EXHIBIT 6.3
CONVERTIBLE DEBENTURE AGREEMENT
DATED: October 14, 1999
BETWEEN: ("Investor")
AND: Axion Spatial Imaging, Inc. ("Company")
0000 - 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Fax: (000) 000-0000
1.0 RECITALS
1.1 This Convertible Debenture Agreement ("Agreement") is
entered into this date by and between_______________ ("Investor")
and Axion Spatial Imaging, Inc., a Nevada corporation ("Company").
Subject to the terms and conditions of this Agreement, the Company
also agrees to issue to Investor a warrant to purchase common stock
of the Company, in substantially the form attached to this
Agreement as Exhibit B (the "Warrant").
1.2 The purpose of this Agreement is to set out the terms of the
arrangement by which Investor agrees to invest in a Convertible
Debenture ("Debenture") of the Company. All dollar amounts
contained in this Agreement are stated in U.S. funds.
2.0 DEFINITIONS
2.1 "Agreement" means this Convertible Debenture Agreement and
all attached Exhibits and Schedules, the terms of which are
incorporated by reference herein.
2.2 "Closing" or "Closing Date" means the date and time as of
which the issuance of the Debenture actually takes place and
consideration is paid, which shall occur immediately following the
execution of this Agreement at the offices of the Company, or at
such other time or place as the Investor and Company may mutually
agree upon.
2.3 "Common Stock" means shares of the class designated as
common stock, $.001 par value, of the Company at the date of this
Agreement.
2.4 "Company" has the meaning set forth in the Recitals section
above.
2.5 "Conversion Price" means $.43 per share.
2.6 "Conversion Shares" means that number of shares of the
Company's Common Stock issuable upon conversion of the Debenture,
valued at the Conversion Price, provided, however, that if an
adjustment is required under Section 5.5 of this Agreement, that
"Conversion Shares" means, after each such adjustment, the number
of shares of Common Stock issuable upon the conversion of this
Debenture immediately after the last such adjustment.
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2.7 "Investor" has the meaning set forth in the Recitals section
above.
2.8 "Maturity" means the earlier of (i) 5:00 pm Pacific Daylight
Time on the date thirty-six (36) months after the Closing Date; or
(ii) the date of complete conversion (if any) as provided in this
Agreement.
2.9 "Principal" means the amount of money loaned to the
Company by Investor, ________________________, payable in lawful
money of the United States.
3.0 PURCHASE AND SALE OF DEBENTURE
3.1 Investor agrees, on the terms of and subject to the
conditions specified in this Agreement, to lend to the Company the
Principal. Investor's loan shall be evidenced by a convertible
debenture ("Debenture") in the form of Exhibit A dated the Closing
Date, and will provide that for value received, unless previously
converted, the Company will pay to Investor on or before Maturity
the amount of the Principal in lawful money of the United States
with interest on the Principal from the Closing Date. The interest
rate will be calculated on basis of a simple interest rate of
10% (ten percent) per annum, and shall be payable annually.
3.2 At the Closing, Investor shall deliver to the Company: (1)
the Principal in United States dollars in immediately available
funds by wire transfer to an account designated in writing by the
Company prior to Closing; and (2) all documents, instruments and
writings required to have been delivered at or prior to Closing by
the Investor pursuant to this Agreement.
3.3 At the Closing, subject to the provisions of this Agreement,
the Company shall deliver to Investor: (1) the Debenture in the
form of Exhibit A. The Debenture and the Conversion Shares shall
carry the restrictive legend set forth in Section 7.4 below; and
(2) all documents, instruments and writings required to have been
delivered at or prior to Closing by the Company pursuant to this
Agreement.
4.0 THE WARRANT
4.1 Subject to the terms and conditions of this Agreement, the
Company agrees to issue to Investor a warrant, in substantially the
form attached to this Agreement as Exhibit B (the "Warrant"), to
purchase common stock of the Company at an exercise price of U.S
$.62 per share.
5.0 CONVERSION PRIVILEGE
5.1 The Debenture shall be convertible at any time at the option
of Investor into Common Stock of the Company at the Conversion
Price, upon not less than ten (10) nor more than ninety (90) days
notice. The number of Conversion Shares is subject to adjustment
in certain events as set forth in Section 5.5 below. Investor may
elect to convert the entire Principal of the Debenture into
Conversion Shares or a portion thereof at the Conversion Price,
provided however, that in the event of any partial conversion, at
least $25,000 of the Principal must be converted at any given time.
