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EXHIBIT 10.24
8% CONVERTIBLE DEBENTURE
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
No. 1 US $2,000,000
8% CONVERTIBLE DEBENTURE DUE SEPTEMBER 30, 2001
THIS DEBENTURE is issued by InChorus.com, a corporation organized and
existing under the laws of the State of Nevada (the "Company") and is designated
as its 8% Convertible Debenture Due September 30, 2001.
FOR VALUE RECEIVED, the Company promises to pay to AMRO International,
S.A., or permitted assigns (the "Holder"), the principal sum of Two Million
Dollars and 00/100 (US $2,000,000) Dollars on September 30, 2001 (the "Maturity
Date") and to pay interest on the principal sum outstanding from time to time
quarterly in arrears at the rate of 8% per annum accruing from the date of
initial issuance. Accrual of interest shall commence on the first business day
to occur after the date of initial issuance and continue until payment in full
of the principal sum has been made or duly provided for. Quarterly interest
payments shall be due and payable on March 1, June 1, September 1 and December 1
of each year, commencing with June 1, 2000. Accrued but unpaid interest shall
also be due and payable on any Conversion Date (as defined herein). If any
interest payment date or the Maturity Date is not a business day in the State of
New York, then such payment shall be made on the next succeeding business day.
The Company will pay the principal of and any accrued but unpaid
interest due upon this Debenture on the Maturity Date, by check or wire transfer
to the person who is the registered holder of this Debenture as of the tenth day
prior to the Maturity Date and addressed to such holder at the last address
appearing on the Debenture Register. The forwarding of such check, or completion
of such wire transfer, shall constitute a payment of principal and interest
hereunder and shall satisfy and discharge the liability for principal, Payment
Premium and interest on this Debenture to the extent of the sum represented by
such check or wire transfer.
This Debenture is subject to the following additional provisions:
1. The Company shall be entitled to withhold from all payments of
interest on this Debenture any amounts required to be withheld under the
applicable provisions of the United States income tax laws or other applicable
laws at the time of such payments, and Holder shall execute and deliver all
required documentation in connection therewith.
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2. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. The Holder shall deliver written
notice to the Company of any proposed transfer of this Debenture. In the event
of any proposed transfer of this Debenture, the Company may require, prior to
issuance of a new Debenture in the name of such other person, that it receive
reasonable transfer documentation including legal opinions that the issuance of
the Debenture in such other name does not and will not cause a violation of the
Act or any applicable state or foreign securities laws. Prior to due presentment
for transfer of this Debenture, the Company and any agent of the Company may
treat the person in whose name this Debenture is duly registered on the
Company's Debenture Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary. This Debenture has been executed and
delivered pursuant to the Loan Agreement dated as of March 27, 2000 between the
Company and the original Holder (the "Loan Agreement"), and is subject to the
terms and conditions of the Loan Agreement, which are, by this reference,
incorporated herein and made a part hereof. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for such terms in the
Loan Agreement.
3. [THIS SECTION INTENTIONALLY LEFT UNUSED]
4. The Holder of this Debenture is entitled, at its option, to convert at
any time commencing after the date hereof, the principal amount of this
Debenture or any portion thereof, and at the Holder's election, any accrued but
unpaid interest, into shares of Common Stock of the Company ("Conversion
Shares") at a conversion price for each share of Common Stock equal to $1.75,
subject to adjustment for any stock splits, reverse splits or the like effected
after the date hereof ("Conversion Price"). If, upon any conversion of this
Debenture, the Company's issuance of Conversion Shares would cause it to violate
any listing requirement of the Principal Market, then in lieu of such stock
issuance, the Company shall pay the Holder cash in an amount equal to the
closing price of the Common Stock on the Conversion Date multiplied by the
number of shares which would otherwise have been issuable upon such conversion.
5. (a) The Company shall use at least fifty percent (50%) of the net
proceeds (i) from the Equity Financing Agreement, and (ii) from any other sale
for cash of its securities to redeem this Debenture, plus all accrued but unpaid
interest. Upon placing the outstanding amount the Company will redeem in an
escrow account on behalf of the Holder and upon a fifteen (15) day written
notice to the Investor any time commencing after the date hereof, the Company
shall be obligated to redeem this Debenture, plus all accrued but unpaid
interest. The Company shall make the redemption payment to the Holder within
five (5) Trading Days of the redemption date set forth in the Company notice of
redemption, or else the redemption notice shall be void, and the Company shall
thereafter not have any further right to redeem this Debenture. The Holder shall
have the right to convert this Debenture as set forth in Section 4 until the
Trading Day prior to the Trading Day set for payment of the redemption price, if
this Debenture is otherwise convertible at that time.
