EXHIBIT 1
No. 2000-1 $500,000.00 USD
------
TAM RESTAURANTS, INC.
10% CONVERTIBLE DEBENTURE DUE OCTOBER 20, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THERE IS AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
This Convertible Debenture is duly authorized issue of Convertible
Debentures of TAM Restaurants, Inc., a Delaware corporation (the "ISSUER"),
issued on October 21, 2000 (the "ISSUANCE DATE"), and designated as its 10%
Convertible Debenture due October 20, 2003 (the "DEBENTURE").
FOR VALUE RECEIVED, the Issuer promises to pay to
PETER SALVATORE
the registered holder hereof or its registered assigns, if any (the "HOLDER"),
the principal sum of:
FIVE HUNDRED THOUSAND ($500,000)
United States Dollars,
on or prior to October 20, 2003 (the "MATURITY DATE") or such earlier date this
Debenture is required to be repaid by the Issuer pursuant to the terms of
Sections 4 and 8 herein, and to pay simple interest on the Maturity Date or as
set forth in Section 8 below, at the rate of ten (10%) percent per annum for
such principal amount of this Debenture outstanding on the Maturity Date
(subject to the qualifications set forth below). Accrual of interest shall
commence as of the Issuance Date. In the event the Holder elects to convert the
principal amount of this Debenture into shares of Common Stock pursuant to the
procedures set forth herein, the Holder shall not be entitled to any interest in
the repayment of such principal. This Debenture has been issued under the terms
and provisions of the Convertible Debenture Purchase Agreement dated as of
October 21, 2000 between the Issuer and Holder (the "AGREEMENT") and shall be
subject to all of the terms and conditions and entitled to all of the benefits
thereof. In the event the principal amount of this Debenture has not been repaid
by the Issuer to the Holder as of the close of business on the Maturity Date,
then at such time the Holder shall have the option of (i) receiving repayment of
the principal amount then outstanding to the Holder in cash or cash equivalent,
plus accrued and unpaid interest for this Debenture then outstanding, or (ii)
issue Conversion Shares (as defined below) for the then remaining principal
amount outstanding (with out the inclusion of any interest). Unless otherwise
agreed in writing by both parties hereto, the interest so payable will be paid
to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the Issuer regarding registration
and transfers of the Debenture (the "DEBENTURE Register"), provided, however,
that the Issuer's obligation to a transferee of this Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions contained in the Agreement and this Debenture.
1
<PAGE>
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
Holder surrendering the same, but shall not be issuable in denominations of less
than $50,000 (unless such amount represents the remaining principal balance
outstanding). No service charge will be made for such registration or transfer
or exchange.
2. The Issuer shall be entitled to withhold from all payments of
principal and/or interest of this Debenture any amounts required to be withheld
under the applicable provisions of the U.S. Internal Revenue Code of 1986, as
amended, or other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original Holder hereof and may be transferred or
exchanged only in compliance with the Securities Act and applicable state
securities laws and in compliance with the restrictions on transfer provided in
the Agreement. Prior to the due presentment for such transfer of this Debenture,
the Issuer and any agent of the Issuer may treat the person in whose name this
Debenture is duly registered on the Issuer's debenture register as the owner
hereof for the purpose of receiving payment as herein provided and all other
purposes, whether or not this Debenture is overdue, and neither the Issuer nor
any such agent shall be affected by notice to the contrary. The transferee shall
be bound, as the original Holder by the same representations and terms described
herein and under the Agreement.