Partial conversion of the Debenture shall result in a proportional
reduction of the Principal.
5.2 To convert, Investor shall within the conversion period
tender notice of conversion to the agent designated by the Company.
Conversion eliminates all rights and obligations resulting from the
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Debenture. No fractional share of Common Stock or scrip
representing a fractional share will be issued upon conversion, but
if the conversion results in a fractional share the Company will
round the fractional share upward to the next whole integer. As
soon as practicable after receipt of a request by the Investor to
convert, the Company shall deliver a certificate for the number of
whole Conversion Shares issuable upon the conversion. The Company
agrees to reserve a sufficient number of shares of its Common Stock
to satisfy its obligation to Investor in the event Investor elects
to convert. If Investor elects to convert, Investor may also elect
to convert any accrued and unpaid interest into Common Stock at the
Conversion Price.
5.3 The Conversion Shares will not be registered under the
United States Securities Act of 1933, as amended ("Securities
Act"), and shall be issued as restricted common stock as the term
"restricted" is defined in Rule 144 under the Securities Act.
Generally, under Rule 144 the Conversion Shares must be held for a
period of at least one year from the date full consideration was
given for the Debenture, and may be resold in broker's transactions
only in accordance with the terms and limitations of Rule 144.
5.4 Automatic Conversion. The Debenture shall automatically be
converted into shares of Common Stock at the Conversion Price upon
the earlier of (1) immediately upon the closing of the sale of the
Company's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act, at a public offering
price (prior to underwiter's discounts and expenses) equal to or
exceeding $2.00 per share of Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to the shares)
and the aggregate proceeds to the Company (after deduction for
underwriter discounts and expenses relating to the issuance) exceed
$1,000,000, or (2) if the average common stock trading price
("Average Market Price") for the fifteen (15) trading days last
preceding the date of conversion is equal to or exceeds $1.88 per
share. For purposes of calculating the Average Market Price, the
market price per share of the common stock at any date shall be (i)
if the principal trading market for such securities is an exchange,
the closing bid price on the exchange on that day, provided if
trading of the common stock is listed on any consolidated tape, the
price shall be the closing bid price set forth on the consolidated
tape, or (ii) if the principal market for the securities is the
over-the-counter market, the closing bid price on that date as set
forth by NASDAQ NMS, NASDAQ SmallCap, the NASD Electronic Bulletin
Board or over-the-counter, as the case may be, or (iii) if the
security is not quoted over-the-counter, the closing bid price as
reported by the National Quotation Bureau (or similar organization
or agency succeeding to its functions of reporting prices).
Notwithstanding the foregoing, if there is no reported closing
price or closing bid price, as the case may be, on a date prior to
the event requiring a computation or adjustment hereunder, then the
market price shall be determined as of the latest date prior to the
day for which the closing price or closing bid price is available.
5.5 The number of Conversion Shares is subject to adjustment
upon the occurrence of certain events, including (i) stock
dividends, stock splits or combinations, (ii) rights offerings for
shares of common stock at less than the then current market price
to existing holders of common stock, and (iii) recapitalizations,
mergers and reorganizations. However, in the event of a merger or
reorganization in which the Company is not the surviving
corporation, including one following an acquisition of
substantially all of the Company's outstanding voting securities by
another corporation, the right of Investor to convert the Debenture
into Common Stock of the Company shall, at the sole discretion of
Investor, be converted into the right to receive whatever
securities or other property, including cash, the holders of Common
Stock received upon such merger or acquisition.
6.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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6.1 The Company represents and warrants to Investor as follows
that the statements contained in this Section 6.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule A and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 6.0.
6.2 The execution and delivery to Investor by the Company of
this Agreement, constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms. The Company has the absolute
and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and any of the Company's closing
documents, if required, and to perform its obligations under this
Agreement and the Company's closing documents.
