EXHIBIT 10.5
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY.
Original Issue Date: August ___, 2005
$[_________
10% SENIOR SECURED DEBENTURE
DUE AUGUST ___, 2008
THIS 10% SECURED DEBENTURE is one of a series of duly authorized and issued
10% Senior Secured Debentures of Intraop Medical Corporation, a Nevada
corporation, having a principal place of business at ______________________ (the
"Company"), designated as its 10% Senior Secured Debenture, due August ___, 2008
(the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to Regenmacher Holdings
Ltd. or its registered assigns (the "Holder"), the principal sum of $[________
on August ___, 2008 or such earlier date as this Debenture is required or
permitted to be repaid as provided hereunder (the "Maturity Date"), and to pay
interest to the Holder on the then outstanding principal amount of this
Debenture in accordance with the provisions hereof. This Debenture is subject to
the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement, and (b)
the following terms shall have the following meanings:
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which
banking institutions in the State of New York are authorized or required by
law or other government action to close.
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"Change of Control Transaction" means the occurrence after the date
hereof of any of (i) an acquisition after the date hereof by an individual
or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated
under the Exchange Act), other than pursuant to the Transaction Documents
or the Convertible Debenture Transaction Documents, of effective control
(whether through legal or beneficial ownership of capital stock of the
Company, by contract or otherwise) of in excess of 40% of the voting
securities of the Company, or (ii) the Company merges into or consolidates
with any other Person, or any Person merges into or consolidates with the
Company and, after giving effect to such transaction, the stockholders of
the Company immediately prior to such transaction own less than 60% of the
aggregate voting power of the Company or the successor entity of such
transaction, or (iii) the Company sells or transfers its assets, as an
entirety or substantially as an entirety, to another Person and the
stockholders of the Company immediately prior to such transaction own less
than 60% of the aggregate voting power of the acquiring entity immediately
after the transaction, (iv) a replacement at one time or within a three
year period of more than one-half of the members of the Company's board of
directors which is not approved by a majority of those individuals who are
members of the board of directors on the date hereof (or by those
individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a majority
of the members of the board of directors who are members on the date
hereof), or (v) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events
set forth above in (i) or (iv).
"Common Stock" means the common stock, par value $0.001 per share, of
the Company and stock of any other class of securities into which such
securities may hereafter have been reclassified or changed into.
"Debenture Register" shall have the meaning set forth in Section 2(c).
"Effectiveness Period" shall have the meaning given to such term in
the Registration Rights Agreement.
"Event of Default" shall have the meaning set forth in Section 6.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fundamental Transaction" shall mean (A) the Company effects any
merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (C) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
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holders of Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property.
"Late Fees" shall have the meaning set forth in Section 2(c).
"Mandatory Default Amount" shall equal the sum of (i) 130% of the
principal amount of this Debenture to be prepaid, plus all accrued and
unpaid interest thereon and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of this Debenture.
"Monthly Payment Amount" shall mean the aggregate principal and
interest to be paid on each Monthly Payment Date as set forth on Schedule A
hereto.
"Monthly Payment Date" means the 1st of each month, commencing on the
first such date after the Original Issue Date and ending upon the August 1,
2008.
"New York Courts" shall have the meaning set forth in Section 7(e).
"Original Issue Date" shall mean the date of the first issuance of
this Debenture regardless of the number of transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence
such Debenture.
"Permitted Indebtedness" shall mean the individual and collective
reference to the following: (a) up to, in the aggregate during the term of
this Debenture, $2,000,000 of new Indebtedness, (b) Indebtedness incurred
in connection with the Purchase Agreement and the Convertible Debenture
Financing, (c) up to approximately $974,614 of Indebtedness existing on the
date of the Purchase Agreement as described in Schedule 3.1(aa) attached to
the Purchase Agreement and (d) up to $3,000,000 in connection with the
Company's revolving inventory and sales contract financing agreement with
E.U. Capital.
"Permitted Lien" shall mean the individual and collective reference to
the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves (in the good faith
judgment of the management of the Company) have been established in
accordance with GAAP; (b) Liens imposed by law which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens, statutory landlords' Liens, and other similar Liens
arising in the ordinary course of business, and (x) which do not
individually or in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of
the business of the Company and its consolidated Subsidiaries or (y) which
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are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or asset subject to such Lien; and (c) Liens on Receivables and
the Company's "inventory" (as such term is used in the Security Agreement)
incurred solely in connection with a Permitted Indebtedness under clause
(a) of the definition of Permitted Indebtedness.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
"Purchase Agreement" means the Securities Purchase Agreement, dated as
of the date hereof, to which the Company, the original Holder and other
investors signatory thereto are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of the Purchase Agreement, to which the
Company and the original Holder are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering among
other things the resale of the Warrant Shares and naming the Holder as a
"selling stockholder" thereunder.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" shall have the meaning given to such term in the Purchase
Agreement.