4. The principal amount of this Debenture is only repayable as set
forth in this Section or upon the occurrence of an Event of Default as set forth
in Section 8 below. The interest is only repayable upon and Event of Default as
set forth in Section 8 below or upon repayment of the principal upon the
Maturity Date as set forth above. The Holder of this Debenture is entitled, at
its option, to convert at any time commencing on the date hereof up until the
Maturity Date, the principal amount of this Debenture or any portion thereof,
into shares of fully paid and non assessable Common Stock of the Issuer
("CONVERSION SHARES") at a conversion price for each Conversion Share
("CONVERSION PRICE") equal to $.15. The number of Conversion Shares due to the
Holder is to be derived from dividing the Conversion Amount by the Conversion
Price. For purposes of this Debenture, the "CONVERSION AMOUNT" shall mean the
principal dollar amount of the Debenture being converted. In the event the
principal amount of this Debenture has not been repaid by the Issuer to the
Holder (in the manner set forth in the first sentence of this Section 4) as of
the close of business on the Maturity Date, then at such time the Issuer shall
issue Conversion Shares for the then remaining principal amount outstanding with
no requirement of a Notice of Conversion (as defined below), and the Maturity
Date being deemed a Conversion Date (as defined below). The Holder may exercise
its right to convert the Debenture by telecopying an executed and completed
notice of conversion (the "NOTICE OF CONVERSION") to the Issuer and delivering
the original Notice of Conversion and the original Debenture to the Issuer by
express courier. Each business day on which a Notice of Conversion is telecopied
to and received by the Issuer in accordance with the provisions hereof shall be
deemed a "CONVERSION DATE". The Issuer will transmit the certificates
representing Conversion Shares issuable upon such conversion of the Debenture
(together with the certificates representing the Debenture not so converted) to
the Holder via express courier, by electronic transfer (if applicable) or
otherwise within five Business Days after the Conversion Date, provided, the
Issuer has received the original Notice of Conversion and Debenture being so
converted. If the Company has not received the original Notice of Conversion and
original Debenture being converted within three Business Days after Conversion
Date, then the Issuer shall transmit the certificates representing the
Conversion Shares issuable upon such conversion of the Debenture (together with
the certificates representing the Debenture not so converted) to the Holder via
express courier, by electronic transfer (if applicable) or otherwise within five
business days after receipt of the original Notice of Conversion and original
Debenture being converted.
2
<PAGE>
The Notice of Conversion and Debenture representing the portion of
the Debenture converted shall be delivered as follows:
To the Issuer:
TAM Restaurants, Inc.
1163 Forest Avenue
Staten Island, NY 10310
Attention: Anthony Golio
Facsimile: (718) 448-3872
Telephone: (718) 720-5959
or to such other address as may be communicated by the Issuer to the
Holder in writing.
The principal amount of this Debenture shall be reduced as per that
principal amount indicated on the Notice of Conversion upon the proper receipt
by the Holder of such Conversion Shares due upon such Notice of Conversion.
5. Upon each adjustment of the Conversion Price (as set forth below), the
Holder shall thereafter be entitled to (but not obligated to) receive upon
conversion of this Debenture, at the Conversion Price resulting from such
adjustment, the number of shares of Common Stock obtained by (i) multiplying the
Conversion Price in effect immediately prior to such adjustment by the number of
shares of Common Stock receivable hereunder immediately prior to such adjustment
and (ii) dividing the product thereof by the Conversion Price resulting from
such adjustment. The Conversion Price shall be adjusted as follows:
(i) In the case of any amendment to the Issuer's Articles
of Incorporation to change the designation of the Common Stock or the
rights, privileges, restrictions or conditions in respect to the
Common Stock or division of the Common Stock, this Debenture shall be
adjusted so as to provide that upon exercise thereof, the Holder
shall receive, in lieu of each share of Common Stock theretofore
issuable upon such conversion, the kind and amount of shares, other
securities, money and property receivable upon such designation,
change or division by the Holder issuable upon such conversion had
the conversion occurred immediately prior to such designation, change
or division. This Debenture shall be deemed thereafter to provide for
adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The
provisions of this Subsection (i) shall apply in the same manner to
successive reclassifications, changes, consolidations and mergers.
