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EXHIBIT 10(i)
GIVIGEST FIDUCIARIA SA
One Time Program
INVESTMENT BANKING AGREEMENT
THIS INVESTMENT BANKING AGREEMENT made this 13th day of August, 1999 by
and between:
GIVIGEST FIDUCIARIA SA
Xxxxx Xxxxxxx 0,
XX-0000 Xxxxxx, Xxxxxxxxxxx
a Swiss Corporation (hereinafter referred to as "GIVIGEST"), and;
AIR PACKAGING TECHNOLOGIES, INC.
00000 Xxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx, XXX
(hereinafter referred to as "COMPANY");
collectively GIVIGEST and COMPANY hereinafter referred to as "the parties".
WITNESSETH:
WHEREAS, GIVIGEST is an investment banking, financial, management
consulting and strategic planning firm, with expertise in the dissemination of
information about publicly traded companies, and
WHEREAS, COMPANY is publicly held with its common stock trading Over the
Counter (OTC) under the ticker symbol "AIRP",
WHEREAS, COMPANY desires to place a private placement of 7% Convertible
Debentures to Institutional and accredited investors as more particularly
described in Addendum "B", attached hereto, and
WHEREAS, GIVIGEST is willing to accept COMPANY as a client; and assist
COMPANY to place the above mentioned private placement,
WHEREAS, GIVIGEST is a company under the laws of the State of Ticino,
Country of Switzerland and, through its financial and investment banking
functions, makes venture capital investments on behalf of itself and clients;
and
THEREFORE, in consideration of the mutual covenants contained herein, it
is agreed as follow:
DEFINITIONS AND INTERPRETATIONS
1. Captions and Section Numbers
The headings and section references in this Investment Banking Agreement are
for convenience or reference only and do not form a part of this agreement and
are not intended to interpret, define or limit the scope, extent or intent of
this Investment Banking Agreement or any provisions thereof.
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2. EXTENDED MEANINGS
The words "hereof", "herein", "hereunder" and similar expressions used in any
clause, paragraph or section of this agreement will relate to the whole of this
Investment Banking Agreement and not to that clause, paragraph or section only,
unless otherwise expressly provided.
3. NUMBER AND GENDER
In this Investment Banking Agreement, words importing the masculine gender
include the feminine or neuter gender and words in the singular include the
plural, and vice-versa.
4. SECTION REFERENCES AND SCHEDULES
Any reference to a particular "article", "section", "paragraph" or other
subdivision of this Investment Banking Agreement and any reference to a
schedule, exhibit or addendum by name, number and/or letter will mean the
appropriate schedule, exhibit or addendum attached to this Investment Banking
Agreement.
AGREEMENT
5. APPOINTMENT
COMPANY hereby appoints and engages GIVIGEST, on a non-exclusive basis, as its
investment banking and financial planning counsel for Switzerland and Italy,
and hereby retains and employs GIVIGEST upon terms and conditions of this
Investment Banking Agreement.
GIVIGEST accepts such appointment and agrees to perform the services upon the
terms and conditions of said Investment Banking Agreement.
6. FIRST ENGAGEMENT
COMPANY engages GIVIGEST to place the private placement, as described on
Addendum "B", to prospective Investors as further described below and subject
to the further provisions of this Investment Banking Agreement.
GIVIGEST hereby accepts said engagement and COMPANY as a client and agrees to
provide the services as further described below and subject to the further
provisions of this Investment Banking Agreement.
7. AUTHORITY AND DESCRIPTION OF SERVICES
During the term of this Agreement, GIVIGEST shall furnish various professional
services. Said professional services and advice shall relate to those services,
items and/or subjects described in Addendum "A", which is attached hereto and
made a part hereof by this reference, and/or as follows:
8. TERM OF AGREEMENT
This agreement shall become effective upon execution hereof and shall continue
thereafter through and including October 15, 1999 or in case of paragraphs
10,11,12(d),(e),17,18,23,24,26, and 30 so long as any of the debentures that are
to be offered to the private placement are outstanding.
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9. WHERE SERVICES SHALL BE PERFORMED
GIVIGEST services shall be performed at the main office location of GIVIGEST in
Lugano (Switzerland), or other such designated location(s) as GIVIGEST and
COMPANY agree are the most advantageous for the work to be performed.
10. LIMITATIONS ON RELEASE OF INFORMATION
The parties hereto recognize that certain responsibilities and obligations are
imposed by federal and state securities laws and by the applicable rules and
regulations of stock exchanges, the National Association of Securities Dealers,
in house "due diligence" or compliance departments of brokerage houses, etc.
Accordingly, GIVIGEST agrees as follows:
(a) GIVIGEST will NOT release any financial or other information or data about
COMPANY that has not previously been publicly disseminated, without the
consent and approval of COMPANY.
(b) GIVIGEST will NOT conduct any meetings with financial analysts without
informing COMPANY in advance of any proposed meeting, the format or agenda
of such meeting and allowing COMPANY to elect to have a representative of
COMPANY attend such meeting.