6.3 To the best of the Company's knowledge, information and
belief, neither the execution and delivery of this Agreement nor
the compliance with and fulfillment of the terms and provisions of
this Agreement:
(a) will result in the breach of any term or provision of, or
constitute a default under or conflict with the charter documents,
Articles of Incorporation or Bylaws of the Company;
(b) is prohibited by or requires any notification, consent,
authorization, or any judgment, order, writ, injunction, or decree
which is binding upon the Company, except for such approvals or
other action or inaction as may be required under the securities or
corporate laws of the various states or other jurisdictions.
6.4 The Company is not or will not be required to give any
notice to or obtain any consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or
performance of any of its terms and provisions.
7.0 REPRESENTATIONS AND WARRANTIES OF INVESTOR
7.1 Investor represents and warrants to the Company as follows
that the statements contained in this Section 7.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule B and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 7.0.
7.2 This Agreement, together with the Promissory Note of even
date, attached to this Agreement as Addendum A, constitutes the
legal, valid, and binding obligation of Investor, enforceable
against Investor in accordance with its terms. Investor has the
full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder unless otherwise stated in this Agreement.
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7.3 Neither the execution nor the delivery of this Agreement,
nor the compliance with and fulfillment of its terms and
provisions:
(a) will result in the breach of any term or provision of, or
constitute a default under or conflict with the Articles of
Incorporation or Bylaws of Investor; and
(b) is prohibited by or requires any notification, consent,
authorization, or any judgment, order, writ, injunction, or decree
which is binding upon Investor, except for such approvals or other
action or inaction as may be required under the securities or
corporate laws of the various states or other jurisdictions.
7.4 With respect to the purchase of the Debenture and the under-
lying Conversion Shares, Investor warrants and represents the
following:
(a) Investor has been fully advised of the financial condition
of the Company, has been allowed to review all relevant financial,
business and legal documentation sufficient to enable it to
evaluate its investment in the Debenture and the underlying
Conversion Shares;
(b) Investor has been provided with all materials and
information requested by Investor or its representatives, including
any information requested to verify any information furnished, and
Investor has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's senior
management and an opportunity to review the Company's facilities.
The Investor understands that such discussions, as well as the
written information issued by the Company, were intended to
describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or
exhaustive description.
(c) Investor has sufficient knowledge and experience in
financial and business matters and is capable of evaluating the
merits and risks of this investment and of making an informed
investment decision with respect to the investment;
(d) Investor is able to bear the economic risk of an investment
in the Shares and, at the present time, is able to afford a
complete loss of such investment;
(e) Investor was not solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or solicitation in connection with the offer, sale, or
purchase of Company securities;
(f) Investor is investing in the securities for Investor's
account and not with a view for resale and Investor does not intend
to divide Investor's participation with others;
(g) Investor understands and acknowledges that the Shares will
be "restricted securities" as that term is defined in Rule 144 pro-
mulgated under the Securities Act, and that the certificate(s) rep-
resenting the Shares will bear a legend similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
and are "restricted securities" as that term is defined
in Rule 144 as promulgated under the Act. The securities may
not be sold or transferred for value without an effective
registration statement under the Act, pursuant to the
provisions of Rule 144 under 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 Company;
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The Investor acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available.
The Investor is aware of the provisions of Rule 144 promulgated
under the Act which permits limited resale of securities purchased
in a private placement subject to the satisfaction of certain
conditions, including, in case the Investor has held the securities
for less than two years or is an affiliate of the Company, among
other things: the availability of certain current public
information about the Company, the resale occurring not less than
one year after a party has purchased and paid for the securities to
be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker," and the number of
shares being sold during any three-month period not exceeding
specified limitations."
(h) At the time Investor was offered the Shares, Investor was,
and at the date of this Agreement is, and at the Closing Date it
will be, an "accredited investor" as that term is defined in Rule
501(a) under the Securities Act.
(i) Investor understands that no established public market now
exists for any of the securities issued by the Company and there
has been and can be no assurance that a public offering will be
successfully completed by the Company or that an established public
market will ever exist for the Common Stock.
8.0 DEFAULTS AND REMEDIES
8.1 Events of Default. The occurrence of one or more of the
following events shall constitute an event of default with respect
to each Debenture:
(a) Nonpayment of the Principal or accrued interest on the
Debenture when the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or
otherwise, and such failure is not cured within 45 days after the
Company receives written demand from the Holder to remedy the same;
(b) The Company becomes insolvent, a receiver is appointed to take
possession of all or a substantial part of its properties, the
Company makes an assignment for the benefit of creditors or files a
voluntary petition in bankruptcy, or the Company is the subject of
an involuntary petition of bankruptcy.
