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Visual Data - Form Of 6% Convertible Debenture
FORM OF 6% CONVERTIBLE DEBENTURE
NO. ___ $6,500,000 USD
GOLF SOCIETY INTERNATIONAL, INC.
6% CONVERTIBLE DEBENTURE DUE JANUARY __, 2007
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE TRANSFERRED, ASSIGNED, SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED BECAUSE OF AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
This 6% CONVERTIBLE DEBENTURE is a duly authorized 6% Convertible Debenture (the "Debenture") of GOLF SOCIETY INTERNATIONAL, INC., a corporation duly organized and existing under the laws of the State of ________ (the "Issuer"), issued on January __, 2007 (the "Issuance Date"), and designated as its Debenture due January __, 2007, in an aggregate face amount of all Debentures not exceeding Six Million Five Hundred Thousand Dollars (USD $6,500,000).
FOR VALUE RECEIVED, the Issuer promises to pay to: VISUAL DATA CORPORATION, a Florida corporation, the registered holder hereof or its registered assigns, if any (the "Holder"), the principal sum of: Six Million Five Hundred Thousand United States Dollars ($6,500,000), on January __, 2002 (the "Maturity Date"), and to pay interest, as outlined below, at the rate of six percent (6%) per annum, subject to adjustment herein, on the principal sum outstanding for the term of this Debenture. Accrual of interest shall commence on the date hereof and shall be payable (for the first year of this Debenture) on January __, 2003, and thereafter quarterly on April 1, July 1, October 1, and January 1, commencing April 1, 2003. The interest so payable will be paid to the person in whose name this Debenture 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 this Debenture. Principal and interest are payable at the address last appearing on the Debenture Register as designated in writing by the Holder hereof from time to time.
The Debenture is subject to the following additional provisions:
1. EXCHANGEABILITY. The Debenture is exchangeable for like Debentures in equal aggregate principal amount of authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, although the Holder shall be responsible for its own expenses associated with complying with the restrictions on transfer of the Debenture.
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2. WITHHOLDING. The Issuer shall be entitled to withhold from all payments of principal and 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. RESTRICTION. This Debenture has been and the Conversion Shares (as defined) will be issued subject to investment representations of the original Holder hereof and may be transferred or exchanged in the United States only in compliance with the Securities Act and applicable state securities laws and in compliance with the restrictions on transfer provided in the Subscription 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 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 and any related agreements.
This Debenture and the Conversion Shares has been acquired for investment purposes and not with a view to distribution or resale and may not be pledged, hypothecated, sold, made subject to a security interest, or otherwise transferred without (i) an effective registration statement for such Debenture under the Securities Act of 1933 and such applicable blue sky laws, or (ii) an opinion of counsel, which opinion of counsel shall be reasonably satisfactory to the Issuer and its counsel, that registration is not required under the Securities Act or under any applicable blue sky laws. Transfer of the Conversion Shares issued upon the conversion of this Debenture shall be restricted in the same manner and to the same extent as the Debenture and the certificates representing such Conversion Shares shall bear substantially the following legend:
4. EVENTS OF DEFAULT. If one or more of the following described "Events of Default" shall occur:
(a) Any of the representations or warranties made by the Issuer herein shall have been incorrect when made in any material respect; or
(b) Except for the failure of Issuer to pay an increased rate of interest during an Event of Default as described below, the Issuer shall breach, fail to perform, or observe in any material respect any covenant, term, provision, condition, agreement or obligation of the Issuer under this Debenture or the Warrant(s) received together herewith, between the parties thereof and such default is not cured within thirty (30) days of the Issuer's receipt of written notice from the Holder or other party in respect to such default; or
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(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 sixty (60) 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 all the properties or assets of the Issuer and shall not be dismissed within sixty (60) 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 forty-five (45) days thereafter.
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), the interest rate shall increase to 12% per annum until the date the Event of Default is cured, provided that no such interest rate increase, or waiver thereof shall constitute a waiver of any other rights the Holder may have as a result of such Event of Default.
5. CONVERSION. The Holder of this Debenture shall have the following conversion rights:
(a) VOLUNTARY CONVERSION. The Holder shall have the right at any time and from time to time prior to payment in full of this Debenture, at the Holder's option, to convert any or all of the principal amount of this Debenture for such number of fully paid, validly issued and nonassessable shares of Common Stock of Issuer, as is determined pursuant to this Section 5 (the "Conversion Shares").
(b) CONVERSION RATE. The Outstanding Principal Amount of this Debenture that is converted into Conversion Shares at the option of the Holder shall be convertible into the number of Conversion Shares which results from application of the following formula:
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P + I
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Conversion Price
P = Outstanding Principal Amount of this Debenture submitted for
conversion as of the Voluntary Conversion Notice Date
I = accrued but unpaid interest (not previously added to
principal) on P as of the Voluntary Conversion Notice Date
The number of shares of Common Stock into which each $1,000 principal amount of this Debenture hereto may be converted pursuant to this paragraph hereof is hereafter referred to as the "Conversion Rate."
(c) CONVERSION PRICE. (i) Subject to the adjustments set forth below, the "Conversion Price" shall be equal to the lesser of:
(a) 150% of the stock price of the Issuer taken on the average
of the 30 Trading Days immediately following the initial
trading date of the stock, if publicly trading within 90 days
from the Closing of the Stock Purchase Agreement, or the value
of the stock based on the financing completed closest in time
to the closing of the Stock Purchase Agreement (the "Maximum
Conversion Price"); and (b) 10% discount of the average
closing price of Common Stock for the 10 Trading Days
immediately prior to the date of the Voluntary Conversion
Notice Date (as defined below) (the "Variable Conversion
Price").
Notwithstanding the foregoing, the Conversion Price may not be less than the Floor Price (as defined below).
As used herein, the "Floor Price" shall be equal to 50% of the stock price of the Issuer taken on the average of the 30 Trading Days immediately following the initial trading date of the stock, if publicly trading within 90 days from the Closing of the Stock Purchase Agreement, or the value of the stock based on the financing completed closest in time to the closing of the Stock Purchase Agreement...
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