Exhibit 10.1
AMENDMENT NO. 1 TO $4,000,000
10% CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO $4,000,000 10% CONVERTIBLE DEBENTURE PURCHASE
AGREEMENT ("Agreement") is made and entered into this 23rd day of September,
1998, by and between FRONTEER FINANCIAL HOLDINGS, LTD. ("Seller") and XXXX XXXX
FINANCE COMPANY LIMITED ("Purchaser").
R E C I T A L S
A. Purchaser and Seller entered into a $4,000,000 10% Convertible Debenture
Purchase Agreement on December 17, 1997 ("Original Agreement").
B. Paragraph 1.5 of the Original Agreement provided Purchaser the option of
purchasing an additional convertible debenture for up to $11,000,000 ("Option").
Subsequent to the Original Agreement, Purchaser exercised a portion of the
Option and purchased a total of $2,500,000 of convertible debentures.
C. Purchaser and Seller desire to amend the Original Agreement by setting
special terms for the remaining $8,500,000 of convertible debentures purchased
pursuant to exercise of the Option.
NOW THEREFORE, in consideration of the premises and agreements contained
herein, the parties hereto do hereby agree as follows:
1. Amendment. The form of 12% Convertible Debenture attached hereto as
Exhibit A shall be the form for the remaining $8,500,000 of convertible
debentures purchased pursuant to exercise of the Option.
2. Maturity. Upon receipt of written notice from Purchaser to Seller of
Purchaser's option to purchase a debenture pursuant to this Agreement, prior to
the purchase Purchaser and Seller must mutually agree upon a maturity date of
such debenture.
3. Confirmation of Terms of Original Agreement. In all other respects
the Original Agreement dated December 17, 1997, shall remain unaffected,
unchanged and unimpaired by reason of the foregoing amendment.
IN WITNESS WHEREOF, the parties have caused this agreement to be made
effective on the day and year first above written.
SELLER:
FRONTEER FINANCIAL HOLDINGS, LTD.,
a Colorado corporation
By: /s/Xxxx X. Xxxx
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Xxxx X. Xxxx, Secretary and Treasurer
PURCHASER:
XXXX XXXX FINANCE COMPANY
LIMITED., a Hong Kong corporation
By: /s/ Xxx X. Xxxx
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Its: Chairman
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EXHIBIT A TO
AMENDMENT NO. 1 TO $4,000,000
10% CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT
FORM OF 12% CONVERTIBLE DEBENTURE
THE SECURITIES REPRESENTED BY THIS DEBENTURE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE CORPORATION.
FRONTEER FINANCIAL HOLDINGS, LTD.
12% Convertible Debenture Due
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$
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FOR VALUE RECEIVED, Fronteer Financial Holdings, Ltd., a corporation duly
organized and existing under the laws of the State of Colorado (the
"Corporation"), hereby promises to pay to the order of Xxxx Xxxx Finance Company
Limited ("Holder") the principal sum of _____________ (________________), with
interest from the date hereof at the rate of 12% per annum. Interest only shall
be payable on the _________ day of __________, ______, with the final payment of
the entire unpaid principal balance and all accrued and unpaid interest, if not
sooner paid, due and payable on the _______ day of ____________, ____ (the
"Maturity Date"). At the election of Holder, interest due hereunder may be paid
in shares of the Common Stock of the Corporation. The Common Stock shall be
valued at the Market Conversion Price (as hereinafter defined) as of the
business day before the date the interest is due.
The unpaid principal amount of this Convertible Debenture ("Debenture") and
all accrued and unpaid interest hereon shall be due and payable by the
Corporation to the Holder on the Maturity Date.
The Holder shall have the right, exercisable at the Holder's option at any
time and from time to time up to and including the Maturity Date (except that,
if this Debenture shall be called for prepayment in full by the Corporation and
the Corporation shall not thereafter default in the making of the prepayment,
such right shall terminate at the close of business on the business day next
preceding the date fixed for prepayment), to convert all or any part of the
unpaid principal amount hereof into fully paid and non-assessable shares of
Common Stock of the Corporation at the Conversion Price, as defined below, upon
surrender or partial surrender of this Debenture to the Corporation at its
principal place of business. If so required by the Corporation, this Debenture,
upon surrender or partial surrender for conversion as aforesaid, shall be duly
endorsed by or accompanied by instruments of transfer, in form satisfactory to
the Corporation, duly executed by the Holder or by Holder's duly authorized
attorney. The Corporation shall not be required to issue fractional shares of
Common Stock of the Corporation, but shall make adjustment therefor in cash
based upon the Conversion Price of the Common Stock of the Corporation as of the
date of conversion. The certificate representing the shares of Common Stock
issued upon conversion shall contain a legend restricting the transfer thereof
similar to the legend that appears on the top of this Debenture.
