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EXHIBIT 4.3
CONVERTIBLE DEBENTURE
FOR VALUE RECEIVED, INTERNATIONAL TRADING & MANUFACTURING CORPORATION, a Nevada
corporation ("Borrower"), hereby promises to pay to Xxxx Xxxxxx ("Holder") the
principal amount of One Hundred Thousand Dollars ($100,000.00), on the terms and
subject to the conditions specified in this Debenture.
THE SECURITIES EVIDENCED, REPRESENTED AND CONTEMPLATED BY THE PROVISIONS OF THIS
DEBENTURE HAVE NOT BEEN REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES
ACT IF 1933 ("ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE RESOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) BORROWER HAS
RECEIVED FROM COUNSEL AN OPINION SATISFACTORY TO BORROWER THAT SUCH TRANSFER CAN
BE MADE WITHOUT COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE ACT, OR (2) A
REGISTRATION STATEMENT FILED BY BORROWER IS DECLARED EFFECTIVE OR ANY AND ALL
ACTIONS NECESSARY TO PERFECT AN EXEMPTION IS COMPLETED.
ARTICLE ONE
INTEREST, TERMS OF PAYMENT AND SECURITY
1.1 CURRENCY. All amounts specified by to the provisions of this Debenture are
in United States Dollars.
1.2 INTEREST. No interest shall accrue on the unpaid amount due and payable
pursuant to the provisions of this debenture.
1.3 PRINCIPAL. The principal amount evidenced by the provisions of this
Debenture shall be payable on December 31, 1999.
ARTICLE TWO
CONVERSION AND PURCHASE RIGHTS
2.1 CONVERSION OR PURCHASE RIGHT. Holder shall have the right from and after
December 1, 1998, and then at any time thereafter to convert any portion of the
principal indebtedness evidenced by the provisions of this Debenture into fully
paid and nonassessable shares of $.001 par value voting common stock of Borrower
("Common Stock"), on the terms and subject to the conditions specified by the
provisions of this Debenture. Upon the surrender of this Xxxxxxxxx, accompanied
by Xxxxxx's written request for conversions, Borrower shall issue and deliver or
cause to be issued and delivered to Holder certified evidencing the appropriate
number of shares of Common stock. If a portion of such principal is converted,
Borrower shall deliver to Holder a certified for the proper number of shares of
Common Stock for the portion of that principal indebtedness converted an a new
Debenture in the form hereof for the unconverted balance of the principal
indebtedness by the provision of this Debenture.
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2.2 CONVERSION OR PURCHASE PRICE. Subject to adjustment as specified by the
provision of Section 2.4 of this Debenture, the conversion or purchase price of
the Common Stock indebtedness ("Conversion Price") shall be $0.50 per share.
2.3 MECHANICS OF CONVERSION. No fractional shares of Common Stock shall be
issued upon any conversion of the principal indebtedness evidenced by the
provisions of this Debenture. In lieu of any fractional shares to which Holder
would otherwise be entitled, Borrower shall pay Holder cash in the amount equal
to the Conversion Price for such fractional shares. Before Holder shall be
entitled to convert the indebtedness evidenced by the provisions of the
Debenture into shares of Common Stock and to receive certificates thereof,
Holder shall surrender the original copy of this Debenture, duly endorsed and
cancelled, at the office of Borrower, and shall given written notice to Borrower
at such office that Holder elects to convert the principal indebtedness
evidenced by the provisions of this Debenture; provided, however, that Borrower
shall not be obligated to issue certificates evidencing the shares of common
stock issuable upon such conversion unless the original endorsed and cancelled
original copy of this Debenture is either delivered to Borrower, as specified
above, or Holder notifies Borrower that such original copy of this Debenture has
been lost, stolen or destroyed and executes an agreement satisfactory to
Borrower to indemnify Borrower from any loss incurred by Borrower in connection
with such original copy of this Debenture. Borrower shall, as soon as practical
after such delivery of an original copy of this Debenture, or such agreement and
indemnification, issue and deliver or cause to be issued and delivered to
Holder, a certificate or certificates for the number of shares of Common Stock
to which Holder shall be entitled and a check payable to Holder in the amount of
any cash amounts payable as a result of the conversion into fractional shares of
Common Stock. The person or persons entitled to receive the shares of Common
Stock issuable upon any such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
2.4 ADJUSTMENT OF CONVERSION TERMS. The Conversion Price and number of shares of
Common Stock to be issued upon conversion or purchase shall be subject to
adjustment from time to time upon the happening of certain events while the
conversion or purchase right specified by the provisions of this Debenture
remains outstanding, as follows:
A. MERGER, SALE OF ASSETS, ETC. If Borrower at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets, the provisions of this Debenture shall thereafter be evidence of the
right to purchase such securities and property as would have purchase such
number and type of securities and property as would have been issuable or
distributable on account of such consolidation, merger, sale or conveyance, upon
or with respect to the securities subject to the conversion or purchase right
immediately prior to such consolidation, merger, sale or conveyance, the
foregoing provision shall similarly apply to successive transaction of a similar
nature by any such successor or purchaser. Without limiting the generality of
the foregoing, the provisions of this Section 2.4 shall apply to such securities
of such successor or purchaser after any such consolidation, merger, sale or
conveyance.
