LICENSE AGREEMENT
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This License Agreement ("Agreement") is entered into effective as of
the 23 day of August, 2000 (the "Effective Date"), by and between WINDMILL
SCIENTIFIC CORPORATION, a Florida corporation ("Licensor"), and WHITEHALL
ENTERPRISES, INC., a Delaware corporation ("Licensee").
WHEREAS, Licensor has the sole proprietary rights in certain software
known as "DocPal Medical Review"; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Parties desire Licensor to license to Licensee Licensor's DocPal software for
use on the Licensee Site and to otherwise market throughout the world;
NOW, THEREFORE, the Parties, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS
1.1 "Confidential Information" shall mean confidential or other proprietary
information that is disclosed by Licensor to Licensee under this Agreement,
including, without limitation, hardware and software designs and code, product
specifications and documentation, business and product plans, and other
confidential business information. Confidential Information shall not include
information which Licensee can show: (i) is or becomes public knowledge without
any action or omission by, or involvement of, Licensee; (ii) is released from
confidential treatment by written consent of Licensor; or (iii) is independently
developed by Licensee without use of or reference to the Confidential
Information.
1.2 "Intellectual Property Rights" shall mean all forms of intellectual
property rights and protections that may be obtained for, or may pertain to, the
Licensed Product and Confidential Information and may include, without
limitation, all right, title and interest in and to all (i) Letters Patent and
all filed, pending or potential applications for Letters Patent, including any
reissue, reexamination, division, continuation or continuation-in-part
applications throughout the world now or hereafter filed; (ii) trade secret
rights and equivalent rights arising under the common law, state law, federal
law and laws of foreign countries; (iii) mask works, copyrights, other literary
property or authors' rights, whether or not protected by copyright or as a mask
work, under common law, state law, federal law and laws of foreign countries;
and (iv) proprietary indicia, trademarks, trade names, symbols, logos and/or
brand names under common law, state law, federal law and laws of foreign
countries.
1.3 "Licensed Product" means the product that is identified as Licensed
Product in the attached Exhibit A, and all Updates provided to Licensee
hereunder.
1.4 "Object Code" shall mean machine readable program code that is
expressed in a form that is not generally suitable for modification by humans
without reverse engineering.
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1.5 "Party" shall mean Licensor or Licensee as applicable, and "Parties"
means Licensor and Licensee.
1.6 "Update" shall mean a revision of the Licensed Product which Licensor
may from time to time produce, if any. Updates shall include bug fixes and
corrections provided by Licensor for the Licensed Product. The inclusion of new
functionality, modules or products within an Update is within the sole
discretion of Licensor.
2. LICENSE
2.1 License Grant. Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee an exclusive royalty bearing license during
the term of this Agreement to use the Licensed Product (the "License") on an
Internet website and to market throughout the world in all formats and media
except as provided below and, provided further, that this License is assignable
to a subsidiary of Licensee (subject to Licensee remaining liable for the
subsidiary's performance of Licensee's obligations hereunder). Notwithstanding
the foregoing, Licensor retains the exclusive right to license, market and sell
the Licensed Product in all formats and media, except for use on an Internet
website, pursuant to all agreements, joint ventures and licenses (and renewals
or amendments thereof) with respect to DocPal to which Licensor is a party as of
the date of this Agreement, and made part of this agreement as Exhibit B.
2.2 Restrictions. Licensee shall not reverse engineer or de-compile or
otherwise attempt to obtain the source code for the Licensed Product, and shall
not permit any third party to do or attempt to do the same, and shall not sell,
lease, assign or otherwise transfer or disclose the Licensed Product, in whole
or in part, to any third party.
2.3 Quality Control. Prior to using a form of the Licensed Product in a
translation other than the English and the Spanish language, Licensee shall
submit the translated form of Licensed Product for Licensor's prior consent that
the form of translation meets the highest commercial standards.
3. MAINTENANCE
3.1 Repairs. Licensor shall provide a patch, fix or solution for any
material malfunction, defect or failure of the Licensed Product to conform to
the applicable user documentation within a reasonable period of time following
notification by Licensee.
3.2 Updates. Licensor shall provide Licensee with Updates to the Licensed
Product within 30 days after Licensor completes such Updates. The decision to
create any Updates shall remain in Licensor's sole discretion.