8.2 Remedies. Upon the occurrence of an Event of Default under
Section 8.1 above, at the option and upon the declaration of the
Investor, (i) the entire unpaid Principal and accrued interest on
the Debenture held by Investor shall, without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly
waived, be forthwith due and payable, and the Investor may,
immediately and without expiration of any period of grace, enforce
payment of all amounts due and owing under the Debenture and
exercise any and all other remedies granted to it at law, in
equity, or otherwise.
9.0 WAIVERS AND AMENDMENTS
9.1 This Agreement shall not be modified, amended or terminated
except by written amendment signed by the parties. With the writ-
ten consent of the parties, the obligations of the Company and the
rights of the Investor under this Agreement may be waived either
generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or
indefinitely.
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10.0 NOTICES
10.1 Any notice, request, demand, claim, instruction, or other
document to be given to any party pursuant to this Agreement shall
be in writing delivered personally or sent by mail, registered or
certified, postage fully prepaid, as follows:
If to the Company, to the address set forth on the first page of
this Agreement, with a copy to:
Xxxxxxxxx Business Law P.C.
0000 Xxxxx Xxx., Xxx. 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
If to Investor, to the address set forth on the first page of this
Agreement.
10.2 Any party may give any notice, request, demand, claim,
instruction, or other document under this section using any other
means (including expedited courier, messenger service, telecopy,
facsimile, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, instruction, or other document
shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended.
Any party may change its address for purposes of this section by
giving notice of the change of address to the other party in the
manner provided in this section.
11.0 GENERAL PROVISIONS
11.1 The Parties agree to furnish upon request to each other such
further information, and to execute and deliver to each other such
other documents, and to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this
Agreement.
11.2 This Agreement supersedes all prior agreements between
the parties with respect to its subject matter and constitutes
(along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to
be charged with the amendment.
11.3 Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties, except
that Investor may assign any of its rights under this Agreement to
any subsidiary or affiliate of Investor. This Agreement will apply
to, be binding in all respects upon, and inure to the benefit of
the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal
or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive
benefit of the parties to this Agreement and their successors and
assigns.
11.4 If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
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Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.5 The headings in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
11.6 With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
11.7 This Agreement will be construed in accordance with its
terms and governed in all respects by the laws of the State of
Washington.
11.8 This Agreement may be signed in as many counterparts is as
necessary and all signatures so executed shall constitute one
Agreement, binding on all Parties as if each was a signatory on the
original.
11.9 In the event an arbitration, suit or action is brought by
any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall
be awarded and receive from the non-prevailing party all costs and
expenses, including all reasonable attorneys fees to be fixed by
the arbitrator, trial court, and/or appellate court, in the action
and on appeal.
11.10 The addenda, exhibits and schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
12.0 SIGNATURES
12.1 IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
Investor:
/s/ Ben House
__________________________________________
Ben House
The Company:
AXION SPATIAL IMAGING, INC.
/s/ Xxx Xxxxxxx
_________________________________________
By: Xxx Xxxxxxx, President
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SCHEDULE A
DISCLOSURE SCHEDULE
(pursuant to Section 6.0)
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SCHEDULE B
DISCLOSURE SCHEDULE
(pursuant to Section 7.0)
[This page intentionally left blank]
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EXHIBIT A
CONVERTIBLE DEBENTURE
This Debenture and the common shares of the Company issuable upon
the conversion of this Debenture, have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") or
applicable state securities laws and are "restricted securities" as
that term is defined in rule 144 under the Securities Act. The
securities may not be sold or transferred for value without an
effective registration statement under the Securities Act and
applicable state securities laws, or pursuant to exemption from
registration under the Securities Act, the availability of which is
to be established to the satisfaction of the Company.
FOR VALUE RECEIVED, AXION SPATIAL IMAGING, INC. ("Company"), a
company incorporated under the laws of the State of Nevada and
having an office at #000 0000-000 Xxxxxx, Xxxxxxxx, Xxxxxxx, X0X0X0
Xxxxxx, hereby acknowledges itself indebted and promises to pay to
("Holder"), on or before Maturity, one hundred thousand $$100,000)
("Principal") in lawful money of the United States with interest on
the Principal from the date of funding. The interest rate will be
calculated on the basis of a simple interest rate of 10% (ten percent)
per annum. Interest is cumulative from the date of issue and is payable
annually on the 1st day of August, beginning August 2000.