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B. RECLASSIFICATION, ETC. If Borrower at any time shall, by subdivision,
combination or reclassification of securities, or otherwise, change any of the
right specified by the provisions of this Debenture into the same or a different
number of securities of any class or classes, the provisions of this Debenture
shall thereafter be evidence of the right to purchase such number and type of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to conversion or purchase right immediately
prior to such subdivision, combination, reclassification or other change. If
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, the Conversion Price shall be proportionately
reduced in case of subdivision of shares or proportionately increased in case of
combination of shares, in both situations by the ratio which the total number of
Common Stock to be outstanding immediately after the occurrence of such event
bears to the total number of Common Stock outstanding immediately prior to the
occurrence of such event.
2.5 CASH DISTRIBUTION. No adjustment of cash dividends on Common Stock or other
Securities purchasable pursuant to the provisions of this Debenture will be made
to the Conversion Price.
2.6 AUTHORIZED SHARES. Borrower covenants that during the period the conversion
right specified by the provisions of this Debenture exists, Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the conversion of the
principal indebtedness evidenced by the provisions of this Debenture. Xxxxxxxx
agrees that its issuance of this Debenture shall constitute full authority to
Xxxxxxxx's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of the principal indebtedness evidenced by the
provisions of this Debenture.
2.7 EARLY REPAYMENT. Borrower may, at its option, repay the principal and
accrued interest evidenced by the provisions of this Debenture at any time after
June 30, 1999, if the closing bid price of the Borrower's Common Stock equals or
exceeds four dollars ($4.00) per share for any twenty (20) consecutive business
days in the prior sixty (60) business days. If the Borrower elects to repay
pursuant to the provisions of this section, Holder will have ten (10) business
days to notify Borrower of Holder's intention to exercise the conversion of the
Debenture into common shares of the Borrower.
ARTICLE THREE
REPRESENTATIONS AND WARRANTS OF BORROWER
Borrower represents and warrants that:
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3.1 EXISTENCE AND RIGHTS. Borrower is a corporation duly, organized and existing
pursuant to the laws of the State of Nevada without limit as to the duration of
its existence; Borrower has corporate powers and adequate authority, rights and
franchises to own its property and to carry on its business as now conducted,
and is duly qualified and in good standing in each jurisdiction in which the
character of the properties owned by it therein or the conduct of its business
makes such qualification necessary: and Borrower has the corporate power and
adequate authority to issue this Debenture and the underlying shares of Common
Stock.
3.2 DEBENTURE AUTHORIZED. The execution and delivery of this Debenture and the
performance of the provisions of this Debenture are not in contravention of or
in conflict with any law or regulation or any term or provision of Borrower's
Articles or Certificate of Incorporation or Bylaws and are duly authorized and
do not require the consent or approval of any governmental body or other
authority; and this Debenture is the valid, binding and legally enforceable
obligation of Borrower in accordance with the terms herein.
3.3 NO CONFLICT. The execution, delivery and performance of this Debenture are
not in contravention of or conflict with any agreement, indenture or undertaking
to which Borrower is a party or by which Borrower or any of Borrower's property
may be bound or affected, and does not cause any lien, charge or other
encumbrance to be created or imposed upon any such property by reason thereof.
ARTICLE FOUR
REPRESENTATION, WARRANTIES AND CONVENANTS OF HOLDER
Holder hereby represents and warrants to and convenience with Borrower as
follows:
4.1 ABILITY TO PROVIDE FOR NEEDS. Holder has adequate means of providing for his
or her currents and possible personal contingencies and he or she no need in the
foreseeable future to sell any shares of Common Stock acquired by Holder. Holder
is able to bear economic risks of the transaction evidenced by the provisions of
this Debenture and Xxxxxx has a sufficient net worth to sustain a loss of the
principal amount lent by Holder to the Company and evidenced by the provisions
of this Debenture, in the event such loss should occur.
4.2 KNOWLEDGE AND EXPERIENCE. Xxxxxx has such knowledge and experience in
financial and business matters that he or she is capable of evaluating the
merits and risks of a loan to Borrower.