3.3 Exclusions. Licensor shall have no obligations to provide maintenance
or support hereunder relating to any errors, defects or malfunctions caused by
(i) erroneous data input, (ii) errors or defects in, or malfunction of, third
party hardware or software, (iii) modifications not made by Licensor, (iv)
operator error, (v) use that is not in accordance with applicable operating
instructions, or (vi) failure to use the most recent Update to the Licensed
Product.
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4 CONSIDERATION
In consideration of this Agreement, Licensee shall pay to Licensor the
following:
4.1 License Fee. A nonrefundable initial license fee of $500,000, payable
in 15 equal installments of $33,333 commencing on the date hereof and on the
next 14 - 15th days of each month commencing September 15, 2000.
4.2 Profit Participation. An annual fee payable on or before the last day
of February of each year equal to 25% of the Net Profits for the preceding year
inuring to Licensee from the Licensed Product. "Net Profits" as used herein
shall mean all revenues received in connection with the Licensed Product
("Revenues"), from whatever source, of the division or subsidiary whose sole
revenues and expenses relate to the Licensed Product including all fees, sales
and advertising revenues, linkage revenues and user fees from the Licensee Site,
less operating expenses determined in accordance with generally accepted
accounting principles, excessive benefits, excessive salaries, excessive bonuses
and excessive incentive compensation shall be excluded from such operating
expenses.
4.3 Royalties. An annual royalty fee equal to 7.5% of Revenues for each
year commencing with the year 2001 payable on or before the last day of February
of the following year.
4.4 Debenture. A convertible debenture issued in the name of Licensor and
delivered to Licensor contemporaneously with the execution hereof in the
principal amount of $2,150,000 in the form attached hereto as Exhibit C.
4.5 Audit Rights. Licensor or its agents shall have the right to audit and
review the books and records of Licensee from time to time during reasonable
business hours in order to confirm the Revenues and related operating expenses.
5 FEASIBILITY
Licensee shall have 90 days from the date of this Agreement to establish the
feasibility of the Licensed Product. Licensor agrees to cooperate fully with
Licensee and provide all reasonable data and information and personnel for the
purpose of enabling Licensee to establish feasibility. If Licensee determines
that its intended use of the Licensed Product is not feasible, it may terminate
this Agreement by giving written notice of termination to Licensor on or prior
to such 90th day. In the event of termination, (i) Licensee shall comply with
Section 10.4 hereof, (ii) the parties shall have no further liabilities or
obligations hereunder and (iii) Licensor shall not be obligated to refund any
consideration paid to it hereunder prior to the date of termination.
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6 INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIALITY
6.1 Intellectual Property Rights. Licensee hereby recognizes that, except
as expressly set forth herein, Licensor retains all Intellectual Property Rights
in the Licensed Product and Confidential Information, including, without
limitation, all derivative works thereof. Licensee hereby assigns and agrees to
assign any rights Licensee may have in the Licensed Product or Confidential
Information, or any derivative works thereof.
6.2 Confidentiality. Licensee agrees to observe complete confidentiality
with respect to the Confidential Information; not to disclose, or permit any
third party or entity access to, the Confidential Information (or any portion
thereof) without prior written permission of Licensor; and to insure that any
employees, or any third parties who receive access to the Confidential
Information, are advised of the confidential and proprietary nature thereof and
are prohibited from copying, utilizing or otherwise revealing the Confidential
Information. Without limiting the foregoing, Licensee agrees to employ with
regard to the Confidential Information procedures no less restrictive than the
strictest procedures used by it to protect its own confidential and proprietary
information, but in no event less than a reasonable degree of care. Licensee may
disclose Confidential Information to the extent required by judicial or
governmental order provided that Licensee provides Licensor with sufficient
prior notice to contest such order or seek appropriate confidential treatment of
the Confidential Information.
7 WARRANTY
7.1 General. Licensor represents and warrants to Licensee that during the
term of this Agreement the Licensed Product shall substantially conform to, and
operate in accordance with, the applicable user documentation.
7.2 Year 2000. Licensor represents and warrants to Licensee that the
Licensed Product, when used in accordance with the documentation and with the
most recent Update, is capable of correctly processing date data after January
1, 2000, provided that all products used with the Licensed Product properly
exchange accurate date data with the Licensed Product in a format compatible
with the Licensed Product.
