EXHIBIT 4.10
NATIONAL BOSTON MEDICAL, INC.
US $ 750,000
10% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2001
NOVEMBER 25, 1998
Issuer: National Boston Medical, Inc. (OTC BB Symbol; "NBMX")
Purchaser: Thomson Xxxxxxxxx & Co. Limited, as Placement Agent 000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
Aggregate Amount: US $ 750,000.00
Security: 10% Convertible Debentures Due December 31, 2001 (the "Debentures").
The Debentures shall bear interest at the rate of 10% per year calculated
on a 30/360 basis, payable upon conversion, redemption or maturity,
whichever occurs first. Interest shall be payable, at the holder's option,
in cash or in shares of the Issuer's common stock ("Common Stock").
Exemption from The Debentures shall be exempt from the registration requirements
of the Registration: US Securities Act of 1933 (the "33 Act").
Initial Funding: US $750,000.00
Initial Funding and
Closing Date: November 25, 1998 - $750,000.00
Special Requirements: Issuer shall set aside in an escrow account to be
maintained at the offices of Mintmire and Associates, Palm Beach, Florida,
a total of 5% of its gross revenues, (or commencing April 1, 1999, a
minimum amount of $10,000per month for nine (9) months and thereafter a
minimum of monthly installment of 25,000) which revenues shall be
specifically held for the purpose of repaying loans or advances made
pursuant to this agreement, such revenues to be retained until the toatl of
such revenues and accrued interest equal the total amount of any funding or
advances outstanding as indebtedness which have not been converted to
common stock or the indebtedness otherwise paid, the escrow shall be
released to Issuer.
In addition, Issuer shall set aside in such escrow account a total of
7,500,000 shares of its common stock to assure the filing by the Company of
its Form 10. NBM shall use its best efforts to file its Form 10SB with the
SEC by April 1, 1999.
Default:
1. Should NBM fail to file its Form 10SB with the SEC on or before June 1,
1999, Purchaser shall be entitled to withdraw 3,750,000 shares of NBM stock
from escrow as payment of $375,000 of the indebtness.
2. Should NBM fail to file its Form 10SB with the SEC on or before July 1,
1999, Purchaser shall be entitled to withdraw 1,875,000 shares of NBM stock
from escrow as payment of $187,500 of the indebtness.
3. Should NBM fail to file its Form 10SB with the SEC on or before August1,
1999, Purchaser shall be entitled to withdraw the remaining 1,875,000
shares of NBM stock from escrow as payment of the remaining indebtness.
Conversion: The Debentures shall be convertible into shares of Common Stock from
time to time in such amounts as the Purchaser shall specify, upon approval
by the SEC of the Form 10SB.
Conversion Price: The lower of (i) US$ 0.625 or (ii) 75% of the lesser of the
average closing sales price of the Common Stock for the three (3) trading
days preceding November 25, 1998, or the Conversion Date.
Purchaser Warrants: On the initial Closing Date, the Issuer shall issue the
Purchaser one (1) year Warrants to purchase 200,00 shares of Common Stock
at a price of $0.625 per share.
Registration of: As soon as possible and in any event by June 1, 1999, the
Issuer shall file (i) a registration statement on Form SB-2 with the SEC
for the purpose of registering the issuance of not less that 150% of the
Common Stock underlying the Debentures and 100% of the Common Stock
underlying the Purchaser's Warrants and the Placement Agent's Warrants
under the 33 Act and the '34 Act. The issuer shall caus the registration
statement to remain effective until 30 days after the Debentures have been
converted or reduced and the Warrant exercised or exposed. The Issuer shall
cause the registration statement to be delcared effective by the SEC as
soon as possible; and , (ii) a registration statement with the SEC for the
purpose of registering the issuance of not less than 150% of the Common
Stock underlying the Debentures (based upon the Initial Closing Date as the
conversion date) and 100% of the Common Stock underlying the Purchasers
Warrants and Placement Agents Warrants under the 33 Act, which registration
shall include the unqualified opinion of the Issuer's auditors satifactory
to the Purchaser, with respect to the Issuer's financial statements
included in the registration statement.
Escrow Holder: Mintmire and Associates, Palm Beach, Florida, shall act as escrow
holder for funds and the Common Stock.
Placement Agent: Thomson Kernaghan & Co., Ltd., Toronto.
Placement Fee: 10% of the gross amount of the Debentures, payable ratably upon
funding.
Placement Agent's Warrants: On the Initial Closing Date, the Issuer shall issue
the Placement Agent Warrants to purchase $200,000 of Common Stock at a
price per share equal to the average closing id price of the Common
Stock for the three trading days preceding the Closing Date.
Purchaser's Legal Fees and Expenses: The Issuer shall pay the Purchasers
reasonable legal fees and expenses not to exceed $10,000.
Definitive Agreement: The purchase and sale of the Debentures is subject to the
negotiation and execution of a definative agreement containing such
representations, warranties, terms and conditions as the parties and their
respective counsel may agree.
