREMENT INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
LINCARE
ASSET MANAGEMENT LP,
  
	
  
 
  	
  
a Nevada   limited partnership
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By: 
  	
  
LINCARE
HOLDINGS INC.,
  
	
   
  	
  
 
  	
  
a Delaware   corporation, its general partner
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
LINCARE
   OF NEW
YORK INC.,
  
	
   
  	
  
a New York   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief Financial   Officer
  

	
   
  	
  
LINCARE PHARMACY SERVICES   INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief Financial   Officer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
LINCARE LICENSING INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
CONVACARE SERVICES   INC.,
  
	
  
 
  	
  
an Indiana   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
MED 4 HOME INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
ALPHA RESPIRATORY, INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
HEALTH CARE SOLUTIONS    AT HOME INC.,
  
	
  
 
  	
  
a Delaware   corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
   
  	
  
Title:
  	
  
Chief   Financial Officer
  

	
  
 
  	
  
HOME-CARE EQUIPMENT   NETWORK INC.,
  
	
  
 
  	
  
a Delaware corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ PAUL G. GABOS
  
	
  
 
  	
  
 
  	
  

  
	
   
  	
  
Name:
  	
  
Paul G.   Gabos
  
	
  
 
  	
  
Title:
  	
  
Chief   Financial Officer
  

	
  
AGENT:
  	
  
BANK  OF   AMERICA,
N.A,
  
	
  
 
  	
  
as Agent
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ KEVIN L. AHART
  
	
   
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Kevin   L. Ahart
  
	
  
 
  	
  
Title:
  	
  
Assistant   Vice President
  

	
  
LENDERS:
  	
  
BANK    OF AMERICA,   N.A.,
  
	
  
 
  	
  
as a Lender
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
By:
  	
  
/s/ CRAIG MURLLESS
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Craig Murlless
  
	
  
 
  	
  
Title:
  	
  
Senior Vice President
  

	
  
 
  	
  
BANK LEUMI
USA,
  
	
  
 
  	
  
as a Lender
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ JOUNG HEE HONG
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Joung Hee   Hong
  
	
  
 
  	
  
Title:
  	
  
Vice   President
  

	
  
 
  	
  
SCOTIABANC, INC.,
  
	
   
  	
  
as a Lender
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ CAROLYN A. CALLOWAY
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Carolyn A.   Calloway
  
	
  
 
  	
  
Title:
  	
  
Managing Director
  

	
   
  	
  
CALYON NEW YORK BRANCH,
  
	
  
 
  	
  
as a Lender
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ CHARLES HEIDSIECK
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Charles Heidsieck
  
	
  
 
  	
  
Title:
  	
  
Managing Director
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
By:
  	
  
/s/ THOMAS RANDOLPH
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Thomas Randolph
  
	
  
 
  	
  
Title:
  	
  
Director
  

	
  
 
  	
  
U.S. BANK NATIONAL   ASSOCIATION,
  
	
  
 
  	
  
as a Lender
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ THOMAS A.    HECKMAN
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Thomas   A.  Heckman
  
	
  
 
  	
  
Title:
  	
  
AVI
  

	
  
 
  	
  
NATIONAL CITY   BANK  OF   KENTUCKY,
  
	
   
  	
  as a Lender
  
	
   
  	
   
  	
   
  
	
   
  	
  By:
  	
  /s/ DEROY SCOTT
  
	
   
  	
   
  	
  

  
	
   
  	
  Name:
  	
  Deroy Scott
  
	
   
  	
  Title:
  	
  Senior Vice   PresidentTHIS SECURED DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE “SECURITIES”), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

 

SECURED DEBENTURE

COLMENA CORP.

8% Secured Convertible Debenture

November     , 2004

 

	
            No. 001
 	
            US$600,000
 

 

This Secured Debenture (the “Debenture”) is issued on November , 2004 (the ”Closing Date”) by Colmena Corp., a Delaware corporation (the “Company”), to the investor(s) as listed on Schedule I attached (together with its permitted successors and assigns, the “Holder(s)”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.

ARTICLE I.

Section 1.01     Principal and Interest. For value received, the Company hereby promises to pay to the order of the Holder(s) on the Nine (9) month anniversary of Closing, the principal sum of up to Six Hundred Thousand U.S. Dollars (US $600,000) pursuant to the respective amounts set forth opposite each Holder(s) name on Schedule I, together with interest on the unpaid principal of this Debenture at the rate of eight percent (8%) per year (computed on the basis of a 365-day year and the actual days elapsed) from the date of this Debenture until paid. At the Holder’s option, the outstanding principal and accrued interest shall be paid to the Holder on the Nine (9) Month anniversary from the date hereof by either (a) converting in accordance with Section 1.02
herein provided, however, that in no event shall the Holder be entitled to convert this Debenture for a number of shares of Common Stock in excess of that number of shares of Common Stock which, upon giving effect to such conversion, would cause 

 

 

the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such conversion or (b) Holder shall have the right to put a portion or all of the outstanding principal Debenture back to the Company at a price equal to the redemption price of One Hundre Twenty (120%) Percent plus accured interest.