11. DUTIES OF COMPANY
(a) COMPANY shall supply GIVIGEST, on a regular and timely basis, with all
approved data and information about COMPANY, its management, its product
and its operations; and COMPANY shall promptly advise GIVIGEST of any
facts which would affect the accuracy of any prior data and information
previously supplied to GIVIGEST so that GIVIGEST may take corrective
action.
(b) COMPANY shall promptly supply GIVIGEST with full and complete copies of
all filings with all federal and state securities agencies; with full and
complete copies of all shareholder reports and communications; with all
data and information supplied to any analyst, broker-dealer, market maker,
or other member of the financial community; and with all product/services
brochures, sales material, etc.
(c) COMPANY will immediately notify GIVIGEST if it intends to make any
additional private or public offering of securities, including an S-8 or
other registered offering, a Regulation S placement, or any other public
or private placement or distribution of its securities and, if reasonably
possible, give GIVIGEST a first right of refusal to make such offering or
placement upon the same terms and conditions.
(d) COMPANY will immediately notify GIVIGEST at least 30 days prior to any
insider selling of COMPANY'S stock, an insider being defined as any
officer, director, or holder of five (5) per cent or more of COMPANY'S
outstanding securities.
(e) In that GIVIGEST shareholders, officers, employees, and/or members of
their families may hold a position in and engage in transactions with
respect to COMPANY securities and, in light of the fact that GIVIGEST
imposes restrictions on such transactions to guard against trading on the
basis of material non public information, COMPANY shall contemporaneously
notify GIVIGEST if any information or data being supplied to GIVIGEST has
not been generally released or promulgated.
(f) COMPANY will cause the outstanding common shares to be reverse split on a
1 new share for 10 old share basis no sooner than October 15, 1999 and no
later than December 31, 1999.
(g) COMPANY will cause DTC shares to be provided to GIVIGEST on a weekly
basis and will pay all costs thereof.
(h) COMPANY will provide GIVIGEST, at no cost, a quarterly shareholder list
and, in addition will provide a list anytime the shareholdings of any
shareholder holding 5% or more of COMPANY'S shares is transferred.
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(i) COMPANY will notify GIVIGEST, in advance, of its intention to issue to
COMPANY officers, directors, employees, or consultants any new options or
warrants on its common stock.
12. REPRESENTATIONS AND INDEMNIFICATION
(a) In that GIVIGEST relies on information provided by COMPANY for a
substantial part of its efforts, COMPANY represents that said information
provided by COMPANY will be neither false nor misleading nor will COMPANY
fail to disclose information necessary to make the other information
provided not misleading.
(b) COMPANY shall be deemed to make a continuing representation of the
accuracy of any and all material facts, materials, information, and data
which it supplies to GIVIGEST and COMPANY acknowledges its awareness that
GIVIGEST will rely on such continuing representation in disseminating such
information and otherwise performing its investment banking functions.
(c) GIVIGEST, in the absence of notice in writing from COMPANY, will rely on
the continuing accuracy of materials, information, and data supplied by
COMPANY.
(d) COMPANY hereby agrees to hold harmless and indemnify GIVIGEST against any
claims, demands, suits, loss, damages, liabilities and expenses arising
out of GIVIGEST's reliance upon the instant accuracy and continuing
accuracy of such facts, materials, information, and data, unless GIVIGEST
has been negligent in performing its duties and obligations hereunder.
(e) GIVIGEST hereby agrees to hold harmless and indemnify COMPANY and its
officers and directors against any claims, demands, suits, loss, damage,
liabilities and expenses incurred which arise out of the services to be
provided by GIVIGEST to COMPANY, but only to the extent that such claims,
demands, suits, loss, damage, liabilities and expenses shall arise out of
or be based upon any untrue statement or alleged untrue statement of a
material fact made by GIVIGEST in the offer and sale of COMPANY'S
debentures.
(f) COMPANY shall cooperate fully and timely with GIVIGEST to enable GIVIGEST
to perform its duties and obligations under this agreement.
(g) The execution and performance of this Investment Banking Agreement by
COMPANY has been duly authorized by the Board of Directors of COMPANY in
accordance with applicable law, and, to the extent required, by the
requisite number of shareholders of COMPANY.
(h) The performance by COMPANY of this Agreement will not violate any
applicable court decree or order, law or regulation, nor will it violate
any provision of the organizational documents and/or bylaws of COMPANY or
any contractual obligation to which COMPANY may be bound.
13. COMPENSATION
(a) For its Investment Banking services, COMPANY shall make payment to
GIVIGEST according to the terms and conditions set forth in Addendum "A".
(b) All moneys payable hereunder shall be in U.S. funds and drawn on U.S.
banks.
(c) For all services not within the scope of this agreement COMPANY shall pay
to GIVIGEST such fee(s) as, and when, the parties determine in advance of
performance of said special services, provided COMPANY has agreed to said
special services in advance.
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14. BILLING AND PAYMENT
Finder's Fees will be paid by wire within three days after COMPANY has received
the funds from any sale of its securities under this agreement. Billing and
payments for any special services shall be agreed on a case by case basis.