"Trading Day" means a day on which the Common Stock is traded on a
Trading Market.
"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the OTC Bulletin Board.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
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Section 2. Monthly Payment.
a) On each Monthly Payment Date, the Company shall pay the Monthly
Payment Amount, in cash, in the amount set forth on Schedule A annexed
hereto. If any portion of the cash payment for a Monthly Payment shall not
be paid by the Company by the respective due date, interest shall accrue
thereon at the rate of 18% per annum (or the maximum rate permitted by
applicable law, whichever is less) until the payment of the Monthly Payment
Amount, plus all amounts owing thereon is paid in full.
b) Balloon Payment. On the Maturity Date, all outstanding principal,
plus accrued but unpaid interest thereon at the rate of 10% per annum as
set forth on Schedule A annexed hereto under "Balloon Payment", plus all
other outstanding amounts due to the Holder shall be paid to the Holder
(except that, if such date is not a Business Day, then such payment shall
be due on the next succeeding Business Day).
c) Interest Calculations. Interest on the then outstanding principal
amount of this Debenture shall accrue at the rate of 10% per annum, payable
on each Monthly Payment Date and on the Maturity Date as set forth on
Schedule A. Interest shall be calculated on the basis of a 360-day year and
shall accrue daily commencing on the Original Issue Date until payment in
full of the principal sum, together with all accrued and unpaid interest
and other amounts which may become due hereunder, has been made. Interest
hereunder will be paid to the Person in whose name this Debenture is
registered on the records of the Company regarding registration and
transfers of this Debenture (the "Debenture Register").
d) Late Fee. All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at the rate of 18% per annum (or such
lower maximum amount of interest permitted to be charged under applicable
law) ("Late Fees") which will accrue daily, from the date such interest is
due hereunder through and including the date of payment.
e) Prepayment. The Company may prepay all or any portion of the
principal amount of this Debenture without the prior written consent of the
Holder at any time; provided, however, prepayments at any one time must be
at least equal to (i) $250,000 or (ii) if less than $250,000 principal
amount is then outstanding on this Debenture, the outstanding principal
amount of this Debenture.
Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Debenture is exchangeable for an
equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holder surrendering the same. No service
charge will be made for such registration of transfer or exchange;
provided, however, the Company shall not be required to exchange this
Debenture for denominations of less than the greater of $50,000 and the
principal amount of this Debenture then outstanding. No service charge will
be made for such registration of transfer or exchange.
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b) Investment Representations. This Debenture has been issued subject
to certain investment representations of the original Holder set forth in
the Purchase Agreement and may be transferred or exchanged only in
compliance with the Purchase Agreement and applicable federal and state
securities laws and regulations.
c) Reliance on Debenture Register. Prior to due presentment to the
Company 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 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 is overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
Section 4. Intentionally Omitted.
Section 5. Negative Covenants. So long as any portion of this Debenture is
outstanding, the Company will not and will not permit any of its Subsidiaries to
directly or indirectly:
a) other than Permitted Indebtedness, enter into, create, incur,
assume, guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including but not limited to, a guarantee, on or with respect to
any of its property or assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom;
b) other than Permitted Liens, enter into, create, incur, assume or
suffer to exist any liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;
c) amend its certificate of incorporation, bylaws or other charter
documents so as to materially and adversely affect any rights of the
Holder;
d) other than with respect to the securities of the Company to the
extent permitted or required under the Convertible Debenture Transaction
Documents or other than repurchases of, up to, in the aggregate among all
shareholders, $130,000 of Common Stock from dissenting shareholders in the
reverse merger, repay, repurchase or offer to repay, repurchase or
otherwise acquire more than a de minimis number of shares of its Common
Stock or Common Stock Equivalents;
e) enter into any agreement with respect to any of the foregoing; or
f) pay cash dividends or distributions on any equity securities of the
Company.