Section 1.02     Optional Conversion. The Holder is entitled, at its option, to convert, and sell on the same day, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of the Debenture, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s common stock, par value US$..01 per share (“Common Stock”), at the price per share (the “Conversion Price”) equal to either (a) an amount equal to one hundred twenty percent (120%) of the final closing bid price of the Common Stock as
listed on a Principal Market (as defined herein), as quoted by Bloomberg L.P. (the “Fixed Price”) as of the closing date, or (b) an amount equal to eighty  percent (80%) of the lowest volume weighted average price of the Company’s Common Stock, as quoted by Bloomberg, LP, for the thirty (30)  trading days immediately preceding the Conversion Date (as defined herein). Subparagraphs (a) and (b) above are individually referred to as a “Conversion Price”. As used herein, “Principal Market” shall mean The National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin Board, Nasdaq SmallCap Market, or American Stock Exchange. If the Common Stock is not traded on a Principal Market, the Closing Bid Price and/or the VWAP shall mean, the reported Closing Bid Price or the VWAP
for the Common Stock, as furnished by the National Association of Securities Dealers, Inc., for the applicable periods. No fraction of shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To convert this Debenture, the Holder hereof shall deliver written notice thereof, substantially in the form of Exhibit ”B” to this Debenture, with appropriate insertions (the “Conversion Notice”), to the Company at its address as set forth herein. The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.

Section 1.03     Reservation of Common Stock. The Company shall 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 shares of Common Stock as shall from time to time be sufficient to effect such conversion, based upon the Conversion Price. If at any time the Company does not have a sufficient number of Conversion Shares authorized and available, then the Company shall call and hold a special meeting of its stockholders within thirty (30) days of that time for the sole purpose of increasing the number of authorized shares of Common Stock. Management of the company shall recommend to shareholders to vote in favor of increasing the number of Common Stock
Authorized. Management shall also vote all of its shares in favor of increasing the number of Common Stock authorized.

Section 1.04     Right of Redemption. The Company at its option shall have the right to redeem, with three (3) business days advance written notice (the “Redemption Notice”), a portion or all outstanding convertible debenture. The redemption price shall be one hundred twenty percent (120%) of the amount redeemed plus accrued interest. 

Section 1.05     Registration Rights. The Company is obligated to register the resale of the Conversion Shares under the Securities Act of 1933, as amended, pursuant to the terms of a 

 

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Registration Rights Agreement, between the Company and the Holder of even date herewith (the “Investor Registration Rights Agreement”). 

Section 1.06     Interest Payments. The interest so payable will be paid at the time of maturity or conversion to the person in whose name this Debenture is registered. At the time such interest is payable, the Holder, in its sole discretion, may elect to receive the interest in cash (via wire transfer or certified funds) or in the form of Common Stock. In the event of default, as described in Article III Section 3.01 hereunder, the Holder may elect that the interest be paid in cash (via wire transfer or certified funds) or in the form of Common Stock. If paid in the form of Common Stock, the amount of stock to be issued will be calculated as follows: the value of the stock shall be the Closing Bid Price on:  (i) the date the interest payment is due; or (ii) if the interest payment is
not made when due, the date the interest payment is made. A number of shares of Common Stock with a value equal to the amount of interest due shall be issued. No fractional shares will be issued; therefore, in the event that the value of the Common Stock per share does not equal the total interest due, the Company will pay the balance in cash.

Section 1.07     Paying Agent and Registrar. Initially, the Company will act as paying agent and registrar. The Company may change any paying agent, registrar, or Company-registrar by giving the Holder not less than ten (10) business days’ written notice of its election to do so, specifying the name, address, telephone number and facsimile number of the paying agent or registrar. The Company may act in any such capacity.

Section 1.08     Secured Nature of Debenture. This Debenture is secured by all of the assets and property of the Company as set forth on Exhibit A to the Security Agreement dated the date hereof between the Company and the Holder (the “Security Agreement”). As set forth in the Security Agreement, Holder’s security interest shall terminate upon the occurrence of an Expiration Event as defined in the Security Agreement.

ARTICLE II.

