Exhibit 4.6
MARCH MOTORS INTERNATIONAL, INC.
10% Convertible Subordinated Debenture, Series 1997
Serial No._____
$___________________ Dated: October 29, 1997
MARCH MOTORS INTERNATIONAL, INC., a Minnesota corporation (hereafter called
"Holder"), the principle sum of $_____________, on the due date of September 30,
2000 (subject to earlier conversion thereof), together with interest from the
date hereof until paid at the rate of ten percent (10%) simple per annum, in
lawful money of the United States of America. Maker covenants and agrees that so
long as any portion of this debenture principal remains outstanding and unpaid
either to the principal hereof or any interest heron, Maker will comply with the
following provisions, to which this debenture is subject and by which it will be
governed:
1. Part of Class. This debenture is one of an issue of 10% subordinated
convertible debentures, series 1997, of Maker provided to be issued incident to
a private placement authorizing a total principal amount of $1,500,000 being
offered to private investors.
2. Payment of Interest. Interest at the rate of 10% per annum shall be paid
semi-annually on the 30th day of December and the 30th day of June of each year
of the term hereof commencing December 30, 1997.
3. Acceleration of Maturity. In the event of nonpayment by Maker to Holder
within 30 days of the date due of any principal or interest hereunder, or any
portion thereof, or in the event of any bankruptcy, liquidation, dissolution or
other insolvency of Maker, then and in either event the Holder may declare the
entire principal and accrued interest due and payable immediately without
further notice, demand or presentment. Maker also agrees to pay all reasonable
costs of collection, including reasonable attorney fees, in case payment shall
not be made under the terms and conditions of this debenture.
4. Subordination. The indebtedness evidenced by this debenture shall be
subordinate in right of payment to all Senior Debt, with the term "Senior Debt"
meaning indebtedness to financial institutions for purchase money loans secured
by real or personal property, or for financing collateralized by inventories and
accounts receivable and constituting working capital used in the business of the
Maker, whether created , assumed, or incurred before or after the date hereof,
and renewals, extensions and refundings of any such indebtedness. The
subordination provisions contained herein are expressly and only for the benefit
of third party Senior creditors of Maker. Payment of Principal and interest on
this debenture shall not be subordinated to the prior payment and interest on
this debenture shall not be subordinated to the prior payment of any such Senior
Debt as to all amounts which actually are paid by Maker hereunder if Maker is
not in default under the terms of any such Senior Debt at such time or times
such payment or payments are made hereunder to holder.
5. Conversion.
i) This debenture shall be automatically converted into common stock
of the Maker in whole on the effective date of registration of an Initial Public
Offering (IPO) of the Maker, with such automatic IPO conversion basis being the
lesser of $2.00 per share ($3 pre-split) or one-half of the IPO offering price.
ii) This debenture shall be convertible anytime in whole or in part,
and from time to time, at the option of the holder, at the rate of one(1) share
of common stock of the Maker for each Two Dollars ($2.00) of principal amount
hereof being converted ($3 pre-split).
iii) The Maker shall not be required to issue any fractional shares
of common stock incident to any conversion of this debenture, and any resulting
fractional amount shall be rounded off to the nearest whole common share.
6. Manner of Conversion. In order to convert this debenture into common
stock of Maker, the Holder shall surrender, at the principal office of Maker,
this debenture duly endorsed to Maker, or in blank,. and give written notice to
Maker that all or part of this debenture is to be converted, such notice is to
specify clearly the portion to be converted. As of the time of such written
notice, the Holder shall be treated for all purposes as the record holder of the
common stock into which this debenture is converted, and the portion converted
shall be deemed to be satisfied and discharged, and the shares of common stock
of Maker into which this debenture is converted shall be fully paid and
nonassessable. In the event only a portion of this debenture has been converted,
Marker shall issue and deliver to Holder a new debenture identical to the one
surrendered except that it shall be in the correct principal amount not yet
converted into common stock of Maker.
7. Anti-Dilution. If Maker shall change the number of shares of its common
stock issued and outstanding as of the date hereof by stock dividend, stock
split, sale without consideration, reorganization, recapitalization, merger or
other business combination, then and in each such event a proportionate
adjustment shall be make to the conversion rate herein as well as to any common
stock previously issued upon conversion of this debenture.
8. Transfers and Investment Representation. By accepting this debenture
Holder represents that the principal amount of this debenture and all shares of
common stock of Maker acquired upon conversion hereof are acquired and will be
acquired for Xxxxxx's own account for long-term investment and with no intention
at the time of acquisition of distributing or reselling the same or and part
thereof to the public, and Holder further agrees that any common stock into
which this debenture is converted shall be legended to evidence its status as
restricted securities under relevant securities laws.
Any transfer of this debenture shall be made only by surrendering this
debenture duly endorsed to Maker, or in blank, for a cancellation, together with
written instructions to Maker, that a new debenture of like principal amount
should be issued to the transferee(s) designated by Xxxxxx in exchange therefor.
9. Registration. Neither this debenture nor the shares of common stock
issuable upon conversion thereof have been registered under the Securities Act
of 1993 or any other securities laws. The Holder hereof agrees that prior to
making any disposition of the debenture or of any common stock issued upon
conversion thereof, Holder will give written notice to the Company
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of such proposed disposition and Xxxxxx further will not make any such
disposition until, in the opinion of counsel for the Maker, either (i)
registration is not required for such disposition, or (ii) a registration
covering the proposed disposition has become effective. Upon receipt by Maker of
such written notice of proposed disposition by Xxxxxx, Maker will use its best
efforts to ascertain as promptly as possible whether or not registration is
required and will advise Holder promptly with respect thereto.
10. Notices. All demands and notices to be given hereunder shall be
delivered or mailed to Marker at 0000 Xxxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx
00000, until a new address shall be substituted by like notice from Maker; and
in the case of Holder to the address written below, until a new address is
substituted by Holder by like notice to Maker.
MARCH MOTORS INTERNATIONAL, INC.
By__________________________________
Xxxxxx Xxxxxxxxxx
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President
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Holder
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Address
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City State Zip
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SS# or Tax ID# of Holder