15. GIVIGEST AS AN INDEPENDENT CONTRACTOR
GIVIGEST shall provide said services as an independent contractor and not as an
employee of COMPANY nor of any company affiliated with COMPANY. GIVIGEST has no
authority to bind COMPANY or any affiliate of COMPANY to any legal action,
contract, agreement, or purchase and such action can not be construed to be made
in good faith or with the acceptance of COMPANY, thereby becoming the sole
responsibility of GIVIGEST. GIVIGEST is not entitled to any medical coverage,
life insurance, savings plans, health insurance, or any and all other benefits
of afforded COMPANY employees. GIVIGEST shall be solely responsible for any
Federal, State or Local Taxes; and should COMPANY for any reason be required to
pay taxes at a later date, GIVIGEST shall insure such payment is made by
GIVIGEST and not COMPANY. GIVIGEST shall be responsible for all workers
compensation payments and herein holds COMPANY harmless for any and all such
payments and responsibilities related hereto.
16. GIVIGEST NOT TO ENGAGE IN CONFLICTING ACTIVITIES
During the term of this agreement, GIVIGEST shall not engage in any activities
that directly conflicts with the interests of COMPANY. COMPANY hereby
acknowledges notification by GIVIGEST and understands that GIVIGEST does and
shall represent and service other multiple clients in the same manner as it
does COMPANY, and that COMPANY is not an exclusive client of GIVIGEST.
17. PROPRIETARY INFORMATION
GIVIGEST shall treat as proprietary any and all information, not previously
publicly disclosed, belonging to COMPANY, its affiliates, or any third parties
and disclosed to GIVIGEST in the course of the performance of GIVIGEST Services.
18. INSIDE INFORMATION - SECURITIES VIOLATIONS
In the course of the performance of this agreement it is expected that specific
sensitive information concerning the operations of COMPANY business and/or
affiliate companies shall be divulged to GIVIGEST. In such event GIVIGEST will
not divulge, discuss, or otherwise reveal such information to any third parties.
19. DISCLOSURE
GIVIGEST shall disclose any outside activities or interests, including
ownership or participation in the development of prior inventions, that
conflict or may conflict with the best interests of COMPANY. It is mutually
understood that prompt disclosure is required under this paragraph if the
activity or interest is related directly or indirectly, to any activity that
GIVIGEST may be involved with on behalf of COMPANY.
20. WARRANTY AGAINST CONTEMPLATION OF AGREEMENT FOR RELATED CORRUPT PRACTICES
GIVIGEST represents and warrants that all payments and other valuable
consideration paid or to be paid under this agreement constitutes compensation
for services rendered that this agreement; all payments and other valuable
considerations and the use of those payments and valuable considerations are
non-political in nature; and that said payments and valuable considerations
will not be used to influence, sway or bribe any government or municipal party,
either domestic or foreign, in any way.
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21. SEVERABILITY
If any provision of this agreement shall be held to be contrary to law, invalid
or unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision of this agreement is
contrary to law, invalid or unenforceable and that by limiting such provision
it would become valid and enforceable, then such provision shall be deemed to
be written, construed, and enforceable as so limited.
22. TERMINATION OF AGREEMENT
This Investment Banking Agreement may not be terminated by either party prior
to the expiration of the term provided in Paragraph 8 above except as follows:
(a) Upon the bankruptcy or liquidation of the other party, whether voluntary
or involuntary.
(b) Upon the other party taking the benefit of any insolvency law, and/or
(c) Upon the other party having or applying for a receiver appointment for
either party.
(d) Upon the discovery of false, misleading, or fraudulent misrepresentations
by either party or the breach of any warranty, representation of covenant
contained herein by either party.
(e) In the event COMPANY fails or refuses to cooperate with GIVIGEST or fails
or refuses to make timely payment of the compensation set forth above
and/or in Addendum "A". In such case, GIVIGEST shall have the right to
terminate any further performance under this agreement and upon,
notification thereof, all earned compensation shall become immediately due
and payable.
23. ATTORNEY FEES
In the event either party is in default of the terms and conditions of this
Investment Banking Agreement and legal action is initiated or suit be entered as
a result of such a default, the prevailing party shall be entitled to recover
all costs incurred as a result of such default including all costs, reasonable
attorney fees, expenses, court costs through trial, appeal and to final
disposition (if applicable), and all costs of arbitration provided for herein.
24. RETURN OF RECORDS
Upon termination of this agreement, GIVIGEST shall deliver all of Company's
records, notes, data, memorandum, models and equipment of any nature that are
in the control of GIVIGEST.
25. MISCELLANEOUS
(a) Effective date of representations shall be no later than the date of the
signing of this agreement by both parties.
(b) Currency: in all instances, references to dollars shall be deemed to be
United States Dollars.
26. NOTICES
All notices hereunder shall be in writing and addressed to the party at the
address herein set forth, or at such other address which notice pursuant to
this section may be given and shall be given by either personal delivery,
certified mail, express mail or other national overnight courier services.