(ii) If the Issuer shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, or declare a dividend or make any other distribution
upon the Common Stock payable in shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision or
dividend or other distribution shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(iii) If any capital reorganization or reclassification of
the capital stock of the Issuer, or any consolidation or merger of
the Issuer with or into another corporation or other entity, or the
sale of all or substantially all of the Issuer's assets to another
corporation or other entity shall be effected in such a way that
holders of shares of Common Stock shall be entitled to receive stock,
securities, other evidence of equity ownership or assets with respect
to or in exchange for shares of Common Stock, then, the Holder shall
thereafter have the right to receive upon the conversion hereof upon
the basis and upon the terms and conditions specified herein, such
shares of stock, securities, other evidence of equity ownership or
assets as may be issued or payable with respect to or in exchange for
a number of outstanding shares of such Common Stock equal to the
number of shares of Common Stock immediately theretofore receivable
upon the conversion of this Debenture under this Section had such
reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provisions shall be
made with respect to the rights and interests of the holder to the
end that the provisions hereof (including, without limitation,
provisions for adjustments of the Conversion Price and of the number
of shares of Common Stock receivable upon the conversion of this
Debenture) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities, other evidence of equity
ownership or assets thereafter deliverable upon the exercise hereof
including an immediate adjustment, by reason of such consolidation or
merger, of the Conversion Price to the value for the Common Stock
3
<PAGE>
reflected, by the terms of such consolidation or merger if the value
so reflected is less than the Conversion Price in effect immediately
prior to such consolidation or merger. Subject to the terms of this
Debenture, in the event of a merger or consolidation of the Issuer
with or into another corporation or other entity as a result of which
the number of shares of common stock of the surviving corporation or
other entity issuable to investors of Common Stock, is greater or
lesser than the number of shares of Common Stock outstanding
immediately prior to such merger or consolidation, then the
Conversion Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common
Stock. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than fifty (50%) percent of the
outstanding shares of Common Stock, the Issuer shall not effect any
consolidation, merger or sale with the person having made such offer
or with any affiliate of such person, unless prior to the
consummation of such consolidation, merger or sale the Holder shall
have been given a reasonable opportunity to then elect to receive
upon the conversion of this Debenture the amount of stock,
securities, other evidence of equity ownership or assets then
issuable with respect to the number of shares of Common Stock in
accordance with such offer.
(iv) In case the Issuer shall, at any time prior to
conversion of this Debenture, consolidate or merge with any other
corporation or other entity (where the Issuer is not the surviving
entity) or transfer all or substantially all of its assets to any
other corporation or other entity, then the Issuer shall cause
effective provision to be made so that the Holder upon the conversion
of this Debenture after the effective date of such transaction shall
be entitled to receive the kind and, amount of shares, evidences of
indebtedness and/or other securities or property receivable on such
transaction by the Holder of the number of shares of Common Stock as
to which this Debenture was convertible immediately prior to such
transaction (without giving effect to any restriction upon such
exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder to the end
that the provisions of this Debenture shall thereafter be applicable
(as nearly as may be practicable) with respect to any shares,
evidences of indebtedness or other securities or assets thereafter
deliverable upon conversion of this Debenture. Upon the occurrence of
any event described in this Subsection (iv), the Holder shall have
the right to (a) convert this Debenture immediately prior to such
event at a Conversion Price equal to the lesser of (1) the Conversion
Price or (2) the price per share of Common Stock paid in such event,
or (b) retain ownership of this Debenture, in which event,
appropriate provisions shall be made so that this Debenture shall be
convertible at the Holder's option into shares of stock, securities
or other equity ownership of the surviving or acquiring entity.
(v) In the case of any (a) consolidation or merger of the
Issuer into any entity (other than a consolidation or merger that
does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Issuer),
(b) sale, transfer, lease or conveyance of all or substantially all
of the assets of the Issuer as an entirety or substantially as an
entirety, or (c) reclassification, capital reorganization or change
of the Common Stock (other than solely a change in par value, or from
par value to no par value), in each case as a result of which shares
of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination
thereof), the holder of this Debenture then outstanding shall have
the right thereafter to convert such share only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale, transfer, capital reorganization or
reclassification by a holder of the number of shares of Common Stock
of the Issuer into which such Debenture would have been converted
4
<PAGE>
immediately prior to such consolidation, merger, sale, transfer,
capital reorganization or reclassification, assuming such holder of
Common Stock of the Issuer (A) is not an entity with which the Issuer
consolidated or into which such sale or transfer was made, as the
case may be ("constituent entity"), or an affiliate of the
constituent entity, and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer (provided that if the kind or amount of securities, cash or
other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the Issuer
held immediately prior to such consolidation, merger, sale or
transfer by other than a constituent entity or an affiliate thereof
and in respect of which the Issuer merged into the Issuer or to which
such rights or election shall not have been exercised ("non-electing
share"), then for the purpose of this paragraph (4)(d) the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share
shall be deemed to be the kind and amount so receivable per share by
a majority of the non-electing shares). If necessary, appropriate
adjustment shall be made in the application of the provision set
forth herein with respect to the rights and interest thereafter of
the Holder, to the end that the provisions set forth herein shall
thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities
or property thereafter deliverable on the conversion of this
Debenture. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, capital reorganizations
and reclassifications. The Issuer shall not effect any such
consolidation, merger, sale or transfer unless prior to or
simultaneously with the consummation thereof the successor issuer or
entity (if other than the Issuer) resulting from such consolidation,
merger, sale or transfer shall assume, by written instrument, the
obligation to deliver to the Holder such shares of Common Stock,
securities or assets as, in accordance with the provisions of this
Debenture, such Holder may be entitled to receive under this
Debenture.
