$2,200,000.00 Issued July 5, 1996
DEBENTURE AGREEMENT
EUROGAS, INC.
CONVERTIBLE DEBENTURE
(Due July 5, 2001)
THE SECURITIES ISSUED PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE TRANSFERRED OR SOLD IN THE UNITED STATES IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AND
ITS COUNSEL, TO THE EFFECT THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE ACT AND SUCH STATE STATUTES.
This original Debenture Agreement represents your right to
payment, and it is important that you retain it in a safe
place. This original Debenture Agreement must be delivered
to the Company on payment or conversion.
EuroGas, Inc. (the "Company"), hereby promises to pay to the holder of this
debenture, Lux Immobilien, or its assigns (the "Holder"), the principal sum of
$2,200,000 on or before July 5, 2001, and interest as provided herein, subject
to the terms and conditions set forth below.
1. Payment of Principal and Interest. The Company shall pay to the
Holder of this Debenture the principal sum stated hereon, on July 5, 2001, at
the offices of the Company at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxx 00000, in
such lawful money of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debt, and shall pay
semi-annually (July 31 and January 31 of each year) in lawful tender interest
thereon commencing July 5, 1996, at a rate of 7.5% per annum.
2. Conversion by Xxxxxx. The Holder of this Debenture is entitled at any
time prior to maturity, or in case this Debenture or some portion hereof shall
have been called for prepayment prior to maturity, then until 30 days after the
date of the notice of prepayment, to convert the Debenture (or any portion of
the principal amount and interest hereof at the rate of $2.70 per share), into
an aggregate of 814,815 fully paid and nonassessable shares of common stock, par
value $0.001 per share, of the Company (the "Shares"). The conversion right
shall be exercised by proper surrender of the original of the Debenture to the
Company, accompanied by written notice that the Holder hereof elects to convert
the Debenture.
3. Conversion by Company. Any time after March 1, 1998, the Company may
require the conversion of this Debenture on the terms set forth in paragraph 2
if the Company's common stock trades on NASDAQ (either national market, small
cap or bulletin board) or a national exchange at a bid price equal to or in
excess of $2.70 per share for a period of twenty-one (21) consecutive days.
4. Adjustment of Conversion Rate and Price. The conversion price, number
of Shares issuable upon conversion of the Debenture, and the trading price for
conversion set forth in paragraph 3, shall be appropriately adjusted if the
Company declares a stock dividend, split, reclassification, distribution, or
similar event.
5. Prepayment. After February 1, 1997, this Debenture is subject to
prepayment, in whole or in part, at the election of the Company at any time, on
not less than 30 days notice. During the 30 days following the date of any
notice of prepayment, the Holder will have the right to convert the Debenture
into shares of Common Stock on the terms and conditions provided in paragraph 2.
On the date fixed for prepayment, the Debenture shall cease to bear interest
with respect to the amount of principal actually paid. Upon the surrender of
the original of this Debenture to the Company for prepayment, the amount of
principal and interest then due shall be paid. Any Debenture which is prepaid
only in part shall be presented to the Company for notation thereon of such
partial prepayment.
6. Acceleration of Maturity. In the event of default on the payment of
the Debenture, the holder hereof shall have the right to accelerate the maturity
date of the Debenture and pursue all of the holder's rights and remedies under
law.
7. Events of Default. "Event of Default," when used herein, means any
one of the following events:
(a) Default in the payment of any interest on any Debenture when it
becomes due and payable, and continuance of such default of payment for a
period of 30 days; or
(b) Default in the payment of principal of any Debenture in this
series when due, whether at maturity, upon prepayment, or otherwise; or
(c) Default in the performance or breach of any covenant or warranty
of the Company in any Debenture (other than a covenant or warranty, the
breach or default in performance of which is elsewhere in this section
specifically dealt with), and continuation of such default or breach for a
period of 60 days after there has been given to the Company by registered
or certified mail by the Holder; or
(d) The entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of or in respect of the Company under the
Federal Bankruptcy Act or any other applicable federal or state law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) The institution by the Company of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or a filing by it of a
petition or answer or consent seeking reorganization or relief under the
Federal Bankruptcy Act, or any other applicable federal or state law of
similar tenor, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or the making by the Company of an
assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such
action.
8. Notices to Holder; Waiver. Where the Debentures provide for notice to
Holder of any event, such notice shall be sufficiently given if in writing and
sent by courier providing for delivery within 72 hours or mailed, return receipt
requested and postage prepaid, to each Holder affected by such event, at his
address as it appears in the Debenture register maintained by the Company, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. Such notice shall be deemed given as of the date
delivered to the courier or deposited in the mail. Neither the failure to
deliver or mail such notice, nor any defect in any notice so delivered or mailed
to any particular Holder shall affect the sufficiency of such notice with
respect to the Holder of other Debentures issued in this series. Where the
Debenture provides for notice to the Company, such notice shall be sufficiently
given if in writing and mailed, return receipt requested and postage prepaid, to
the Company at its address set forth above, not later than the latest date, and
not earlier than the earliest date prescribed for the giving of such notice.
Where the Debenture provides for notice in any matter, such notice may be waived
in writing by the person entitled to receive such notice, whether before or
after the event, and any such waiver shall be equivalent to such notice.
9. Withholding. The Company shall be entitled to withhold from all
payments of principal and interest on the Debenture any amounts required to be
withheld under the applicable provisions of the United States Internal Revenue
Code of 1986, as amended, applicable state tax laws, or any other applicable law
at the time of such payments.
10. Governing Law. The Debenture shall be governed by and construed and
interpreted in accordance with the laws of the state of Utah.
11. Miscellaneous. This Debenture is subject to the following additional
terms and conditions:
(a) If this Debenture is placed with an attorney for collection, or
if suit is instituted for collection, or if any other remedy provided by
law is pursued by the registered Holder hereof, because of any Event of
Default, the undersigned agrees to pay reasonable attorney's fees, costs,
and other expenses incurred by the registered Holder hereof in so doing.
(b) Subject to the limitations on transfer imposed by United States
federal and state securities laws, this Debenture may be transferred,
subject to compliance with the provisions hereof.
EUROGAS, INC.
By /s/ Xxxx Xxxxxxxxxxxx
Xxxx Xxxxxxxxxxxx, Secretary/Treasurer