(b) The Company also shall have the right at any time to deliver to
the Holder a written notice of the Company's intent to redeem the entire
outstanding principal amount of this Debenture, plus all accrued but unpaid
interest. The Company shall make the redemption payment to the Holder within
five (5) Trading Days of the redemption date set forth in the Company notice of
redemption, or else the redemption notice shall be void, and the Company shall
thereafter not have any further right to redeem this Debenture without the
consent of the Holder. The Holder shall have the right to convert this Debenture
as set forth in Section 4 until the Trading Day prior to the Trading Day set for
payment of the redemption price.
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6. (a) Conversion shall be effectuated by surrendering this Debenture to
the Company (if such Conversion will convert all outstanding principal) together
with the form of conversion notice attached hereto as Exhibit A (the "Notice of
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Conversion"), executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion (as above provided)
hereof, and accompanied, if required by the Company, by proper assignment hereof
in blank. Interest accrued or accruing from the date of issuance to the date of
conversion shall, at the option of the Holder, be paid in cash as set forth
above. No fraction of a share or scrip representing a fraction of a share will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share. The date on which Notice of Conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Holder faxes the
Notice of Conversion duly executed to the Company. Facsimile delivery of the
Notice of Conversion shall be accepted by the Company at facsimile number ( )
Attn: Pat Coan, Chief Financial Officer. Certificates representing Common
Stock upon conversion will be delivered to the Holder within three (3) Trading
Days from the date the Notice of Conversion is delivered to the Company.
Delivery of shares upon conversion shall be made to the address specified by the
Holder in the Notice of Conversion.
(b) The Company understands that a delay in the issuance of shares of
Common Stock upon a conversion beyond the three (3) Trading Day period described
in Section 6(a) could result in economic loss to the Holder. As compensation to
the Holder for such loss, the Company agrees to pay late payments to the Holder
for late issuance of shares of Common Stock upon conversion in accordance with
the following schedule (where "No. Trading Days Late" is defined as the number
of Trading Days beyond three (3) Trading Days from the date the Notice of
Conversion is delivered to the Company).
<TABLE>
<CAPTION>
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No. Trading Days Late Late Payment for Each
$5,000 of Principal Amount
Being Converted
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<S> <C>
1 $100
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2 $200
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3 $300
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4 $400
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5 $500
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6 $600
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7 $700
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8 $800
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9 $900
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10 $1,000
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More than 10 $1,000 +$200 for each Trading Day
Late beyond 10 Trading Days
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</TABLE>
The Company shall pay any payments incurred under this Section 6(b) in
immediately available funds upon demand. Nothing herein shall limit Holder's
right to pursue injunctive relief and/or actual damages for the Company's
failure to issue and deliver Common Stock to the holder, including, without
limitation, the
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Holder's actual losses occasioned by any "buy-in" of Common Stock necessitated
by such late delivery. Furthermore, in addition to any other remedies which may
be available to the Holder, in the event that the Company fails for any reason
to effect delivery of such shares of Common Stock within three (3) Trading Days
from the date the Notice of Conversion is delivered to the Company, the Holder
will be entitled to revoke the relevant Notice of Conversion by delivering a
notice to such effect to the Company, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to delivery of
such Notice of Conversion, and in such event no late payments shall be due in
connection with such withdrawn conversion.
(c) If at any time (a) the Company challenges, disputes or denies the
right of the Holder to effect the conversion of this Debenture into Common Stock
or otherwise dishonors or rejects any Notice of Conversion delivered in
accordance with this Section 6 or (b) any Company stockholder who is not and has
never been an Affiliate (as defined in Rule 405 under the Securities Act of
1933, as amended) of the Holder obtains a judgment or any injunctive relief from
any court or public or governmental authority which denies, enjoins, limits,
modifies, delays or disputes the right of the holder hereof to effect the
conversion of this Debenture into Common Stock, then the Holder shall have the
right, by written notice, to require the Company to promptly redeem this
Debenture for cash at a redemption price equal to one hundred thirty percent
(130%) of the outstanding principal amount hereof and all accrued and unpaid
interest hereon. Under any of the circumstances set forth above, the Company
shall be responsible for the payment of all costs and expenses of the Holder,
including reasonable legal fees and expenses, as and when incurred in disputing
any such action or pursuing its rights hereunder (in addition to any other
rights of the Holder), subject in the case of clause (b) to the Company's right
to control and assume the defense of any such action. In the absence of an
injunction precluding the same, the Company shall issue shares upon a properly
noticed conversion.