4.3 BOOKS AND RECORDS. Xxxxxx confirms that all documents, records and books,
pertaining to his or her loan to Borrower have been made available to Holder.
4.4 QUESTIONS REGARDING LOAN. Xxxxxx has had an opportunity to ask questions of
an received satisfactory answers from Borrower, and any person or persons acting
on Xxxxxxxx's behalf, concerning the terms and conditions of his or her loan to
Borrowers, and
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all such questions are been answered to the complete satisfaction of Xxxxxx.
4.5 ACQUISITION INTENTION. Any shares of Common Stock acquired by Holder because
of exercise of the conversion rights specified by the provisions of this
Debenture will be acquired by Holder for his or her own account for investment
in a manner which would not require registration or qualification pursuant tot
he provisions of the Securities Act of 1933,as amended ("Act"), or any state
Blue Sky law.
4.6 HISTORY AND EARNINGS OR BORROWER. It has been called to the attention of
Holder by those persons with whom the undersigned has dealt in connection with
his or her loan to Borrower, that Xxxxxxxx has a limited history of operations
and insignificant earnings and that Xxxxxx's loan to Borrower involves
significant risk which may result in the loss of the amount lent to Borrower.
4.7 NO REPRESENTATIONS OR WARRANTIES. Xxxxxx has received no representations or
warranties in making his or her lending decision.
4.8 EVALUATION OF RISKS. Xxxxxxxx has made available to Holder or his or her
personal advisor the opportunity to obtain appropriate to evaluate the merits
and risks of a loan to Borrower.
4.9 NO DETERMINATION BY REGULATORS. Holder understands that neither the
Securities and exchanges commission nor any Securities Administrator or similar
person of any state or province has made any finding or determination relating
to the fairness of any loan to Borrower or subsequent acquisition of Common
Stock and that neither the Securities and Exchange Commission nor any Securities
Administrator or similar person of any state or province has or will recommend
or enforce any such loan or acquisition of Common Stock
4.10 ACCREDITED INVESTOR. Holder hereby represents and warrants that Holder is
an "Accredited Investor", as defined pursuant to Section 2(a)(15) of the Act and
Rule 501 of Regulation D promulgated pursuant to the Act, and satisfies one of
the following categories:
(1) Xxxxxx is a director or executive officer of Borrower; or
(2) Xxxxxx is a natural person whose individual net worth, or joint
net worth with that Xxxxxx's spouse, at the time of his or her
loan to Borrower exceeds $1,000,000; or
(3) Holder is a natural person who has an individual income in
excess of $200,000 in each of the 2 most recent years or joint
income with Xxxxxx's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of having the same
income level in the current year; or
(4) Holder is a trust, with total asset in excess of $5,000,000, not
formed for the specific purpose of making the loan to Borrower,
whose lending
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decision is directed by a sophisticated person as described in
Regulation 230.506(b)(2)(ii) promulgated pursuant to the Act; or
(5) Holder is an entity in which all of the equity owners are
accredited investors.
4.11 INDEMNIFICATION. Holder acknowledges that he or she understands the meaning
and legal consequences of the representation, warranties, and covenants
specified in this Article 4 and that Borrower has relied on such representation,
warranties and covenants, and the undersigned hereby agrees to indemnify and
hold harmless Borrower, and its officers, directors, controlling persons,
agents, attorneys, accountants, and employees, from any and all loss, damage or
liability sue to, or occurring because of, a breach any such representation,
warranty, or covenant.
4.12 REGISTRATION OF ACQUIRED SHARES. Borrower has no right to require that any
shares of Common Stock acquired by Holder upon the exercise of the conversion
right specified in the Debenture be registered pursuant to the provisions of the
Act, or otherwise. The undersigned further acknowledges that Borrower has no
obligation to assist Holder in obtaining any exemption from any registration
requirements imposed by applicable law. Xxxxxx also acknowledges that he or she
shall be responsible for compliance with all conditions on transfer imposed by
the Securities and Exchange Commission or any Securities Administrator or
similar person of any state or province.
4.13 LIMITATION ON TRANSFER OF INTEREST. Xxxxxx acknowledges that he or she is
aware that there are substantial restrictions on the transferability of any
shares of Common Stock acquired by Holder upon the exercise of the Conversion
right specified in this Debenture. Because such Common Stock will not, and the
undersigned has no right to require that such Common Stock, be registered
pursuant to the provisions of the Act, Holder agrees not to sell, transfer,
assign, pledge, hypothecate or otherwise dispose of any such Common Stock unless
such sale is exempt from such registration pursuant to the provisions of the
Act. Holder further acknowledges that Xxxxxxxx has no obligation to assist
Holder in obtaining any exemption from any registration requirements imposed by
applicable law. Xxxxxx also acknowledges that he or she shall be responsible for
compliance with all conditions on transfer imposed by the Securities and
Exchange Commission or any Securities Administrator of any state and for any
expenses incurred by Borrower for legal and accounting services in connection
with reviewing such a proposed transfer and issuing options in connection
therewith.