Section 2.01     Amendments and Waiver of Default. The Debenture may not be amended. Notwithstanding the above, without the consent of the Holder, the Debenture may be amended to cure any ambiguity, defect or inconsistency, or to provide for assumption of the Company obligations to the Holder.

ARTICLE III.

Section 3.01     Events of Default. An Event of Default is defined as follows: (a) failure by the Company to pay amounts due hereunder within fifteen (15) days of the date of maturity of this Debenture; (b) failure by the Company to comply with the terms of the Irrevocable Transfer Agent Instructions attached to the Securities Purchase Agreement; (c) failure by the Company’s transfer agent to issue freely tradeable Common Stock to the Holder within five (5) days of the Company’s receipt of the attached Notice of Conversion from Holder; (d) failure by the Company for ten (10) days after notice to it to comply with any of its other agreements in the Debenture; (e) events of bankruptcy or insolvency; (f) a breach by the Company of its
obligations under the Securities Purchase Agreement or the Investor Registration Rights Agreement which is not cured by the Company within ten (10) days after receipt of written notice thereof. Upon the occurrence of an Event of Default, the Holder may, in its sole 

 

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discretion, accelerate full repayment of all debentures outstanding and accrued interest thereon or may, notwithstanding any limitations contained in this Debenture and/or the Securities Purchase Agreement dated the date hereof between the Company and Investor (the “Securities Purchase Agreement”), convert all debentures outstanding and accrued interest thereon into shares of Common Stock pursuant to Section 1.02 herein. 

Section 3.02     Failure to Issue Unrestricted Common Stock. As indicated in Article III Section 3.01, a breach by the Company of its obligations under the Investor Registration Rights Agreement shall be deemed an Event of Default, which if not cured within ten (10) days, shall entitle the Holder to accelerate full repayment of all debentures outstanding and accrued interest thereon or, notwithstanding any limitations contained in this Debenture and/or the Securities Purchase Agreement, to convert all debentures outstanding and accrued interest thereon into shares of Common Stock pursuant to Section 1.02 herein. The Company acknowledges that failure to honor a Notice of Conversion shall cause irreparable harm to the Holder. 

ARTICLE IV.

Section 4.01     Rights and Terms of Conversion. This Debenture, in whole or in part, may be converted at any time following the Closing Date, into shares of Common Stock at a price equal to the Conversion Price as described in Section 1.02 above.

Section 4.02     Re-issuance of Debenture. When the Holder elects to convert a part of the Debenture, then the Company shall reissue a new Debenture in the same form as this Debenture to reflect the new principal amount.

ARTICLE V.

Section 5.01     Anti-dilution. In the event that the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on the outstanding Common Stock, the Conversion Price in effect immediately prior to such subdivision or the issuance of such dividend shall be proportionately decreased, and in the event that the Company shall at any time combine the outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased, effective at the close of business on the date of such subdivision, dividend or combination as the case may be.

Section 5.02     Consent  of Holder to Sell Capital Stock or Grant Security Interests. Except for the Standby Equity Distribution Agreement dated the date hereof between the Company and Cornell Capital Partners, LP, so long as any of the principal of or interest on this Debenture remains unpaid and unconverted, the Company shall not, without the prior consent of the Holder, issue or sell (i) any Common Stock or Preferred Stock without consideration or for a consideration per share less than its fair market value determined immediately prior to its issuance, (ii) issue or sell any Preferred Stock, warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration
per share less than such Common Stock’s fair market value determined immediately prior to its issuance, (iii) enter into any security instrument granting the holder a security interest in any of the assets of the Company, or (iv) file any registration statement on Form S-8.

 

4

 

 

 

ARTICLE VI.

Section 6.01     Notice. Notices regarding this Debenture shall be sent to the parties at the following addresses, unless a party notifies the other parties, in writing, of a change of address:

	
            If to the Company, to:
 	
            Colmena Corp.

6499 N.W. 9th Avenue, Suite 304

Ft. Lauderdale, FL 33309

Attention:  L. Joshua Eikov

Telephone: (954) 670-2300

Facsimile:  (954) 772-9955
 
	
             
 	
             
 
	
             
 	
             
 
	
            With a copy to:
 	
            Jeffrey G. Klein, Esquire

Newman, Pollock & Klein

2600 N. Miliatry Trail, Suite 210

Boca Raton, FL 33431

Telephone: (561) 997-9920

Facsilie: (561) 241-4943

 
 
	
             
 	
             
 
	
            If to the Holder:
 	
            Pursuant to Schedule I Attached
 
	
             
 	
             
 
	
            With a copy to:
 	
            Anslow and Jaclin, LLP
 
	
             
 	
            195 Route 9, Suite 204
 
	
             
 	
            Manalapan, NJ 07726
 
	
             
 	
            Attention:          Gregg Jaclin, Esq.
 