The term "Conversion Price", as used with reference to any share of Common
Stock on any specified date, shall mean the lesser of $0.35 or the Market
Conversion Price. The Market Conversion Price shall be determined as follows:
(i) if such stock is listed and registered on any national
securities exchange or traded on The Nasdaq Stock Market ("Nasdaq"),
the average closing sales price over the ten consecutive trading days
prior to the date of conversion on such exchange or Nasdaq;
(ii) if such stock is not at the time listed on any such
exchange or traded on Nasdaq but is traded on the OTC Bulletin Board,
or if not, on the over-the-counter market as reported by the National
Quotation Bureau or other comparable service, the average of the
closing bid and asked prices for such stock over the ten consecutive
trading days prior to the date of conversion; or
(iii) if clauses (i) and (ii) above are not applicable, the
fair value per share of such stock as determined in good faith and on a
reasonable basis by the Board of Directors of the Corporation and, if
requested, set forth in a certificate delivered to the holder of this
Debenture upon the conversion hereof.
If any payment of interest or any payment of principal and interest, as the
case may be, is not paid by the Corporation within five (5) business days after
the date on which such payment shall have become due and payable under this
Debenture or upon the bankruptcy or receivership of the Corporation (each, an
"Event of Default"), the Holder may, by giving written notice to the
Corporation, declare the unpaid principal amount hereof and all accrued and
unpaid interest hereon to be immediately due and payable and upon such
declaration, the unpaid principal amount hereof and all accrued and unpaid
interest hereon shall be and become immediately due and payable. Upon the
occurrence and continuance of an Event of Default and upon notice from Holder to
the Corporation, the rate of interest on this Debenture shall increase from 12%
per annum to 18% per annum and the Conversion Price shall change to $0.10 per
share of Common Stock.
Notwithstanding anything contained herein, Holder shall not be entitled to
convert any part of the unpaid principal amount hereof into fully paid and
nonassessable shares of Common Stock of the Corporation if, at the time of
conversion, the Corporation does not have sufficient shares of Common Stock
authorized that are not issued and outstanding or reserved for issuance. In such
event, the Holder shall only be entitled to convert such part of the unpaid
principal amount hereof into such number of fully paid and nonassessable shares
of Common Stock of the Corporation that is equal to the number of shares of
Common Stock that are not issued and outstanding and not reserved for issuance.
Upon the occurrence of any such election to convert, in the event the
Corporation does not have a sufficient number of unissued and reserved shares of
Common Stock authorized, the Corporation agrees to call a meeting of its
shareholders to be held as soon as possible to propose an amendment to the
Corporation's Articles of Incorporation to increase the number of shares of
Common Stock that the Corporation is authorized to issue to enable the Holder to
complete the Holder's requested conversion. Nothing contained herein shall
prevent the Corporation from issuing and reserving for issuance such number of
shares of the Corporation's Common Stock as the Board of Directors of the
Corporation deems appropriate, in its sole discretion, after the date hereof
whether or not such issuance or reservation would prevent the Holder from
exercising the Holder's conversion rights contained herein.
Should the indebtedness represented by this Debenture or any part thereof
be collected at law or in equity, or in bankruptcy, receivership or any other
court proceedings (whether at the trial or appellate level), or should this
Debenture be placed in the hands of attorneys for collection upon the occurrence
of an Event of Default, the Corporation agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collection,
including reasonable attorneys' fees.
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This Debenture may be prepaid, in part or in whole, at the option of the
Corporation, at any time or from time to time prior to the Maturity Date, to the
Holder without premium or penalty, together with accrued interest to the date
fixed for prepayment; provided, however, that prepayment in full of this
Debenture by the Corporation shall require not less than 30 nor more than 60
days prior notice of prepayment to the Holder.
Subject to compliance with the provisions of the Securities Act of 1933, as
amended, this Debenture is transferable in the manner authorized by law. Upon
surrender of this Debenture for transfer, accompanied by a written instrument of
transfer in form satisfactory to the Corporation, a new Debenture or Debentures,
for a like aggregate principal amount, will be issued to the transferee.
Prior to the transfer of this Debenture, the Corporation may deem and treat
the Holder hereof as the absolute owner hereof (whether or not this Debenture
shall be overdue) for the purpose of receiving payment of or on account of the
principal hereof and interest hereon, and for all other purposes, and the
Corporation shall not be affected by any notice to the contrary.
Except as expressly provided for herein, the Corporation hereby waives
presentment, demand, notice of demand, protest, notice of protest and notice of
dishonor and any other notice required to be given by law in connection with the
delivery, acceptance, performance, default or enforcement.
This Debenture shall be governed and construed in accordance with the laws
of the State of Colorado.
IN WITNESS WHEREOF, Fronteer Financial Holdings, Ltd. has caused this
Debenture to be signed by a duly authorized officer on the date first above
written.
FRONTEER FINANCIAL HOLDINGS, LTD.
By:
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