Notices shall be deemed given upon the earlier or actual receipt or three (3)
business days after being mailed or delivered to such courier service. Any
notices to be given hereunder shall be effective if executed by and sent by the
attorneys for the parties giving such notice; and in connection therewith, the
parties and their respective counsel agree that in giving such notice, such
counsel may communicate directly in writing
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with such parties to the extent necessary to give such notice. Any notice
required or permitted by this agreement to be given shall be given to the
respective parties at the following address:
GIVIGEST:
GIVIGEST FIDUCIARIA XX
Xxxxx Xxxxxxx 0,
XX-0000 Xxxxxx, Xxxxxxxxxxx
Telephone: x0000-000-0000
Fax: x0000-000-0000
COMPANY:
AIR PACKAGING TECHNOLOGIES, INC.
00000 Xxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx, XXX
Telephone 0-000-000-0000
Fax: 0-000-000-0000
27. TIME IS OF THE ESSENCE
Time is hereby expressly made of the essence of this Investment Banking
Agreement with respect to the performance by the parties of their respective
obligations hereunder.
28. INUREMENT
This Investment Banking Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors, assigns and any addenda attached hereto.
29. ENTIRE AGREEMENT
This Investment Banking Agreement contains the entire agreement of the
parties and may be modified or amended only by agreement, in writing, signed by
the party against whom enforcement of any waiver, change, amendment,
modification, extension or discharge is sought. It is declared by both parties
that there are no oral or other agreements or understanding between them
affecting this Investment Banking Agreement or relating to the business of
GIVIGEST. This agreement supersedes all previous agreements between GIVIGEST
and COMPANY.
30. APPLICABLE LAW
This Agreement is executed pursuant to and shall be interpreted and
governed for all purposes by the laws of the State of Ticino. If any provision
of this Investment Banking Agreement is declared void, such provisions shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect. Any controversy or claim arising out of, relating to this
agreement, or the breach thereof, shall be settled by arbitration in the
Lugano District, Ticino in accordance with the rules then promulgated by said
Courts, the Court shall appoint an arbitrator, and judgment upon award rendered
may be entered in the courts of the Lugano District, Ticino or any other court
having jurisdiction, which award and/or judgment shall include reasonable
attorney's fees.
31. ACCEPTANCE BY GIVIGEST
This Investment Banking Agreement is not valid or binding upon GIVIGEST unless
and until executed by the President or other duly authorized executive officer
of GIVIGEST at its home office in Lugano, Switzerland.
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32. NON-WAIVER
The failure of either party at any time to require any such performance by any
other part shall not be construed as a waiver of such right to require such
performance and shall in no way affect such party's right to require such
performance and shall in no way affect such party's right subsequently to
require full performance hereunder.
33. EXECUTION IN COUNTERPARTS
This agreement may be executed in counterparts, not withstanding the date or
dates upon which this agreement is executed and delivered by any of the
parties, and each shall be deemed to be an original and all of which will
constitute one and the same agreement.
34. COSTS
All costs and expenses incurred in the preparation of this agreement shall be
borne solely by COMPANY.
IN WITNESS WHEREOF, the parties hereto have set their hands in execution of this
agreement.
For and in behalf of: For and in behalf of:
COMPANY GIVIGEST
AIR PACKAGING TECHNOLOGIES, INC. GIVIGEST FIDUCIARIA SA
a US Company a Swiss Company
By /s/ XXXXXX X. XXXXXXXX By /s/ CLAUDIO GIANASCIO
------------------------------- ---------------------------
Xxxxxx X. Xxxxxxxx Xxxxxxx Gianascio
President President
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GIVIGEST FIDUCIARIA SA
One Time Program
INVESTMENT BANKING AGREEMENT
Addendum "A"
SPECIFIC SERVICES
1. GIVIGEST agrees to use its efforts to place COMPANY's $2,000,000 7%
Convertible Debentures (hereinafter "Debentures"), as described on
Addendum "B".
2. GIVIGEST commits to place $1,500,000 of COMPANY's Debentures on a
firm basis, as that term is commonly used.
3. GIVIGEST will use its best efforts to place the remaining $500,000
of COMPANY's Debentures.
4. GIVIGEST commits to place the first $500,000 of COMPANY's Debentures
no later than August 13, 1999.
5. GIVIGEST commits to place the next $1,000,000 of COMPANY's
Debentures no later than September 15, 1999.
6. GIVIGEST will use its best efforts to place the remaining $500,000
of COMPANY's Debentures no later than October 15, 1999.
COMPENSATION
10% commission on all funds received by COMPANY through the sale of the
Debentures subject to this agreement, including but not limited to the
sale of the aforementioned debentures by GIVIGEST directly, received from
investors or subscribers presented by GIVIGEST, or received from persons
related to or referred by any such investor or subscriber.
