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EXHIBIT 4.7
THIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY,
THE "SECURITIES"), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE
SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER
REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S
PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT,
PURSUANT TO REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH
OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
DEBENTURE
JAGNOTES.COM INC.
2000 8% Convertible Debenture
Due ____________, 2003
No. A-___ $500,000
This Debenture is issued by JagNotes.com Inc., (the "Company") to CALP
II Limited Partnership, a limited partnership organized under the laws of
Bermuda (together with its successors and assigns, the "Holder") pursuant to
exemptions from registration under the U.S. Securities Act of 1933, as amended.
ARTICLE I
1.01 Principal and Interest. For value received, on __________, 2003
(the "Maturity Date"), the Company hereby promises to pay to the order of the
Holder, at the offices of Thomson Kernaghan & Co. Limited, 365 Bay Street, Tenth
Floor, Toronto, Ontario M5H2V2, Canada, in lawful money of the United States of
America and in immediately available fund the principal sum of $500,000 together
with interest on the unpaid principal of this Debenture at the
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rate of 8% per year (computed on the basis of a 365 day year and the actual days
elapsed) from the date of this Debenture until paid.
1.02. Conversion. The Holder is entitled, at its option, to convert
at any time and from time to time, until payment in full of this Debenture, all
or any part of the principal amount of the Debenture, plus accrued interest,
into shares (the "Conversion Shares") of the Company's common stock, $0.00001
par value ("Common Stock"), at the price per share (the "Conversion Price")
equal to the lesser of (i) $0.80 and (ii) 75% of the average of the five (5)
lowest closing bid prices of the Common Stock on the Principal Market quoted by
Bloomberg L.P. (the "Closing Bid Price") during the 20 trading days immediately
preceding the Conversion Date (the "Conversion Price"). As used herein,
"Principal Market" shall mean the Nasdaq Bulletin Board System, Nasdaq Small Cap
Market, or American Stock Exchange. If the Common Stock is not traded on a
Principal Market, the Closing Bid Price shall mean, the reported Closing Bid
Price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc., for the applicable periods. No fraction of shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share. To
convert this Debenture, the holder hereof shall deliver written notice thereof,
substantially in the form of Exhibit A to this Debenture, with appropriate
insertions (the "Conversion Notice"), to the Company at its address set forth
above. The date upon which the conversion shall be effective (the "Conversion
Date") shall be deemed to be the date set forth in the Conversion Notice,
provided that the Company delivers the Conversion Shares within three (3)
business days after receipt of a Conversion Notice, otherwise, the holder shall
have the right to revoke the Conversion Notice, or to specify the date on which
it actually receives the Conversion Shares as the Conversion Date.
1.03 Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of shares
of Common Stock as shall from time to time be sufficient to effect such
conversion, based upon the Conversion Price. If at any time the Company does not
have a sufficient number of Conversion Shares authorized and available, then the
Company shall call and hold a special meeting of its stockholder within 30 days
of that time for the sole purpose of increasing in the number of authorized
shares of Common Stock.
1.04 Interest Payments. The interest so payable will be paid at the
time of maturity or conversion to the person in whose name this Debenture is
registered. At the time such interest is payable, the Company, in its sole
discretion, may elect to pay interest in cash (via wire transfer or certified
funds) or in the form of Common Stock. In the event of default, as described in
Article III Section 3.01 hereunder, the Holder, may elect that the interest be
paid in cash (via wire transfer or certified funds) or in the form of Common
Stock. If paid in the form of Common Stock, the amount of stock to be issued
will be calculated as follows: the value of the stock shall be the Closing Bid
Price on: (i) the date the interest payment is due; or (ii) if the interest
payment is not made when due, the date the interest payment is made. A number of
shares of Common Stock with a value equal to the amount of interest due shall be
issued. No fractional shares will be issued; therefore, in the event that the
value of the Common Stock per share does not equal the total interest due, the
Company will pay the balance in cash.
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1.05 Paying Agent and Registrar. Initially, the Company will act as
paying agent and registrar. The Company may change any paying agent, registrar,
or Company-registrar by giving the Holder not less than 10 days' written notice
of its election to do so, specifying the name, address, telephone number and
facsimile number of the Paying Agent or Registrar. The Company may act in any
such capacity.
1.06 Subordinated Nature of Debenture. This Debenture and all
payments hereon, including principal or interest, shall be subordinate and
junior in right of payment to all accounts payable of the Company incurred in
the ordinary course of business and or bank debt of the Company not to exceed
$500,000.
1.07 Registration Rights. The Holder shall have the right to demand
that the Company register the Conversion Shares by filing a Registration
Statement on Form SB-2 with the Securities and Exchange Commission no later than
December 29, 2000.
ARTICLE II
2.01 Amendments and Waiver of Default. The Debenture may be amended
with the consent of the Holder. Without the consent of the Holder, the Debenture
may be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company obligations to the Holder or to make any change that
does not adversely affect the rights of the Holder.
ARTICLE III
3.01 Events of Default. An Event of Default is defined as follows:
(a) failure by the Company to pay amounts due hereunder within two (2) days of
the Maturity Date; (b) failure by the Company to advise its transfer agent to
issue Common Stock to the Holder within two (2) business days of the Company's
receipt of the attached Notice of Conversion from Holder; (c) failure by the
Company for thirty (30) days after notice to it to comply with any of its other
agreements in the Debenture; (d) events of bankruptcy or insolvency; (e) a
breach by the Company of its obligations under the Letter Agreement, dated as of
October 30, 2000, between the Company and Thomson Kernaghan & Co., Ltd. (the
"Letter Agreement"). The Holder may not enforce the Debenture except as provided
herein.