	
             
 	
            Telephone:        (732) 409-1212
 
	
             
 	
            Facsimile:         (732) 577-1188
 
	
             
 	
             
 

 

Section 6.02     Governing Law. This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of Florida without giving effect to the principals of conflict of laws thereof. Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of Florida or the state courts of the State of Florida sitting in Broward County, Florida in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

Section 6.03     Severability. The invalidity of any of the provisions of this Debenture shall not invalidate or otherwise affect any of the other provisions of this Debenture, which shall remain in full force and effect.

Section 6.04     Entire Agreement and Amendments. This Debenture represents the entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as set forth herein. This Debenture may be amended only by an instrument in writing executed by the parties hereto.

 

5

 

 

 

Section 6.05     Counterparts. This Debenture may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute on instrument.

IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company as executed this Debenture as of the date first written above.

	
             
 	
            COLMENA CORP.
 
	
             
 	
             
 
	
             
 	
            By:  /s/ L. Joshua Eikov                                                                                                                                                                                                                                                                            
 
	
             
 	
            Name:  L. Joshua Eikov
 
	
             
 	
            Title:    President
 

 

 

 

6

 

 

 

SCHEDULE I

SCHEDULE OF BUYERS/INVESTORS,HOLDERS

 

	
            
Name
 
 	
            
Signature
 
 	
            
Address/Facsimile 
 Number of Holder
 
 	
            
Amount of Holder
 
 	
             

	
             
 	
             
 	
             
 	
             
 	
             

	
            . 
 	
             
 	
             
 	
             
 	
             

	
            Montgomery Equity Partners, Ltd.
 	
            By:         Yorkville Advisors, LLC
 	
            101 Hudson Street – Suite 3700
 	
            $        200,000
 
	
             
 	
            Its:          General Partner
 	
            Jersey City, NJ  07303
 	
             
 
	
             
 	
             
 	
            Facsimile:             (201) 985-8266
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
            By:                                                                                                                              
 	
             
 	
             
 
	
             
 	
            Name:    Mark  Angelo
 	
             
 	
             
 
	
             
 	
            Its:          Portfolio Manager
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            With a copy to: 
 	
            David Gonzalez, Esq.
 	
            101 Hudson Street – Suite 3700
 	
             
 
	
             
 	
             
 	
            Jersey City, NJ 07302
 	
             
 
	
             
 	
             
 	
            Facsimile:           (201) 985-8266
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            Advantage Capital Development Corp. 
 	
            By:                                                                                                                             
 	
            2999 N.E. 191st Street, PH2
 	
            $        200,000
 
	
             
 	
            Name:  Jeffrey Sternberg
 	
            Aventura, FL 33180
 	
             
 
	
             
 	
            Its:       President
 	
            Facsimile:             (305-692-1832) 
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            With a copy to: 
 	
            Gregg Jaclin, Esq.
 	
            195 Route 9 South, Suite 204
 	
             
 
	
             
 	
             
 	
            Manalapan, NJ 07726
 	
             
 
	
             
 	
             
 	
            Facsimile:           (732) 577-1188
 	
             
 
	
             

 
 	
             
 	
             
 	
             
 
	
             
 	
                                                            
 	
             
 	
             
 	
             

	
             
 	
                                                            
 	
                                                            
 	
             
 	
             

	
             
 	
             
 	
             
 	
             
 	
             

	
             
 	
             
 	
             
 	
             
 	
             

	
             
 	
             
 	
             
 	
             
 	
             

	
             
 	
             
 	
             
 	
             
 	
             

 

 

 

7

 

 

 

EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to Convert the Debenture)

 

	
            TO:
 	
             
 

 

The undersigned hereby irrevocably elects to convert US$                                          
              of the principal amount of the above Debenture into Shares of Common Stock of Colmena Corp., according to the conditions stated therein, as of the Conversion Date written below.

	
            Conversion Date:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Applicable Conversion Price:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Signature:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Name:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Address:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Amount to be converted:
 	
            US$                                                                                                                                                                                                                                                                                                                                                                      
 
	
            Amount of Debenture unconverted:
 	
            US$                                                                                                                                                                                                                                                                                                                                                                      
 
	
            Conversion Price per share: 
 	
            US$                                                                                                                                                                                                                                                                                                                                                                       
 
	
            Number of shares of Common Stock to be issued:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Please issue the shares of Common Stock in the following name and to the following address:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Issue to:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Authorized Signature:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Name:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Title:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Phone Number:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Broker DTC Participant Code:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 
	
            Account Number:
 	
                                                                                                                                                                                                                                                                                                                                                                                                            
 

 

 

 

A-1

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