For an in behalf of For and in behalf of
COMPANY GIVIGEST
AIR PACKAGING TECHNOLOGIES, INC. GIVIGEST FIDUCIARIA SA
a US Company a Swiss Company
By /s/ XXXXXX X. XXXXXXXX By /s/ CLAUDIO GIANASCIO
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxxx Gianascio
President President
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GIVIGEST FIDUCIARIA SA
One Time Program
INVESTMENT BANKING AGREEMENT
Addendum "B"
DESCRIPTION OF DEBENTURES
1. 4 year 7% Convertible Debentures of Air Packaging Technologies, Inc.
2. Conversion Price
a. Convertible into common stock of COMPANY at anytime within two
years of issue date at $0.15 per share.
b. Convertible into common stock of COMPANY at anytime between the
first day of the third year and the last day of the fourth year after
issue date at $0.25.
c. Conversion feature expires at 12:00 midnight Los Angeles,
California time on the last day of the fourth year after the issue
date.
3. Payable in full, if not converted, upon surrender of debenture to COMPANY
no sooner than the first day of the fifth year after issue date.
4. Interest
a. Payable annually in arrears.
b. Payable, at the option of holder, in unregistered common stock
of COMPANY at a 20% discount to the average bid price of COMPANY's
common stock during the 30 business days immediately prior to payment
date, if COMPANY is notified of the election a minimum of 15 days
prior to the payment date. For the purpose of this paragraph the
"payment date" is defined as the 365th day from the issue date or the
last payment date, as applicable.
c. At COMPANY's option, COMPANY may choose to register said
dividend shares. In such event, the dividend shall be payable at the
average bid price of COMPANY's common stock for the 30 business days
immediately prior to payment date. If COMPANY chooses this option, it
will use its best efforts to register the dividend shares as soon as
practicable after payment date.
D. Notwithstanding anything to the contrary, the minimum price to
be used to compute the number of shares to be issued as a dividend
shall be $0.15.
5. Issuance of Debentures
a. The Debentures will be issued in the names and denominations as
directed by GIVIGEST, provided, that COMPANY shall be entitled to
request information from GIVIGEST concerning any purchaser and
approve any purchaser of the Debentures, which approval shall not be
unreasonably withheld or delayed.
REGISTRATION RIGHTS AND OTHER FEATURES
1. Registration Rights
a. Company will use its best efforts to file a registration with
the US Securities and Exchange Commission within 30 days of this
agreement to register the debentures and the underlying common shares
upon conversion.
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b. Company will use its best efforts to cause said registration statement
to become effective by December 31, 1999 and will use its best efforts to
maintain said registration until 6 months after the conversion of all of
the debentures or the expiration of the conversion rights, whichever comes
first.
2. Other Features
a. The minimum amount of debentures that can be converted at any time by
any debenture holder shall be $100,000.
b. Debentures shall be senior in preference to all other debentures whether
presently outstanding or issued in the future unless unanimously agreed to
by the debenture holders in the particular case.
SUBSCRIBERS & EXEMPT PLACEMENT
a. The aforementioned debentures shall be offered by GIVIGEST only to
accredited institutions and individuals as that term is defined under the
Securities Act of 1933 and the rules promulgated thereunder (hereinafter
"The Act") and only to institutions and individuals which acknowledge that
they are acquiring the Debentures with an investment intent and not with a
view to resale unless registered.
b. The Debentures will be offered and sold pursuant to an exemption from
registration under The Act and, as such, both the Debentures and the common
shares issued upon conversion will be issued with a restrictive legend and
may not be resold, hypothecated, or transferred within the US or to a US
person, as that term is defined under The Act, unless and until a
registration statement covering the debentures and underlying shares is in
effect or an exemption from registration for said sale, hypothecation, or
transfer is applicable to said action.
For and in behalf of: For and in behalf of:
COMPANY GIVIGEST
AIR PACKAGING TECHNOLOGIES, INC. GIVIGEST FIDUCIARIA SA
a US Company a Swiss Company
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Claudio Gianascio
----------------------------- --------------------------
Xxxxxx X. Xxxxxxxx Xxxxxxx Gianascio
President President
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AIR PACKAGING TECHNOLOGIES, INC.
7% CONVERTIBLE NOTES DUE 2003
ADDITIONAL TERMS AND CONDITIONS
1. GENERAL
This Note is one of a duly authorized issue of Notes of the Company
designated as its 7% Convertible Noted Due 2003. The terms of the Notes include
those stated below. The Notes are general obligations of the Company limited to
$2,000,000 in aggregate principal amount. The Notes are unsecured but are
senior in rights to all other debentures issued by the Company, whether
presently outstanding or issued in the future.
2. PAYING AGENT, CONVERSION AGENT AND REGISTRAR.
Initially, the Company will act as its own Paying Agent, Conversion Agent
and Registrar. The Company may change any Paying Agent, Conversion Agent,
Registrar or co-registrar without notice.
3. DEFINITIONS.
"ACT" shall mean the Securities Act of 1933, as amended, and the Rules
promulgated thereunder.
"AVERAGE CLOSING PRICE" shall mean the average of the highest closing bid
prices of the Company's common stock for each of the thirty (30) business
days, immediately prior to Payment Date or Record Date, as the case may be,
on the OTC Bulletin Board or such other place that the Company's common
stock may be trading on payment date.