Unless previously converted as described below, the Company
shall repay the Principal and any accrued and unpaid interest
thereon to the Holder at the address of the Company set forth above
on the "Repayment Date."
DEFINITIONS
- "Agreement" means the Convertible Debenture Agreement of even
date, and all attached Exhibits and Schedules, the terms of which
are incorporated by reference herein, and in accordance with said
terms this Debenture is being issued. All capitalized terms used
in this Debenture and not defined herein shall have the meanings
ascribed to them in the Agreement.
- "Common Stock" means shares of the class designated as common
stock, $.001 par value, of the Company at the date of this
Agreement.
- "Conversion Price" means $0.43 per share.
- "Conversion Shares" means that number of shares of the Company's
Common Stock issuable upon conversion of the Debenture, valued at
the Conversion Price, provided, however, that if an adjustment is
required under Section 5.5 of this Agreement, that "Conversion
Shares" means, after each such adjustment, the number of shares of
Common Stock issuable upon the conversion of this Debenture
immediately after the last such adjustment.
- "Maturity" means the earlier of (i) 5:00 pm Pacific Daylight Time
on the date thirty-six (36) months after the Closing Date; or (ii)
the date of complete conversion (if any) as provided in this
Agreement.
- "Principal" means the amount of money loaned to the Company by
Holder, one hundred thousand dollars($100,000) payable in lawful
money of the United States.
CONVERSION
The Debenture shall be convertible at any time at the option of
Holder into Common Stock of the Company at the Conversion Price,
upon not less than ten (10) nor more than ninety (90) days notice.
The number of Conversion Shares is subject to adjustment in certain
events as set forth below. Holder may elect to convert the entire
Principal of the Debenture into Conversion Shares or a portion
thereof at the Conversion Price, provided however, that in the
event of any partial conversion, at least $25,000 of the Principal
must be converted at any given time. Partial conversion of the
Debenture shall result in a proportional reduction of the
Principal.
To convert, Holder shall within the conversion period tender
notice of conversion to the agent designated by the Company.
Conversion eliminates all rights and obligations resulting from the
Debenture. No fractional share of Common Stock or scrip
representing a fractional share will be issued upon conversion, but
if the conversion results in a fractional share the Company will
round the fractional share upward to the next whole integer. As
soon as practicable after receipt of a request by the Holder to
convert, the Company shall deliver a certificate for the number of
whole Conversion Shares issuable upon the conversion. The Company
agrees to reserve a sufficient number of shares of its Common Stock
to satisfy its obligation to Holder in the event Holder elects to
convert. If Holder elects to convert, Holder may also elect to
convert any accrued and unpaid interest into Common Stock at the
Conversion Price.
The Conversion Shares will not be registered under the United
States Securities Act of 1933, as amended ("Securities Act"), and
shall be issued as restricted common stock as the term "restricted"
is defined in Rule 144 under the Securities Act.
Automatic Conversion. The Debenture shall automatically be
converted into shares of Common Stock at the Conversion Price upon
the earlier of (1) immediately upon the closing of the sale of the
Company's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act, at a public offering
price (prior to underwiter's discounts and expenses) equal to or
exceeding $2.00 per share of Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to the shares)
and the aggregate proceeds to the Company (after deduction for
underwriter discounts and expenses relating to the issuance) exceed
$1,000,000, or (2) if the average common stock trading price
("Average Market Price") for the fifteen (15) trading days last
preceding the date of conversion is equal to or exceeds $1.88 per
share. For purposes of calculating the Average Market Price, the
market price per share of the common stock at any date shall be (i)
if the principal trading market for such securities is an exchange,
the closing bid price on the exchange on that day, provided if
trading of the common stock is listed on any consolidated tape, the
price shall be the closing bid price set forth on the consolidated
tape, or (ii) if the principal market for the securities is the
over-the-counter market, the closing bid price on that date as set
forth by NASDAQ NMS, NASDAQ SmallCap, the NASD Electronic Bulletin
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EXHIBIT A
Board or over-the-counter, as the case may be, or (iii) if the
security is not quoted over-the-counter, the closing bid price as
reported by the National Quotation Bureau (or similar organization
or agency succeeding to its functions of reporting prices).