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Section 6. Events of Default.
a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court, or any order, rule or regulation of any
administrative or governmental body):
i. any default in the payment of (A) the principal amount of any
Debenture or Convertible Debenture, or (B) interest (including Late
Fees) on, or liquidated damages in respect of, any Debenture or the
Convertible Debenture, as and when the same shall become due and
payable (whether on the Maturity Date or by acceleration or otherwise)
which default, solely in the case of an interest payment or other
default under clause (B) above, is not cured, within 5 Trading Days;
ii. the Company shall fail to observe or perform any other
covenant or agreement contained in (A) this Debenture, (B) any of the
other Transaction Documents or (C) any of the Convertible Debenture
Transaction Documents, which failure is not cured, if possible to
cure, within the earlier to occur of (A) 15 Trading Days after notice
of such default sent by the Holder or by any other Holder and (B)20
Trading Days after the Company shall become or should have become
aware of such failure;
iii. a default or event of default (subject to any grace or cure
period provided for in the applicable agreement, document or
instrument) shall occur under (A) any of the Transaction Documents,
(B) any of the Convertible Debenture Transaction Documents or (C) any
other material agreement, lease, document or instrument to which the
Company or any Subsidiary is bound and which default or event of
default could have a Material Adverse Effect on the Company;
iv. any representation or warranty made herein, in any other
Transaction Documents or Convertible Debenture Transaction Documents
shall be untrue or incorrect in any material respect as of the date
when made or deemed made;
v. (i) the Company or any of its Subsidiaries shall commence a
case, as debtor, a case under any applicable bankruptcy or insolvency
laws as now or hereafter in effect or any successor thereto, or the
Company or any Subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the
Company or any Subsidiary thereof or (ii) there is commenced a case
against the Company or any Subsidiary thereof, under any applicable
bankruptcy or insolvency laws, as now or hereafter in effect or any
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successor thereto which remains undismissed for a period of 60 days;
or (iii) the Company or any Subsidiary thereof is adjudicated by a
court of competent jurisdiction insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is
entered; or (iv) the Company or any Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial
part of its property which continues undischarged or unstayed for a
period of 60 days; or (v) the Company or any Subsidiary thereof makes
a general assignment for the benefit of creditors; or (vi) the Company
shall fail to pay, or shall state that it is unable to pay, or shall
be unable to pay, its debts generally as they become due; or (vii) the
Company or any Subsidiary thereof shall call a meeting of its
creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (viii) the Company or any Subsidiary
thereof shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or
(ix) any corporate or other action is taken by the Company or any
Subsidiary thereof for the purpose of effecting any of the foregoing;
vi. the Company or any Subsidiary shall default in any of its
obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under
which there may be issued, or by which there may be secured or
evidenced any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement of the Company in an amount
exceeding $150,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such
indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable.
vii. the Common Stock shall not be eligible for quotation on or
quoted for trading on a Trading Market and shall not again be eligible
for and quoted or listed for trading thereon within five Trading Days;
viii. the Company shall be a party to any Change of Control
Transaction or Fundamental Transaction, shall agree to sell or dispose
of all or in excess of 33% of its assets in one or more transactions
(whether or not such sale would constitute a Change of Control
Transaction) or shall redeem or repurchase more than a de minimis
number of its outstanding shares of Common Stock or other equity
securities of the Company (other than repurchases of shares of Common
Stock or other equity securities of departing officers and directors
of the Company; provided such repurchases shall not exceed $130,000,
in the aggregate, for all officers and directors during the term of
this Debenture);
ix. the Company shall fail for any reason to pay in full the
amount of cash due pursuant to a Buy-In of the Warrant within 5 days
after notice therefor is delivered hereunder or shall fail to pay all
amounts owed on account of an Event of Default within five days of the
date due;
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x. the Company shall fail to have available a sufficient number
of authorized and unreserved shares of Common Stock to issue to such
Holder upon exercise of the Warrants in full;
xi. any breach by the Company or any creditor of the Company with
respect to the payoffs, satisfactions and/or conversions of
indebtedness referred to in Section 2.3(b)(vii) of the Purchase
Agreement, including any claim by any such pre-Closing creditor
related to such prior indebtedness;
xii. the Company shall redeem more than a de minimis number of
Common Stock Equivalents; and
xiii. other than Permitted Liens, the Company shall fail, at any
time, to have a perfected, first priority security interest in all
Collateral (as defined in the Security Agreement) and all other assets
pledged to Holder as security for the loan evidenced by this
Debenture.
b) Remedies Upon Event of Default. If any Event of Default occurs, (i)
the full principal amount of this Debenture, together with interest and
other amounts owing in respect thereof, to the date of acceleration shall
become, at the Holder's election, immediately due and payable in cash and
(ii) the Exercise Price of the Warrant shall be adjusted to equal $0.01,
subject to further adjustment therein. The aggregate amount payable upon an
Event of Default shall be equal to the Mandatory Default Amount. Commencing
5 days after the occurrence of any Event of Default that results in the
eventual acceleration of this Debenture, the interest rate on this
Debenture shall accrue at the rate of 18% per annum, or such lower maximum
amount of interest permitted to be charged under applicable law. Upon the
payment in full of the Mandatory Default Amount on this entire Debenture
the Holder shall promptly surrender this Debenture to or as directed by the
Company. The Holder need not provide and the Company hereby waives any
presentment, demand, protest or other notice of any kind, and the Holder
may immediately and without expiration of any grace period enforce any and
all of its rights and remedies hereunder and all other remedies available
to it under applicable law. Such declaration may be rescinded and annulled
by Xxxxxx at any time prior to payment hereunder and the Holder shall have
all rights as a Debenture holder until such time, if any, as the full
payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.