7.3 No Viruses. Licensor represents and warrants to Licensee that, to the
best of its knowledge, the Licensed Product will not contain, at the time of
shipment by Licensor, any "worm," or similar computer "virus" that intentionally
erases or disables any software or data contained in Licensee's computer systems
without Licensee's authorization.
7.4 Limitation. Licensor's sole responsibility under the representations
and warranties set forth herein shall be to repair or replace the Licensed
Product, even if such repair or replacement fails of its essential purpose.
Licensor shall have no obligations under this Agreement for any errors, defects
or malfunctions caused by (i) erroneous data input, (ii) errors or defects in,
or malfunction of, third party hardware or software, (iii) modifications not
made by Licensor, (iv) operator error, (v) use that is not in accordance with
applicable operating instructions, or (vi) failure to use the most recent Update
to the Licensed Product.
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7.5 Disclaimer. EXCEPT FOR THE WARRANTIES SPECIFICALLY STATED IN THIS
ARTICLE 7, LICENSOR HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY.
8 INDEMNIFICATION
8.1 By Licensor. Licensor shall, at its expense, defend, indemnify and hold
harmless Licensee from any cost, damage, liability or expense (including
reasonable attorneys' fees) brought against Licensee by a third party based on
(i) a claim that the use of the Licensed Product as shipped by Licensor to
Licensee infringes the Intellectual Property Rights of a third party, (ii)
proper use of, or reliance on, the Licensed Product in accordance with the terms
of this Agreement, (iii) any breach of this Agreement by Licensor, or (iv) any
gross negligence or willful misconduct by Licensor, its agents or employees.
Licensee agrees to promptly notify Licensor in writing of any claim, to permit
Licensor to defend, compromise or settle the claim and to provide all available
information and reasonable assistance regarding such claim. Licensor shall not
be liable for any costs, or fees incurred by Licensee on such action or claim
unless authorized in writing by Licensor.
8.2 Remedies. Should any Licensed Product become, or in Licensor's opinion
be likely to become, the subject of a claim for infringement of a third party's
Intellectual Property Rights, Licensor may (i) procure for Licensee, at no cost
to Licensee, the right to continue to use the Licensed Product, (ii) replace or
modify the Licensed Product at no cost to Licensee, to make such non-infringing,
provided that the replacement or modified Licensed Product provides
substantially similar function and performance, or (iii) if neither (i) or (ii)
are practical, terminate this Agreement.
8.3 By Licensee. Except for claims that the Licensed Product as shipped by
Licensor to Licensee infringe the Intellectual Property Rights of a third party,
Licensee shall, at its expense, indemnify, defend, and hold harmless Licensor
from any cost, damage, liability or expense (including reasonable attorneys'
fees) brought against Licensor by a third party based on a claim arising from or
related to (i) proper use of, or reliance on, the Licensed Product in accordance
with the terms of this Agreement, (ii) any breach of this Agreement by Licensee,
or (iii) any gross negligence, or willful misconduct of Licensee, its agents or
employees. Licensor agrees to promptly notify Licensee in writing of any claim,
to permit Licensee to defend, compromise or settle the claim and to provide all
available information and reasonable assistance regarding such claim. Licensee
shall not be liable for any costs, or fees incurred by Licensor on such action
or claim unless authorized in writing by Licensee.
8.4 Special Indemnification.
a. Licensor further agrees to indemnify and save harmless Licensee for
any damages sustained by licensee as a result of any foreign licensees
or parties included in Exhibit B effecting sales, agreements, joint
ventures or licenses for the Licensed Products in jurisdictions
reserved to the Licensee.
b. Licensor further agrees to indemnify and save harmless Licensee for
any damages sustained by Licensee as a result of any claim by one Mr.
Ricardo Bisio regarding the software known as "DocPal Medical Review".
Licensor states that this aforementioned negotiation between Licensor
and Mr. Ricardo Bisio does not in any way involve the Licensee, nor
does it have any relevance to this Agreement between Licensor and
Licensee.
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8.5 Limitation. Licensor shall have no liability for any claim or suit
based upon: (i) the alteration or modification of any Licensed Product that was
not made by Licensor; or (ii) the failure by Licensee to use the most current
Update to the Licensed Product.