(vi) The Issuer will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Issuer, but will at all times in good
faith assist in the carrying out of all the provisions of this
Debenture and in taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder
against impairment.
(vii) Whenever the Conversion Price shall be adjusted
pursuant to this Section the Issuer shall promptly mail by registered
or certified mail, return receipt requested, to the Holder a
certificate signed by its President setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors
of the Issuer made any determination hereunder), and the Conversion
Price after giving effect to such adjustment, and shall cause copies
of such certificates to be mailed (by first-class mail, postage
prepaid) to the Holder. The Issuer shall make such certificate and
mail it to the Holder immediately after each adjustment.
6. No provision of this Debenture shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, upon an Event of
Default (as defined below), to pay the principal of, and interest on this
Debenture at the place, time, and rate, and in the coin or currency herein
prescribed.
7. The Issuer hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
8. If one or more of the following described "EVENTS OF DEFAULT" shall
occur,
(a) Any of the representations, covenants, or warranties
made by the Issuer herein, or in the Agreement (including all
Exhibits annexed thereto) shall have been incorrect when made in any
material respect or shall thereafter be determined to be incorrect;
or
(b) The Issuer shall breach, fail to perform, or fail to
observe in any material respect any material covenant, term,
provision, condition, agreement or obligation of the Issuer under
this Debenture (or any other debenture of the Company held by the
Holder), the Agreement, between the parties of even date herewith,
and such breach or failure has not been cured within ten business
days after receipt of written notice from the Holder setting forth
such breach or failure; or
5
<PAGE>
(c) A trustee, liquidator or receiver shall be appointed
for the Issuer or for a substantial part of its property or business
without its consent and shall not be discharged within thirty (30)
calendar days after such appointment; or
(d) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of the
properties or assets of the Issuer and shall not be dismissed within
thirty (30) calendar days thereafter; or
(e) Bankruptcy reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or
against the Issuer and, if instituted against the Issuer, Issuer
shall by any action or answer approve of, consent to or acquiesce in
any such proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding or such
proceedings shall not be dismissed within thirty (30) calendar days
thereafter; or
(f) There shall be a material adverse change in the
financial condition of the Issuer; or
(g) The Issuer shall have failed to deliver shares of
Common Stock issuable upon conversion of the Debentures within five
business days of when due under the terms of this Debenture; or
(h) The Issuer, or any other party, shall, at any time
after the Issuance Date, in any way materially adversely alter
Holder's priority interest as set forth below.
Then, or at any time thereafter, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) or
cured as provided herein, at the option of the Holder, and in the Holder's sole
discretion, the Holder may consider this Debenture (and all interest through
such date) immediately due and payable in cash, without presentment, demand
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law (including but
not limited to consequential damages if any). It is agreed that in the event of
such action, such Holder shall be entitled to receive all reasonable fees, costs
and expenses incurred, including without limitation such reasonable fees and
expenses of attorneys. The parties acknowledge that a change in control of the
Issuer shall not be deemed to be an Event of Default as set forth herein.
9. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
10. The Holder shall have the right to include all of the Conversion
Shares underlying this Debenture (the "REGISTRABLE SECURITIES") as part of any
registration of securities filed by the Issuer (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to
Form S-4 or S-8) and must be notified in writing of such filing as soon as
reasonably practicable; PROVIDED, HOWEVER, that the Holder agrees it shall not
have any piggy-back registration rights pursuant to this Debenture if the
Conversion Shares underlying this Debenture may be sold in the United States
pursuant to the provisions of Rule 144 without any restriction on resale. Holder
shall have five business days after receipt of the aforementioned notice from
the Issuer, to notify the Issuer in writing as to whether the Issuer is to
include Holder or not include Holder as part of such registration; PROVIDED,
HOWEVER, that if any registration pursuant to this paragraph shall be
underwritten, in whole or in part, the Issuer may require that the Registrable
Securities requested for inclusion pursuant to this paragraph be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If in the good faith judgment of the underwriter
evidenced in writing of such offering only a limited number of Registrable
Securities should be included in such offering, or no such shares should be
included, the Holder, and all other selling stockholders, shall be limited to
registering such proportion of their respective shares as shall equal the
proportion that the number of shares of selling stockholders permitted to be
registered by the underwriter in such offering bears to the total number of all
shares then held by all selling stockholders desiring to participate in such
offering. All registration expenses incurred by the Issuer in complying with the
terms of this Debenture shall be paid by the Issuer, exclusive of underwriting
discounts, commissions and legal fees and expenses for counsel to the Holder.
6
<PAGE>
11. This Debenture, together with all documents referenced herein,
embodies the full and entire understanding and agreement between the Issuer and
Holder with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof.
Neither this Debenture nor any terms hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the Issuer and the
Holder. All capitalized terms not otherwise defined herein shall have the same
meaning as given in the Agreement. In the event of any inconsistencies between
this Debenture and the Agreement, the Debenture shall control. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Debenture shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Debenture.
12. This Debenture will be construed and enforced in accordance with
and governed exclusively by the laws of the State of New York, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law. Each of the parties consents to the exclusive jurisdiction of
the U.S. District Court sitting in the Southern District of the State of New
York sitting in Manhattan 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. Each party hereby agrees
that if the other party to this Debenture obtains a judgment against it in such
a proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Debenture irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trial by jury.
13. Upon receipt by the Issuer of evidence of the loss, theft,
destruction or mutilation of any Debenture certificate(s), and (in the case of
loss, theft or destruction) of indemnity or security reasonably satisfactory to
the Issuer, and upon the cancellation of the Debenture certificate(s), if
mutilated, the Issuer shall execute and deliver new certificates for
Debenture(s) of like tenure and date.
14. This Debenture does not entitle the Holder hereof to any voting
rights or other rights as a shareholder of the Issuer prior to the conversion
into Common Stock thereof, except as provided by applicable law. If, however, at
the time of the surrender of this Debenture and conversion the Holder hereof
shall be entitled to convert this Debenture, the Conversion Shares so issued
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the Conversion Date.
15. Except as expressly provided herein or as required by law, so
long as this Debenture remains outstanding, the Issuer shall not, without the
approval by vote or written consent by the Holder, take any action that would
adversely affect the rights, preferences or privileges of this Debenture.
16. The Debentures shall only be junior in right of payment to the
Issuer's current debtors in the Issuer's Times Square, New York financing and
any current traditional bank financing and debts owed to the government, and
senior in respect to all other indebtedness of the Issuer outstanding as of the
original Issuance Date. The Issuer agrees that it shall not incur any other debt
or equity that ranks senior to the rights of the holder of this Debenture, so
long as this Debenture remains outstanding, except for traditional bank
financing or the repayment of government related debt, unless the holders of at
least seventy five percent (75%) of the then outstanding principal amount of
these Debentures agrees in writing.
7
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Convertible
Debenture to be duly executed by an officer thereunto duly authorized.
TAM RESTAURANTS, INC.
By_______________________________
Name: Anthony Golio
Title: President
Date: October 21, 2000
<PAGE>
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ________________
of the principal amount of the above Debenture No. ___ into Shares of Common
Stock of TAM Restaurants, Inc. according to the conditions hereof, as of the
date written below.
Date of Conversion ____________________________________________________________
Applicable Conversion Price __________________________________________________
Signature______________________________________________________________________
[Name]
Address:_______________________________________________________________________
_______________________________________________________________________
8
<PAGE>