Section 7. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries
to be provided by the Holder hereunder, including, without limitation, any
Notice of Conversion, shall be in writing and delivered personally, by
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facsimile, sent by a nationally recognized overnight courier service,
addressed to the Company, at the address set forth above, facsimile number
408.986.0222, Attn: Xxxxxx X. Xxxx, CEO or such other address or facsimile
number as the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall
be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service addressed to each Holder at the
facsimile telephone number or address of such Xxxxxx appearing on the books
of the Company, or if no such facsimile telephone number or address
appears, at the principal place of business of the Holder. Any notice or
other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone
number specified in this Section prior to 5:30 p.m. (New York City time),
(ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii)
the second Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no
provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of,
interest and liquidated damages (if any) on, this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This
Debenture is a direct debt obligation of the Company. This Debenture ranks
pari passu with all other Debentures now or hereafter issued under the
terms set forth herein.
c) Security Interest. This Debenture is a direct debt obligation of
the Company and, pursuant to the Security Documents, is secured by a first
priority security interest in all of the assets of the Company and certain
other collateral for the benefit of the Holders.
d) Lost or Mutilated Debenture. If this Debenture shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Debenture, or in lieu of or in substitution for a lost, stolen or destroyed
Debenture, a new Debenture for the principal amount of this Debenture so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of
such loss, theft or destruction of such Debenture, and of the ownership
hereof, and indemnity, if requested, all reasonably satisfactory to the
Company.
e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal proceedings concerning the
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interpretations, enforcement and defense of the transactions contemplated
by any of the Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, employees
or agents) shall be commenced in the state and federal courts sitting in
the City of New York, Borough of Manhattan (the "New York Courts"). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of
the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or such New York
Courts are improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to
it under this Debenture and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in
any manner permitted by law. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this
Debenture, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
f) Waiver. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Debenture. The failure of the Company or the Holder to
insist upon strict adherence to any term of this Debenture on one or more
occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Debenture. Any waiver must be in writing.
g) Severability. If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in
effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and
circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates applicable laws governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
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covenants or the performance of this indenture, and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impeded the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every
such as though no such law has been enacted.
h) Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
i) Headings. The headings contained herein are for convenience only,
do not constitute a part of this Debenture and shall not be deemed to limit
or affect any of the provisions hereof.
j) Usury. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or
advantage of, usury laws wherever enacted, now or at any time hereafter in
force, in connection with any claim, action or proceeding that may be
brought by any Purchaser in order to enforce any right or remedy under any
Transaction Document. Notwithstanding any provision to the contrary
contained in any Transaction Document, it is expressly agreed and provided
that the total liability of the Company under the Transaction Documents for
payments in the nature of interest shall not exceed the Maximum Rate, and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in
the nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date of such increase or decrease
forward, unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum Rate is
paid by the Company to any Purchaser with respect to indebtedness, if any,
evidenced by the Transaction Documents, such excess shall be applied by
such Purchaser to the unpaid principal balance of any such indebtedness or
be refunded to the Company, the manner of handling such excess to be at
such Purchaser's election in the event any principal amount remains
outstanding.
k) Assumption. Any successor to the Company or surviving entity in a
Fundamental Transaction shall (i) assume in writing all of the obligations
of the Company under this Debenture and the other Transaction Documents
pursuant to written agreements in form and substance satisfactory to the
Holder (such approval not to be unreasonably withheld or delayed) prior to
such Fundamental Transaction and (ii) to issue to the Holder a new
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debenture of such successor entity evidenced by a written instrument
substantially similar in form and substance to this Debenture, including,
without limitation, having a principal amount and interest rate equal to
the principal amounts and the interest rates of the Debentures held by the
Holder and having similar ranking to this Debenture, and satisfactory to
the Holder (any such approval not to be unreasonably withheld or delayed).
The provisions of this Section 7(k) shall apply similarly and equally to
successive Fundamental Transactions and shall be applied without regard to
any limitations of this Debenture.
*********************
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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.
INTRAOP MEDICAL CORPORATION
By:__________________________________
Name:
Title:
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