"BUSINESS DAY" shall mean Monday through Friday of each week, excluding any
day that is a legal holiday in the State of California.
"COMMON STOCK" shall mean the Common Stock, $0.001 per value, of the
Company, as designated on the date hereof, or shares of any class or
classes of Capital Stock resulting from reclassification or
reclassification thereof.
"COMPANY" shall mean Air Packaging Technologies, Inc., a Delaware
Corporation.
"HOLDER" shall mean the person in whose name the Notes are registered on
the Company's books.
"INTEREST PAYMENT DATE" or "PAYMENT DATE" shall mean June 30 of each year.
"NOTES" shall mean the 7% Convertible Debentures Due 2003.
"SEC" shall mean the United States Securities and Exchange Commission.
4. HOLDER'S OPTION TO TAKE STOCK IN LIEU OF CASH INTEREST PAYMENT.
At Holder's option, holder may elect to receive any annual interest
payment in common stock of the Company at a 20% discount to the Average Closing
Price, subject to the following:
(a) Company must receive from holder a written notice of Holder's election
a minimum of fifteen (15) days prior to the Payment Date.
(b) All stock to be issued shall be "restricted" as that term is generally
used under the Act and, as such, shall contain a legend thereon restricting
their sale, transfer, or hypothecation unless an effective registration
statement is in effect or an exemption from registration applies to the
specific instance.
(c) After notice of Holder's election, the Company may elect, within
fifteen (15) days, to register said dividend shares under an appropriate
registration statement to be filed with the SEC. If the Company makes this
election, the interest payment will be payable in common stock of the
Company at the Average Closing Price of the Company's common stock, with no
discount thereon and Company will use its best efforts to register said
shares as soon as practicable after such election.
(d) Notwithstanding anything to the contrary, the minimum price to be used
to compute the number of shares to be issued as an interest payment shall
be $0.15.
5. REGISTRATION RIGHTS.
Company undertakes to use its best efforts to register, for resale, the
Notes and/or the common stock issuable upon conversion of the Notes, with the
SEC on an applicable registration form and to maintain said registration until
six (6) months after conversion of all of the debentures, expiration of the
conversion rights, or until the Company shall have received an opinion of
Counsel that the shares of the Common Stock issued or issuable upon conversion
of the Notes may be resold by the Holders thereof without an effective
registration statement under the Act pursuant to Rule 144(k).
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6. OPTIONAL CONVERSION.
Subject to the provisions contained herein, a Holder of a Note is entitled,
at his option, at any time on or before the close of business on September 30,
2003, to convert the principal amount of such Note or any portion of the
principal amount thereof which is $1,000 or an integral multiple of $1,000, into
shares of Common Stock of the Company at a Conversion Price as provided below
(or at the current adjusted Conversion Price if an adjustment has been made as
provided in Section 10 below "Adjustments to Conversion Price"). No fractions of
shares or scrip representing fractions of shares will be issued on conversion of
a Note, but an adjustment in cash will be made for any fractional interest as
provided in the indenture.
(a) The Conversion price shall be $0.15 per share through and including
September 30, 2001.
(b) The Conversion price shall be $0.25 per share from October 1, 2001
through and including September 30, 2003.
(c) The minimum amount of debentures that may be converted by any holder at
any one time shall be $100,000 and must be in integral multiples of $1,000.
(d) To convert a Note, a Holder must (i) complete and sign the conversion
notice attached to the Note, (ii) surrender the Note with the conversion
notice to the Conversion Agent, (iii) furnish appropriate endorsements and
transfer documents if required by the Registrar or Conversion Agent, and
(iv) pay any transfer or similar tax, if required.
7. DENOMINATIONS, PAYMENT, TRANSFER, EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may transfer Notes in
accordance with the reasonable rules set forth by the Registrar. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law. The
Registrar need not transfer any Note until it has received an opinion of
Counsel that the transfer may be made pursuant to any effective registration or
pursuant to an exemption from registration. Holders must surrender Notes to a
Paying Agent to receive principal payments thereof.
8. PERSONS DEEMED OWNERS.
Prior to due presentment of this Note for registration of a transfer, the
Company, the Trustee and any agent of either may treat the registered Holder of
this Note as the owner of it for all purposes.