The Holder shall be entitled to exercise its conversion privilege
notwithstanding the commencement of any case under 11 U.S.C.(S)101 et seq. (the
-- ---
"Bankruptcy Code"). In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives to the fullest extent permitted any rights to
relief it may have under 11 U.S.C. (S)362 in respect of the Holder's conversion
privilege.
7. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency or shares of Common Stock, herein prescribed. This Debenture is a
direct obligation of the Company.
8. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture as provided in Section 5, less
all amounts required by law to be deducted, upon which tender of payment
following such notice, the right of conversion shall terminate.
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9. This Debenture shall be governed by and construed in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement 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.
10. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture and same shall continue for a
period of ten (10) days; or
b. Any of the representations or warranties made by the Company
herein, in the Loan Agreement, the Registration Rights
Agreement, or in any agreement, certificate or financial or
other written statements heretofore or hereafter furnished
by the Company in connection with the execution and delivery
of this Debenture or the Loan Agreement shall be false or
misleading in any material respect at the time made; or
c. The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this
Debenture, fails to transfer or to cause its Transfer Agent
to transfer any certificate for shares of Common Stock
issued to the Holder upon conversion of this Debenture as
and when required by this Debenture or the Registration
Rights Agreement, and such transfer is otherwise lawful, or
fails to remove any restrictive legend or to cause its
Transfer Agent to transfer any certificate or any shares of
Common Stock issued to the Holder upon conversion of this
Debenture as and when required by this Debenture, the Loan
Agreement or the Registration Rights Agreement and such
legend removal is otherwise lawful, and any such failure
shall continue uncured for five (5) business days; or
d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of the Company under the
Loan Agreement, the Registration Rights Agreement or this
Debenture and such failure shall continue uncured for a
period of thirty (30) days after written notice from the
Holder of such failure; or
e. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment
for the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or
business without its consent and shall not be discharged
within sixty (60) days after such appointment; or
g. 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
Company and shall not be dismissed within sixty (60) days
thereafter; or
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h. Any money judgment, writ or warrant of attachment, or
similar process in excess of Three Hundred Thousand
($300,000) Dollars in the aggregate shall be entered or
filed against the Company or any of its properties or other
assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of sixty (60) days or in any event
later than five (5) days prior to the date of any proposed
sale thereunder; or
i. 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 Company and, if instituted
against the Company, shall not be dismissed within sixty
(60) days after such institution or the Company 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
j. The Company shall have its Common Stock suspended or
delisted from trading on a Principal Market for in excess of
two (2) Trading Days;
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) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, 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
the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
12. In no event shall the Holder be permitted to convert this Debenture
for shares of Common Stock in excess of the amount of this Debenture upon the
conversion of which, (x) the number of shares of Common Stock owned by such
Holder (other than shares of Common Stock issuable upon conversion of this
Debenture) plus (y) the number of shares of Common Stock issuable upon
conversion of this Debenture, would be equal to or exceed 9.9% of the number of
shares of Common Stock then issued and outstanding, including shares issuable
upon conversion of this Debenture held by such Holder after application of this
Section 12. As used herein, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder. To the extent that the
limitation contained in this Section 12 applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by the
Holder) and of which a portion of this Debenture is convertible shall be in the
sole discretion of such Holder, and the submission of a Notice of Conversion
shall be deemed to be such Holder's determination of whether this Debenture is
convertible (in relation to other securities owned by such holder) and of which
portion of this Debenture is convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. Nothing contained herein shall be
deemed to restrict the right of a holder to convert this Debenture into shares
of Common Stock at such time as such conversion will not violate the provisions
of this Section 12. The provisions of this Section 12 may be waived by the
Holder of this Debenture upon not less than 75 days' prior notice to the
Company, and the provisions of this Section 12 shall continue to apply until
such 75th day (or such later date as may be specified in such notice of waiver).
No conversion of this Debenture in violation of this Section 12 but otherwise in
accordance with this
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Debenture shall affect the status of the Common Stock issued upon such
conversion as validly issued, fully-paid and nonassessable.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by an officer thereunto duly authorized.
Dated: March 31, 2000
InChorus.com
By: /s/ William Yuan
______________________________
William Yuan, President & CEO
Attest:
/s/ Ralph G. Coan, Jr.
_______________________
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EXHIBIT A
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 InChorus.com. (the "Company") according to the
conditions hereof, as of the date written below.
Date of Conversion* _______________________________________________________
Applicable Conversion Price * _____________________________________________
Accrued Interest___________________________________________________________
Signature__________________________________________________________________
[Name]
Address:___________________________________________________________________
___________________________________________________________________
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