Notwithstanding the foregoing, if there is no reported closing
price or closing bid price, as the case may be, on a date prior to
the event requiring a computation or adjustment hereunder, then the
market price shall be determined as of the latest date prior to the
day for which the closing price or closing bid price is available.
ADJUSTMENTS
The number of Conversion Shares is subject to adjustment upon the
occurrence of certain events, including (i) stock dividends, stock
splits or combinations, (ii) rights offerings for shares of common
stock at less than the then current market price to existing
holders of common stock, and (iii) recapitalizations, mergers and
reorganizations. However, in the event of a merger or
reorganization in which the Company is not the surviving
corporation, including one following an acquisition of
substantially all of the Company's outstanding voting securities by
another corporation, the right of Holder to convert the Debenture
into Common Stock of the Company shall, at the sole discretion of
Holder, be converted into the right to receive whatever securities
or other property, including cash, the holders of Common Stock
received upon such merger or acquisition.
So long as this Debenture shall be outstanding, if the Company
proposes to take any action that would cause an adjustment to be
made pursuant to this section, the Company shall mail by certified
mail to the Holder, at least 10 days prior to the day on which such
adjustment would become effective, a notice setting forth in
reasonable detail the action to be so taken.
EVENTS OF DEFAULT AND REMEDIES
Events of Default. The occurrence of one or more of the
following events shall constitute an event of default with respect
to each Debenture:
1. Nonpayment of the Principal or accrued interest on the Debenture
when the same shall become due and payable, whether at maturity or
at a date fixed for prepayment or by acceleration or otherwise, and
such failure is not cured within 45 days after the Company receives
written demand from the Holder to remedy the same;
2. The Company becomes insolvent, a receiver is appointed to take
possession of all or a substantial part of its properties, the
Company makes an assignment for the benefit of creditors or files a
voluntary petition in bankruptcy, or the Company is the subject of
an involuntary petition of bankruptcy.
Remedies. Upon the occurrence of an Event of Default under
Section 8.1 above, at the option and upon the declaration of the
Holder, (i) the entire unpaid Principal and accrued interest on the
Debenture held by Holder shall, without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived,
be forthwith due and payable, and the Holder may, immediately and
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EXHIBIT A
without expiration of any period of grace, enforce
payment of all amounts due and owing under the Debenture and
exercise any and all other remedies granted to it at law, in
equity, or otherwise.
DISCHARGE OF DEBENTURE
Upon repayment, conversion or redemption, in whole or in part,
this Debenture shall be surrendered by the Holder to the Company
for cancellation.
LOSS OF DEBENTURE
If the Holder claims that this Debenture has been lost,
destroyed or wrongfully taken, the Company shall issue a
replacement Debenture upon: (1) receipt of an indemnity bond or
other assurance requested by the Company to protect it from any
loss which it may suffer by reason of such replacement or
subsequent presentment of the original Debenture; and
(2) payment by the Holder of any expenses incurred by the Company
in replacing the Debenture.
AMENDMENTS AND WAIVERS
The Debenture and its terms may only be amended by agreement in
writing duly executed by the Company and the Holder. With the
written consent of the parties, the obligations of the Company and
the rights of the Investor under this Debenture may be waived
either generally or in a particular instance, either retroactively
or prospectively and either for a specified period of time or
indefinitely.
The Company may require the Holder to surrender this Debenture
so that an appropriate notation concerning an amendment may be
placed thereon or a new debenture, reflecting the amendment or
waiver. Even if such a notation is not made or such a new
debenture is not issued, such amendment or waiver and any consent
given thereto by the Holder shall be binding according to its terms
on any subsequent holder of this Debenture.
IN WITNESS WHEREOF, AXION SPATIAL IMAGING, INC. has caused its
corporate seal to be hereunto affixed and this Debenture to be
signed by an authorized signing officer of the Company this
1st day of October, 1999.
AXION SPATIAL IMAGING, INC.
/s/ Xxx Xxxxxxx
_________________________________________
By: Xxx Xxxxxxx, President
AXION SPATIAL IMAGING, INC.