9. DEFAULTS AND RIGHTS TO PAYMENT.
Event of Default. An "Event of Default" with respect to any Security occurs
if:
(a) The Company defaults in the payment of interest on any Security when
the same becomes due and payable and the default continues for a period of
30 days; or
(b) The Company defaults in the payment of Principal of any Security when
the same becomes due and payable at maturity or otherwise; or
(c) The Company fails to comply with any other material agreement set forth
in the Securities and the default continues for a period of 30 days after
notice of such default is delivered to the Company by the Holder; provided,
however, that if the default is such that it cannot, in the exercise of
reasonable diligence be corrected within such period, it shall not
constitute an Event of Default hereunder if corrective action is instituted
promptly by the Company within said period and is diligently pursued until
the default is corrected; or
(d) A court of competent jurisdiction enters a judgment, decree or order
for relief in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any Bankruptcy Law which shall (A) approve as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition in respect of the Company, (B) appoint a Custodian of the
Company for all or substantially all of the property of the Company; or (C)
provide for the winding-up or liquidation of the affairs of the Company;
and such judgment, decree or order shall remain unstayed and in effect for
a period of 90 consecutive days; or any bankruptcy or insolvency petition
or application is filed, or any bankruptcy or insolvency proceeding is
commenced against the Company and such petition, application or proceeding
is not dismissed within 90 days; or any warrant of attachment is issued
against any substantial portion of the property of the Company which is not
released, bonded or stayed within 90 days of service;
(e) The Company shall (A) commence a voluntary case or proceeding under any
Bankruptcy Law, (B) consent to the entry of a judgment, decree or order for
relief in an involuntary case or proceeding under any Bankruptcy Law, (C)
consent to the institution of bankruptcy or insolvency proceedings against
it, or (D) apply for, consent or acquiesce in the appointment of or taking
possession by a Custodian of the Company or for any substantial part of the
property of the Company.
The Term "Bankruptcy Law" means Title 11, U.S. Code, or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
custodian, receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.
Acceleration. If an Event of Default (other than an Event of Default
specified in clauses (d) and (c) of Section 9) occurs and is continuing, the
Holder by notice to the Company, may declare the Principal of and accrued
interest on all the Securities to be due and payable. Upon any such declaration
such Principal and interest shall be due and payable immediately. If an Event
of Default specified in clause (4) or (5) of Section occurs, such amount shall
de factor become and be immediately due and payable without any declaration.
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14
Rights of Holders to Receive Payment. Notwithstanding any other provision
of this debenture, the right of any Holder of a Security to receive payment of
Principal of or interest on the Security on or after the respective dates
expressed in the Security or after acceleration provided for herein or to bring
suit for the enforcement of any such payment on or after such respective dates,
or for the right to convert the Security, shall not be impaired or affected
without the consent of the Holder.
10. ADJUSTMENT OF CONVERSION PRICE
Adjustment of Conversion Price. The Conversion Price shall be subject to
adjustment from time to time as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock, (ii) subdivide
or reclassify the outstanding shares of its Common Stock into a greater
number of shares, or (iii) combine or reclassify the outstanding shares of
its Common Stock into a smaller number of shares, then the Conversion Price
in effect at the timer of, respectively, the record date for such dividend
or distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder of
any Security surrendered for conversion after such time shall be entitled
to receive the number of shares of Common Stock which he would have owned
or been entitled to receive had such Security been converted immediately
prior to such time. Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the time
of the record date for such dividend for purposes of calculating the number
of outstanding shares of Common Stock under subsections (b) and (c) below.
Such adjustments shall be made successively whenever any event specified
above shall occur. In the event that any such dividend, subdivision,
reclassification or combination causing any such adjustment does not
thereafter occur, then the adjusted Conversion Price then in effect shall
be readjusted, effective as of the date when the Board of Directors
determines not to effect such dividend, subdivision, reclassification or
combination, to the Conversion Price which would then be in effect if such
record date or effective date had not been
(b) In case the Company shall fix a record date for the issuance rights or
warrants to all holders of its Common Stock without any charge to such
holders entitling them (for a period expiring within 45 days after the
record date mentioned above) to subscribe for or purchase shares of its
Common Stock (or securities convertible into shares of its Common Stock) at
a price per share (or having an initial conversion price per share) less
than the Current Market Price (as defined) of the Common Stock on such
record date, the Conversion Price shall be adjusted immediately thereafter
so that it shall equal the price determined by multiplying the Conversion
Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the number of share of Common Stock outstanding on such
record date plus the number of shares of Common Stock which the aggregate
offering price of the number of shares of such Common Stock so offered for
subscription or purchase (or the aggregate initial conversion price of the
convertible securities so offered) would purchase at the Current Market
Price per share, and of which the denominator shall be the number of shares
of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock so offered for subscription or purchase
(or into which the convertible securities so offered are initially
convertible). Shares of Common Stock owned by or held for the Company shall
not be deemed outstanding for the purpose of any computation. Such
adjustments shall be made successively whenever such a record date is
fixed. In the event that any such rights or warrants (or convertible
securities), as the case may be, to the Conversion Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of
any class other than its Common Stock or (ii) of evidences of indebtedness
of the Company or any Subsidiary or (iii) of assets (excluding cash
dividends or distributions referred to in subsection (a) above) or (iv) of
rights or warrants (excluding those referred to in subsection (b) above),
in each such case the Conversion Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior thereto by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding on such record date multiplied by the Current Market Price per
share on such record date, less the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive, and described
in a Board Resolution filed with the Trustee) of said shares or evidences
of indebtedness or assets or rights or warrants so distributed, and of
which the denominator shall be the number of shares of Common Stock
outstanding on such record date multiplied by such Current Market Price per
share. Such adjustment shall be made successively whenever such a record
date is fixed. In the event that any such distribution is thereafter no so
made, then the adjusted Conversion Price then in effect shall be
readjusted, effective as of the date when the Board of Directors determines
not to distribute such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Conversion Price which would then be
in effect if such record date had not been fixed.