8.6 Entire Liability. This Article 8 states the entire liability of
Licensor with respect to infringement of any Intellectual Property Rights by the
Licensed Product and Licensor shall have no additional liability with respect to
any alleged or proven infringement.
9 LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER ENTITY
FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING
TO ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
10 TERM AND TERMINATION
10.1 Term. This Agreement shall commence on the Effective Date and continue
for a period of 15 years (the "Term"), unless sooner terminated pursuant to this
Article 10. The Agreement may be renewed for subsequent terms upon agreement of
the parties.
10.2 Termination for Cause. In the event of any material breach of this
Agreement, the non-breaching Party may terminate this Agreement by giving 30
days' prior written notice to the other Party; provided, however, that this
Agreement shall not terminate if the other Party has cured the breach prior to
the expiration of such 30-day period. The minimum annual (calendar year) royalty
payment pursuant to Section 4.3 shall be $100,000 for the year 2001, $200,000
for the year 2002, $300,000 for the year 2003, $400,000 for the year 2004, and
then $500,000 yearly for the remainder of the term of this Agreement. In the
event that the annual royalty payment is less than stipulated above, Licensor
may terminate this Agreement or, at Licensor's option, the license granted
hereunder shall become nonexclusive. The annual royalty payment shall be payable
in cash or stock at Licensor's discretion.
10.3 Termination for Insolvency. Either Party may terminate this Agreement,
without notice, (i) upon the institution by or against the other Party of
insolvency, receivership or bankruptcy proceedings, (ii) upon the other Party's
making an assignment for the benefit of creditors, or (iii) upon the other
Party's dissolution or ceasing to do business.
10.4 Effect of Termination. Upon expiration or termination of this
Agreement, (i) the License granted hereunder pursuant to Section 2.1 shall
immediately terminate, (ii) Licensee shall pay to Licensor all unpaid Fees that
are payable hereunder prior to the date of termination, including profit
participation and royalties for any period to the date of termination which is
less than a full year, and (iii) Licensee shall, at the option of Licensor,
either destroy and certify the destruction of, or return to Licensor, all copies
of the Licensed Product, Updates, Confidential Information and all other
tangible materials relating to the foregoing.
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10.5 Survival. The provisions of Sections 10.4 and 10.5 and Articles 5, 6,
7, and 11 shall survive the expiration or termination of this Agreement for any
reason.
11 GENERAL PROVISIONS
11.1 Relationship of the Parties. The relationship of Licensor and Licensee
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either Party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the Parties as partners, joint venturers, or co-owners, or (iii)
allow either party to create or assume any obligation on behalf of the other
party for any purpose whatsoever.
11.2 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed effective when delivered by hand or by facsimile
transmission, or by recognized overnight courier, to the Parties at the
addresses listed below:
If to Licensor: Windmill Scientific Corporation
4210 N.W. 4th Street
Miami, Florida 33126
Attention: Dr. Roberto P. Barcala
Fax No.: 305-442-1488
If to Licensee: Whitehall Enterprises, Inc.
1825 Ponce de Leon Boulevard
Coral Gables, Florida 33134
Attention: Mr. Luis Alvarez
Fax No.: 305-858-2355
11.3 Headings. Section headings are for convenience only and shall not be a
part of the terms and conditions of this Agreement.
11.4 Waiver. Failure by either Party at any time to enforce any obligation
of the other Party, to claim a breach of any term of this Agreement or to
exercise any power agreed to hereunder will not be construed as a waiver of any
right, power or obligation under this Agreement, will not affect any subsequent
breach, and will not prejudice either Party as regards to any subsequent action.
11.5 Severability. If any term or provision of this Agreement should be
declared invalid by a court of competent jurisdiction, the remaining terms and
provisions of this Agreement shall remain unimpaired and in full force and
effect.
11.6 Assignment. Licensee may not assign this Agreement without the prior
written consent of Licensor, except to wholly owned subsidiaries of Licensee
provided that Licensee remains liable for any breach hereof by such subsidiary.
Licensor may not assign this Agreement without the prior written consent of
Licensee, except to wholly owned subsidiaries of Licensor provided that Licensor
remains liable for any breach hereof by such subsidiary.
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11.7 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Florida,
without giving effect to principles of conflicts of laws.