4.14 COMPLIANCE WITH ACT. Xxxxxx understands and agrees that the following
restrictions and limitations are applicable to his purchase and any sale,
transfer, assignment, pledge, hypothecation or other disposition of any shares
of Common Stock acquired by Holder upon the exercise of the conversion right
specified in the Debenture pursuant to Section 4(2) of the Act and Rule 144
promulgated pursuant thereto:
(a) Xxxxxxxx agrees that any shares of Common Stock acquired by
Xxxxxx
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upon the exercise of the conversion right specified in the
Debenture shall not be sold, pledged, hypothecated or otherwise
disposed of unless such Common Stock is registered pursuant to
the Act and applicable state securities laws or are exempt
therefrom.
(b) A legend in substantially the following form has been or will be
placed on any certificate(s) or other documents evidencing such
Common Stock.
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT ONLY AND HAVE NOT BEEN REGISTERED PURSUANT TO THE PROVISIONS OF THE
SECURITIES ACT OF 1933 AS AMENDED ("ACT"), AND HAVE BEEN OFFERED AND SOLD IN
RELIANCE UPON THE EXEMPTIONS SPECIFIED IN SECTION 4(2) AND 4(6) OF THE ACT.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT UPON DELIVERY
TO THE COMPANY OR ITS TRANSFER AGENT OF AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY OR ITS TRANSFER AGENT THAT REGISTRATION IS NOT REQUIRED COR SUCH
TRANSFER OR THE SUBMISSION TO THE COMPANY OR ITS TRANSFER AGENT OF SUCH OTHER
EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY OR ITS TRANSFER AGENT TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT, APPLICABLE
STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
(c) Stop transfer instructions to the transfer agent of such Common
Stock will be placed with respect to such Common Stock so as to
restrict the sale, transfer, pledge, hypothecation or other
disposition thereof, subject to the further terms hereof,
including the provisions of the legend set forth in subparagraph
(b) above.
(d) The legend and stop transfer instruction described in
subparagraphs (b) and (c) above will be placed on any new
certificate(s) or other documents for transfer.
ARTICLE FIVE
MISCELLANEOUS
5.1 LOST OR DESTROYED DEBENTURES. Upon receipt by Borrower at its principal
office of evidence satisfactory to Borrower of the loss, theft, destruction or
mutilation of this Debenture, and in the case of any such loss, theft, or
destruction, upon delivery of indemnity satisfactory to Borrower or, in case of
any such mutilation, upon surrender and cancellation of this Debenture, Borrower
will issue a new Debenture specifying provisions which are the same as those
specified in lieu of this Debenture with a notification thereon of the date from
which interest has accrued.
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5.2 SURVIVAL OF WARRANTIES. All agreements, representations and warranties made
herein shall survive the execution and delivery hereof.
5.3 NOTICES. Any notices herein required or permitted to be given shall be in
writing and may be personally served or sent by mail and shall be deemed to have
been given when deposited in the mail, registered, with postage prepaid and
properly addressed.
5.4 AMENDMENT PROVISION. The term "Debenture" or "this Debenture" and all
references thereto, as used throughout this instrument, shall mean this
instrument as originally executed or if later amended or supplemented, then, as
so amended or supplemented.
5.5 ASSIGNABILITY. This Debenture shall obligate Borrower, its successors and
assigns. This Debenture shall not be assigned, transferred, alienated, pledged
or otherwise hypothecated by Holder without prior written consent of Borrower,
which consent may be withheld unreasonably.
5.6 GOVERNING LAW. This Debenture has been executed in and shall be governed by
the laws of the State of Nevada.
IN WITNESS WHEREOF, XXXXXXXX AND HOLDER HAVE CAUSED THIS DEBENTURE TO BE SIGNED
IN THEIR NAMES BY THEIR DULY AUTHORIZED REPRESENTATIVES ON THE DATES SPECIFIED
OPPOSITE THEIR SIGNATURES.
Dated: November 16, 1998 BORROWER:
INTERNATIONAL TRADING &
MANUFACTURING CORPORATION,
A NEVADA CORPORATION
By: Xxxxx Xxxxxxx /S/
Its: CEO
Dated: November 16, 1998 HOLDER:
Xxxx Xxxxxx /S/
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