(d) For the purpose of any computation under subsections (b) and (c)
above, the "Current Market Price" per share at any date shall be deemed to
be the Average Closing Price of the Company's common stock.
(e) In any case in which this Article X shall require that any adjustment
shall become effective immediately after a record date for any event, the
Company may defer until the occurrence of such event (i) issuing to the
Holder of any Security converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such Holder any
amount in cash in lieu of a fractional share of Common Stock pursuant to
Section 10.6; provided, however, that the Company shall deliver to such
Holder a due xxxx or other appropriate instrument evidencing such Holder's
rights to receive such additional shares of Common Stock, and such cash,
upon the occurrence of the event requiring such adjustment.
(f) No adjustment in the Conversion Price shall be required with respect
to shares of Common Stock issued upon conversion of the Securities unless
such adjustment would require an increase or decrease in the amount equal
to at least one percent of such price; provided, however, that any such
adjustment which is not required to be made shall be carried forward and
taken into account in any subsequent adjustment made not later than three
years after the happening of the specified event or events.
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(g) The Company from time to time may reduce the Conversion Price by an
amount for any period of time if the reduction is irrevocable during the
period.
(h) All calculations under this Article X shall be made to the nearest cent
or to the nearest one-hundredth of a share, as the case may be.
Whenever the Conversion Price is reduced, the Company shall mail to
Holders of the Securities a notice of the reduction. The Company shall mail the
notice at least 15 days before the date the reduced Conversion Price takes
effect. The notice shall state the reduced Conversion Price and the period for
which it will be in effect.
A reduction of the Conversion Price does not change or adjust the
Conversion Price otherwise in effect for purposes of this Section.
11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER, SALE, LEASE OR
CONVEYANCE.
(a) In case of any consolidation with or merger of the Company into another
corporation (other than a merger or consolidation in which the Company is
the continuing corporation), or in case of any sale, lease or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, such successor, leasing or purchasing
corporation, as the case may be, shall execute a supplemental debenture
providing that the Holder of each Security then outstanding shall have the
right thereafter to convert such Security solely into the kind and amount
of shares of stock, other securities, property or cash or any combination
thereof receivable upon such consolidation, merger, sale, lease or
conveyance by a holder of the number of shares of Common Stock into which
such Security might have been converted immediately prior to such
consolidation, merger, sale, lease or conveyance.
(b) In case of any reclassification or change of the shares of Common Stock
issuable upon conversion of the Securities) other than a change in par
value, or from par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares of Common Stock into
two or more classes or series of shares) or in the case of any
consolidation or merger of another corporation into the Company in which
the Company is the continuing corporation and in which there is a
reclassification or change (including a change in the right to receive cash
or other property) of the shares of Common Stock (other than a change in
par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in the shares of
Common Stock into two or more classes or series of shares), or any
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, the Company and the person obligated to
deliver stock, other securities, property or cash (or any combination
thereof) upon the effectiveness of such reorganization and the issuer of
any stock or other securities so to be delivered, if a different person,
shall execute a supplemental debenture providing that the Holder of each
Security then outstanding shall have the right thereafter to convert such
Security solely into the kind and amount of shares of stock, other
securities, property or cash or any combination thereof receivable upon
such classification, change, consolidation or merger by a holder of the
number of shares of Common Stock into which such Security might have been
converted immediately prior to such reclassification, change, consolidation
or merger.
(c) Any supplemental debenture entered into pursuant to this Section shall
(i) where appropriate, state the Conversion Price in terms of one full
share of Common Stock or one full share of the Common Stock of any
successor, leasing, purchasing or affiliate corporation (as the case may
be) and (ii) provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The
Company shall cause notice of the execution of each such supplemental
debenture to be mailed to each Holder of Securities at his address as the
same appears in the Security register.
12. AMENDMENT, SUPPLEMENT, WAIVER.
Subject to certain exceptions contained herein, the Notes may not be
amended or supplemented without unanimous consent of the Holders of the Notes
then outstanding. Any such consent by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note. Without the consent of any holder of a Note, the
Company may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency or to provide for uncertificated Notes in
addition to or in place of certified Notes or to make any change that does not
materially adversely affect the rights of any Holder of a Note.
13. SENIOR NOTES.
The 7% Convertible Debentures Due 2003 shall be senior in all rights,
including but not limited to payment of principal and interest, to all other
debentures whether outstanding as of this date or issued in the future. This
senior right shall only apply to debentures issued by the Company and shall not
apply to secured debt nor general unsecured debt of the Company such as
accounts payable, bank lines of credit, or credit card debt.
14. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a Note or
an assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=Custodian) and U/G/M/A (=Uniform Gifts to Minors
Act).
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