11.8 Arbitration. Any controversy or disagreement arising out of or relating
to this Agreement or its termination shall be submitted for determination by a
board of arbitration consisting of three arbitrators who are to be appointed and
are to act in accordance with the rules of the American Arbitration Association.
The board of arbitration will hold its hearing in Miami-Dade County, Florida.
The board of arbitration shall cause its written decision to be delivered to the
parties. Any decision made by the board of arbitration shall be final, binding
and conclusive on the parties, and each party to the arbitration shall be
entitled to enforce such decision to the fullest extent permitted by law and
entered in any court of competent jurisdiction.
11.9 Attorneys' Fees. In connection with any arbitration or litigation
arising out of the enforcement of this Agreement or for its interpretation, the
prevailing Party shall be entitled to recover its costs, including reasonable
attorneys' fees, at the arbitration, trial and all appellate levels from the
other Party.
11.10 Force Majeure. Nonperformance of either Party shall be excused to the
extent the performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, or any other reason where failure
to perform is beyond the reasonable control of and is not caused by the
negligence or intentional act or omission of the non-performing Party.
11.11 Entire Agreement. This Agreement, together with the attached Exhibits,
sets forth the entire agreement and understanding of the Parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the Party
to be charged.
(Signature Page Follows)
<PAGE>
IN WITNESS WHEREOF, the Parties hereto through their duly authorized
representatives have executed this Agreement as of the day and year first set
forth above.
WINDMILL SCIENTIFIC CORPORATION
By /s/ Roberto P. Barcala
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Dr. Roberto P. Barcala, President
WHITEHALL ENTERPRISES, INC.
By /s/ Luis Alvarez
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Luis Alvarez, Chairman & CEO
<PAGE>
Exhibit A
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LICENSED PRODUCT
The licensed product is medical software for humans, written in English and
Spanish, known as "DocPal Medical Review". This software contains information
about general internal medicine, and is composed of three main sections:
1. Written medical information on general internal medicine topics,
accompanied by multimedia that compliments the specific topic.
2. Four interactive laboratory consultants that guide the user in
interpreting laboratory data. These consultants include Blood Test,
Liver Function Tests, Pleural Effusion Analysis and Thyroid Function
Tests.
3. A Differential Diagnosis Finder that generates a differential diagnosis
based on a selected clinical presentation.
<PAGE>
Exhibit B
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FOREIGN AGREEMENTS
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As of the date of this Agreement, Windmill Scientific Corporation is a party to
the following agreements, joint ventures and/or licenses ("Contracts") in the
following countries:
Country Other Parties and Expiration
Argentina Dr. Armando Goldman and
Mr. Julio Navarro 7/00-10/00
Uruguay Dr. Armando Goldman and
Mr. Julio Navarro 7/00-10/00
Venezuela Dr. Raul Portillo 6/00-6/01
Colombia Dr. Jorge A. Pulido 6/00-6/01
Mexico Dr. Jorge A. Pulido 6/00-6/01
Costa Rica Dr. Jorge A. Pulido 6/00-6/01
Dominican Republic Dr. Jorge A. Pulido 6/00-6/01
Honduras Dr. Jorge A. Pulido 6/00-6/01
Brazil Sr. Pedro Fialdini 6/00-1/01
In the event that any of the Contracts terminate, Licensor retains the exclusive
right to enter into Contracts with other parties in that country in substitution
for the terminated Contract ("Substituted Contracts"); provided, however, that
Licensee shall have a right of first refusal with respect to such Substituted
Contracts. Prior to entering into any Substituted Contracts, Licensor will
provide Licensee with written notice of the terms of the Substituted Contract,
and Licensee will have 45 days to evaluate whether or not it wishes to enter
into the Substituted Contract. The Licensor and Licensee will proceed thereafter
in good faith to negotiate the remaining terms of the Substituted Contract.
<PAGE>
Exhibit C
CONVERTIBLE DEBENTURE
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$2,150,000.00 August 31, 2000
FOR VALUE RECEIVED, the undersigned, WHITEHALL ENTERPRISES, INC., a
Delaware corporation ("Maker"), hereby promises to pay to the order of WINDMILL
SCIENTIFIC CORPORATION ("Payee"), the principal sum of Two Million, One Hundred
and Fifty Thousand Dollars ($2,150,000.00) with interest on the unpaid principal
at the rate of 5% per year, and with the outstanding principal and all accrued
interest being due and payable 18 months after the date hereof ("Maturity Date")
all as hereinafter provided.