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EXHIBIT B
AXION SPATIAL IMAGING, INC.
STOCK PURCHASE WARRANT
This Warrant and the common shares of the Company issuable upon its
exercise have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") or applicable state securities
laws and are "restricted securities" as that term is defined in
rule 144 under the Securities Act. The securities may not be sold
or transferred for value without an effective registration
statement under the Securities Act and applicable state securities
laws, or pursuant to exemption from registration under the
Securities Act, the availability of which is to be established to
the satisfaction of the Company.
Void after October 15, 2002
No. of Shares 80,000
Exercise Price $.62
THIS CERTIFIES THAT, for value received, Ben House
and his registered assigns (hereinafter called the "Holder") is
entitled to purchase from Axion Spatial Imaging, Inc. ("Company"),
at any time after the Closing Date and ending at 5:00 p.m. Seattle,
Washington Time on the Expiration Date, as such term is defined in
Section 1.0 below, up to eighty thousand (80,000) shares of the
Company's Common Stock (the "Warrant Shares"). The Exercise Price
per share of this warrant shall be the price per share of $.62,
payable inlawful money of the United States. This Warrant may be
exercised in whole or in part, at the option of the Holder. Unless
otherwise defined herein, all capitalized terms used in this Warrant
shall have the meanings ascribed to them in the Convertible Debenture
Agreement of even date, to which this Warrant is attached as an
exhibit.
1.0 Term
1.1 This Warrant shall be exercisable at any time after the
Closing Date and ending at 5:00 p.m. Seattle, Washington Time on
October 15, 2002 (the "Expiration Date").
2.0 Method of Exercise; Payment; Issuance of New Warrant
2.1 Subject to Section 1.0 hereof, the purchase right represented
by this Warrant may be exercised by the Holder, in whole or in
part, by:
(a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Attachment A duly executed)
at the principal office of the Company; and
(b) the payment to the Company, by check or wire, of an amount
equal to the applicable Warrant Price per share multiplied
by the number of Warrant Shares then being purchased;
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EXHIBIT B
provided, however, that this Warrant may not be exercised in
increments representing a purchase of less than 20,000 shares
at one time.
2.2 If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the
balance of the Warrant Shares purchasable hereunder. Upon receipt
by the Company of this Warrant and such notice of exercise,
together with, if applicable, the aggregate Warrant Price, at its
principal executive office, the Holder shall be deemed to be the
holder of record of the applicable Warrant Shares, notwithstanding
that the stock transfer books of the Company shall then be closed
or that certificates representing such Warrant Shares shall not
then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Warrant Shares
to the registered owner of this Warrant.
3.0 Stock Fully Paid; Reservation of Warrant Shares
3.1 All shares of stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period
within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and
reserved for the purpose of issue upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of
its stock to provide for the exercise of the rights represented by
this Warrant. In the event that there is an insufficient number of
Warrant Shares reserved for issuance pursuant to the exercise of
this Warrant, the Company will take appropriate action to authorize
an increase in the capital stock to allow for such issuance or
similar issuance acceptable to the Holder.
4.0 Adjustment of Warrant Price and Number of Warrant Shares
4.1 The number and kind of Warrant Shares purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification; Merger. In case of any reclassification
or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result
in any reclassification or change of outstanding securities
issuable upon exercise of this Warrant), or any other corporate
reorganization in which the Company shall not be the continuing or
surviving entity of such consolidation, merger or reorganization,
or any transaction in which in excess of 50% of the Company's
voting power is transferred, or any sale of all or substantially
all of the stock or assets of the Company, the Company shall, as
condition precedent to such transaction, execute a new Warrant or
cause such successor or purchasing corporation, as the case may be,
to execute a new Warrant, providing that the Holder shall have the
right to exercise such new Warrant and upon such exercise to
receive, in lieu of each share of stock theretofore issuable upon
-2-
EXHIBIT B
exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such
reclassification, change, merger or acquisition by a holder of one
share of stock. Such new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The provisions of this
Section shall similarly apply to successive reclassifications,
changes, mergers and acquisitions.