Purchasers: The Purchasers will represent and warrant to the Placement Agent
that (i) Representations to they have such knowledge and experience in
financial and business the Placement Agent: matters that they are capable
of evaluating the merits and risks of purchasing the Debentures, (ii) they
are capable of bearing the economic risk of such purchase, and (ii) they
have received all information requested by them in connection with their
decision to purchase the Debentures.
Indemnification: The Issuer shall indemnify the Placement Agent against certain
liability to and claims made by the Purchasers.
Currency: All dollar amounts are US currency.
National Boston Medical, Inc. Xxxxxx Xxxxxxxxx & Co. Ltd., a
Placement Agent
By:/s/Xxxxxx X. Xxxxx By:/s/ Xxxx Xxxxxxxxx
NATIONAL BOSTON MEDICAL, INC.
(The "Company")
Preliminary Legal Due Diligence List
Please provide each of Thomson Kernaghan & Co. Ltd. and Xxxx X. Xxxx with a copy
of the following:
1. Articles (certificates) of incorporation of the Company and each of its
subsidiaries, certified as of a recent date by the secretary of state of
the state of their respective incorporation.
2. Certificates of good standing for the Company and each of its subsidiaries,
issued as of a recent date by:
A. The secretary of state of (1) the states of their respective
incorporation, and (2) each state in which the corporation has
qualified to do business.
B. The taxing authorities of (1) the states of their respective
incorporation, and (2) each state in which the corporation has
qualified to do business.
3. Bylaws of the Company and each of its subsidiaries, certified as of a
recent date by their respective secretaries.
4. UCC searches as of a recent date for the Company and each of its
subsidiaries for (1) the states of their respective incorporations, (2)
each state in which the corporation has qualified to do business or is
doing business, and (3) each other state in which financing statements have
been filed for the Company or any subsidiary.
5. The names, addresses and biographical information for the directors and
executive officers of the Company and each subsidiary.
6. For the Company and each subsidiary, please list the classes of shares of
outstanding, and the number of shares in each class outstanding.
7. The names and addresses of the (1) beneficial owners of 5% or more of each
class of the Company's voting securities, together with the number and
percentage of such shares; and (2) the holders of rights to acquire any
such securities which, when added to the securities beneficially owned by
the holder, will result in the holder beneficially owning 5% or more of any
class of the Company's voting securities, together with a description of
those rights.
8. Please describe all executor agreements, arrangements and understandings,
whether written or oral, and whether formal or informal, relating to (i)
the sale or issuance by the Company or any subsidiaries of any of their
respective securities, or (ii) the purchase or repurchase by the Company or
any subsidiary of any of their respective securities.
9. A copy of the Company's current business plan, and the Company's current
marketing plan if not a part of its business plan. Please describe in
detail the Company's plan and critical path for becoming a reporting
company.
10. A copy of all business, financial, operating capital and other forecasts
prepared by or for the Company.
11. Copies of all offering materials, private placement memoranda,
subscriptions and agreements for the purchase or sale of securities of the
Company and each subsidiary for the current and past two years.
12. Copies of all meeting notices, proxy statements and other communications
with the shareholders of the Company and each subsidiary during the current
and past two years, and all material communications received from such
shareholders during that three year period.
13. Copies of all material agreements relating to or affecting the Company or
any of its subsidiaries, or any of their respective assets, operations or
business.
14. Please describe all agreements, arrangements and understandings, whether
written or oral, and whether formal or informal, relating to the voting of
any of the securities of the Company and each subsidiary. Please provide
copies of any such agreements, arrangements and understandings that are in
writing.
14. Copies of the CONSOLIDATING financial statements for the Company and each
subsidiary for (1) the most recent fiscal year, and (2) each subsequent
quarter.
15. Copies of all federal, state and local income and franchise tax returns
filed by the Company and each subsidiary for the past two tax years.
16. Copies of all letters, reports, opinions, and other communications from the
Corporation's auditors during the preceding and current fiscal years.
17. A list and description of all litigation, arbitration, and pending or
threatened claims against the Company or any subsidiary. This list should
include, but not be limited to, employee matters, ERISA matters,
environmental matters, intellectual property matters and regulatory
matters.
18. Copies of all opinions of legal counsel for the Company or any of its
subsidiaries furnished during the past two years to the Company's auditors,
or the Company's lenders, or the Company or any of its shareholders,
directors or officers in connection with any matter relating to the Company
or any of its subsidiaries, or to their respective assets, operations or
existing or potential liability.
19. Copies of all communications to or from any other federal, state or local
governmental or regulatory authority relating to the Company or any of its
subsidiaries.
20. A list and description of all loans and other obligations and arrangements
for borrowed money, and any collateral therefor, of the Company and each
subsidiary. Please include copies of all loan agreements, notes, security
agreements, pledges, mortgages and other documents that relate to such
loans.
21. The names, addresses, telephone numbers, fax numbers and e-mail addresses
for the Company's legal counsel and auditors.
22. Authorizations for the Company's legal counsel and auditors to discuss the
operations and affairs of the Company and its subsidiaries with Thomson
Kernaghan & Co., Ltd. and Xxxx X. Xxxx, legal counsel for Xxxxxxx Xxxxxxxxx
& Co. Ltd.