1. Payments of Interest and Principal
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a. Interest. Maker will pay interest to Payee on the
outstanding principal owed to Payee at the rate of 5%
per year. Interest will be payable at the Maturity
Date.
b. Principal. Maker has no duty or obligation to pay any
portion of the outstanding principal owed hereunder,
except as provided hereinafter in paragraph 3, until
the Maturity Date. Thereafter, all outstanding
principal and accrued interest will be due and
payable to Payee at any time commencing at the
Maturity Date in the discretion of either the Maker
or the Payee; provided, however, the Maker shall have
the right to issue its Common Stock in payment of
principal and/or interest at a price to be determined
as provided in Section 3 below.
2. Place of Payment. So long as Payee shall hold this Debenture, all
payments of principal and interest shall be made at the principal office of
Payee, as specified by Payee in writing upon presentment of this Debenture.
3. Conversion. Payee may convert any or all of the outstanding
principal and accrued interest of this Debenture into Maker's common stock, par
value $.0001 per share ("Common Stock"), at the conversion price of $1.00 per
share at any time prior to the 18 months period commencing on the date of
execution of this Debenture, and thereafter at the conversion price equal to the
average closing bid price for a share of the Common Stock for the 5 trading days
prior to the Notice of Conversion (defined below), per share. The Payee shall
exercise the option to convert by sending this Debenture and written election to
such effect to Maker, which election shall specify the amount of indebtedness to
be converted ("Notice of Conversion"), and by completing any other such
documentation as shall be reasonably requested by Maker, including but not
limited to a subscription agreement.
<PAGE>
4. Registration Rights. Payee and its assigns shall have the
registration rights described in this Section 4 with respect to all of the
shares of Common Stock issued to it pursuant to Sections 1.b and 3 hereof. If at
any time after the date hereof until the one-year anniversary of the issuance of
such shares Maker proposes to register any securities under the Securities Act
of 1933 on Forms S-1, S-2, S-3 or their successors, Maker shall give Payee
written notice thereof and, upon the written request of Payee given to Maker
within 10 days of such notice, Maker shall include in the registration statement
the number of shares of Common Stock or shares issuable upon conversion of this
Debenture which payee requests. Maker shall be responsible for the costs and
expenses of any registration under this Section 4. Maker shall indemnify and
hold Payee harmless from any loss, claim, damage or liability arising from any
untrue statement or omission of a material fact contained in any such
registration statement.
The foregoing notwithstanding, Payee shall be entitled to demand
registration rights at the cost of the Maker if it converts this Debenture
within such initial 18-month period. Maker may defer such right at the request
of any underwriter for the Maker's securities.
5. Covenants. Maker covenants and agrees that it will at all times
reserve and keep available an authorized number of shares of its Common Stock
sufficient to permit the exercise in full of all outstanding options, warrants
and rights, including the conversion rights under this Debenture.
6. Default.
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a. Event of Default. Each of the following, to the
extent not cured by Maker on written notice from
Payee, shall constitute an "Event of Default" under
this Debenture:
i. Maker shall fail to make any payment under this
Debenture when due; or
ii. The dissolution or any other termination of
Maker's business as a going concern, the insolvency of Maker,
the appointment of a receiver for any part of Maker's
property, any assignment for the benefit of Maker's creditors,
or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Maker.
b. Rights and Remedies on Default. Upon the concurrence
of an Event of Default, all outstanding principal and accrued
interest shall become immediately due and payable by Maker,
and the interest rate payable under this Debenture shall
increase from 5% per year to 18% per year, and shall continue
at that rate until the Event of Default is cured.
7. Miscellaneous. In the event any provision contained in this
Debenture shall, for any reason, be held invalid, illegal or unenforceable in
any respect, the validity of all other terms and provisions hereto shall in no
way be affected thereby. This Debenture shall be read, construed and governed in
all respects in accordance with the laws of the State of Florida.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Debenture to be
executed by its duly authorized officer and its seal affixed hereto, as of the
day and year first above written.
WHITEHALL ENTERPRISES, INC.
By:
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Luis Alvarez, Chairman & CEO