(b) Subdivision or Combination of Warrant Shares. If the
Company at any time while this Warrant remains outstanding and
unexpired shall subdivide or combine its stock, the Warrant Price
shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with
respect to stock payable in stock, or make any other distribution
with respect to stock of stock (except any distribution
specifically provided for in the foregoing Sections 4.1(a) and
(b)), then the Warrant Price shall be adjusted, from and after the
date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of shares of stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which
shall be the total number of shares of stock outstanding
immediately after such dividend or distribution.
(d) Adjustment of Number of Warrant Shares. Upon each
adjustment in the Warrant Price, the number of shares of stock
purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Warrant
Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the
Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately
thereafter.
(e) Fractional Warrant Shares. No fractional Warrant Shares
will be issued in connection with any exercise hereunder, but in
lieu of such fractional shares the Company shall, in its sole
discretion, either make a cash payment therefor upon the basis of
the Warrant Price then in effect or round the fractional share
upward to the next whole integer.
5.0 Compliance with Securities Act; Non-transferability of Warrant;
Disposition of Shares
5.1 Compliance with Securities Act. The Holder, by acceptance
hereof, agrees that this Warrant and the Warrant Shares are being
acquired for investment and that he will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares except
under circumstances which will not result in a violation of the
Securities Act of 1933, as amended ("Securities Act"). Upon
exercise of this Warrant, the Holder hereof shall confirm in
writing, in a form of Attachment B, that the Warrant Shares so
purchased are being acquired for investment and not with a view
toward distribution or resale. In addition, the Holder shall
provide such additional information regarding such Holder's
financial and investment background as the Company may reasonably
request. This Warrant and all Warrant Shares (unless registered
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EXHIBIT B
under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
and are "restricted securities" as that term is defined in Rule 144
as promulgated under the Act. The securities may not be sold or
transferred for value without an effective registration statement
under the Act, pursuant to the provisions of Rule 144 under 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 Company.
6.0 Transferability of Warrant
6.1 This Warrant may not be transferred or assigned in whole or in
part without (i) the prior written consent of the Company and (ii)
compliance with applicable federal and state securities laws;
provided, however, that the Warrant may be transferred without the
prior written consent of the Company in the following transactions:
(a) A transfer of the Warrant in whole by a Holder
who is a natural person during such Holder's lifetime or on death
by will or intestacy to such Holder's immediate family or to any
custodian or trustee for the account of such Holder or such
Holder's immediate family. "Immediate family" as used herein shall
mean spouse, lineal descendant, father, mother, brother, or sister
of the Holder;
(b) A transfer of the Warrant in whole pursuant to
and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of the
corporate shareholder or pursuant to a sale of all or substantially
all of the stock or assets of a corporate shareholder; or
(c) A transfer of the Warrant in whole to a parent,
subsidiary or affiliate of a Holder.
7.0 Rights of Shareholders
7.1 No Holder of this Warrant shall be entitled to vote or receive
dividends or be deemed the holder of stock or any other securities
of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any
of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this
Warrant has been exercised and the Warrant Shares shall have become
deliverable, as provided herein.
8.0 General Provisions
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EXHIBIT B
8.1 This Agreement will be construed in accordance with its terms
and governed in all respects by the laws of the State of
Washington.
8.2 The headings in this Agreement are provided for convenience
only and will not affect its construction or interpretation. The
Warrant and its terms may only be amended, changed, waived,
discharged or terminated by agreement in writing duly executed by
the Company and the Holder.
AXION SPATIAL IMAGING, INC.
/s/ Xxx Xxxxxxx
_________________________________________
By: Xxx Xxxxxxx, President
-5-
ATTACHMENT A
NOTICE OF EXERCISE
TO: Axion Spatial Imaging, Inc.
1. The undersigned hereby elects to purchase _________ shares of
stock of Axion Spatial Imaging, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase
price of such shares in full, together with all applicable transfer
taxes, if any.
1. The undersigned hereby elects to convert the attached Warrant
into Warrant Shares in the manner specified in Section 2.2 of the
Warrant. This conversion is exercised with respect of _________ of
the Shares covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY.]
2. Please issue a certificate or certificates representing said
shares of stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
Legal Name
___________________________________________________________________
Permanent Home Residence Address
___________________________________________________________________
City State Zip Code
3. The undersigned represents that the aforesaid shares of stock
are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection
with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares.
___________________________________________________
WARRANTHOLDER
Date: _________________________
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