3.02 Failure to Issue Unrestricted Common Stock. As indicated in
Article III Section 3.01, a breach by the Company of its obligations under the
Letter Agreement shall be deemed an Event of Default, which if not cured within
ten (10) days, shall entitle the Investor(s) accelerated full repayment of all
debentures outstanding. The Company acknowledges that failure to honor a Notice
of Conversion shall cause hardship to the Investor(s).
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ARTICLE IV
4.01 Rights and Terms of Conversion. This Debenture, in whole or
in part, may be converted at any time following the date of closing, into shares
of Common Stock at a price equal to the Conversion Price.
4.02 Mandatory Conversion. Provided that a Registration Statement
is then in effect for the Conversion Shares and the Company is not then in
default under this Debenture or the Letter Agreement, and subject to the
limitations contained in paragraph 4.05 of this Debenture, the Company shall
have the right to require the Holder to convert unpaid principal of and accrued
interest on this Debenture, by giving the Holder not less than 5 days' prior
written notice of the amount to be converted, up to the maximum amount in any
consecutive 15 day period based upon the average Closing Bid Price and the
average daily trading volume during the 20 trading days preceding the date of
such notice, as set forth in the table below, less the amounts thereof
voluntarily converted during such 30 day period:
<TABLE>
<CAPTION>
20-Day Avg. 20-Day Avg. 20-Day Avg. 20-Day Avg. 20-Day Avg.
Daily Daily Daily Daily Daily
Trading Volume Trading Volume Trading Volume Trading Volume Trading Volume
--------------- --------------- ---------------- ---------------- --------------
Avg. Closing
Bid Price 30,000-49,999 50,000-99,999 100,000-149,999 150,000-199,999 200,000-Above
--------------- --------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
$1.00-$1.49 $30,000 $ 75,000 $150,000 $225,000 $300,000
$1.50-$1.99 $45,000 $112,500 $225,000 $337,500 $450,000
$2.00-$2.49 $60,000 $150,000 $300,000 $450,000 $600,000
$2.50-$2.99 $75,000 $187,500 $375,000 $562,500 $750,000
$3.00-Above $90,000 $225,000 $450,000 $675,000 $900,000
</TABLE>
4.03 Reissuance of Debenture. When the Holder elects to convert a
part of the Debenture, then the Company shall reissue a new Debenture in the
same form as this Debenture to reflect the new principal amount.
4.04 Termination of Conversion Rights. The Holder's right to
convert the Debenture into the Common Stock in accordance with paragraph 4.01
shall terminate on _________, 2003 shall be automatically converted on that date
in accordance with the formula set forth in Section 4.01 hereof, and the
appropriate shares of common stock and amount of interest shall be issued to the
Holder.
4.05 Limitation on Right and Power to Exercise. Any provision in
this Debenture or any other document to the contrary not withstanding, the
Holder shall not have the right or power to convert this Debenture into Common
Stock, either in whole or in part, and any attempt to do
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so shall be void, if, after having given effect to such conversion, the Holder
shall be or shall be deemed to be the beneficial owner of 10% or more of the
then outstanding Common Stock within the meaning or for the purposes of Section
13(d) or 13(g) of the U.S. Securities Exchange Act of 1934, as amended, or as
the term "beneficial owner" is defined in Rule 13d-3 of the U.S. Securities and
Exchange Commission or otherwise.
ARTICLE V
5.01 Antidilution. In case the Company shall at any time
subdivide the outstanding shares of Common Stock, or shall issue a stock
dividend on the outstanding Common Stock, the conversion price in effect
immediately prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in case the Company shall at any time combine the
outstanding shares of Common Stock, the conversion price in effect immediately
prior to such combination shall be proportionately increased, effective at the
close of business on the date of such subdivision, dividend or combination as
the case may be.
So long as any of the principal of or interest on this
Debenture remains unpaid and unconverted, the Company shall not, without the
prior consent of the holder, issue or sell (i) any Common Stock without
consideration or for a consideration per share less than its fair market value
determined immediately prior to its issuance, or (ii) issue or sell any warrant,
option, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration per share less than such Common Stock's fair market value
determined immediately prior to its issuance.
ARTICLE VI
6.01 Notice. Notices regarding this Debenture shall be sent to
the parties at the following addresses, unless a party notifies the other
parties, in writing, of a change of address:
If to the Company: JAGNOTES.COM INC.
226 West 26th Street
Studio D
New York, New York 10001
Attention: President
If to Holder: CALP II Limited Partnership
c/o Thomson Kernaghan & Co., Ltd.
365 Bay Street 10th Floor
Toronto, Ontario M5H2V2
6.02 Governing Law. This Debenture shall be deemed to be made
under and shall be construed in accordance with the laws of the State of New
York without giving effect to the
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principals of conflict of laws thereof. Each of the parties consents to the
jurisdiction of the U.S. District Court sitting in the Southern District of the
State of New York or the state courts of the State of New York sitting in
Manhattan in connection with any dispute arising under this Debenture and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens to the bringing of any such proceeding
in such jurisdictions.
6.03 Severability. The invalidity of any of the provisions of this
Debenture shall not invalidate or otherwise affect any of the other provisions
of this Debenture, which shall remain in full force and effect.
6.04 Entire Agreement and Amendments. This Debenture represents the
entire agreement between the parties hereto with respect to the subject matter
hereof and there are no representations, warranties or commitments, except as
set forth herein. This Debenture may be amended only by an instrument in writing
executed by the parties hereto.
6.05 Counterparts. This Debenture may be executed in multiple
counterparts, each of which shall be an original, but all of which shall be
deemed to constitute on instrument.
IN WITNESS WHEREOF, with the intent to be legally bound hereby, the
Company as executed this Debenture as of this ____ day of _______________, 2000.
JAGNOTES.COM INC.
By:______________________________
Name: Thomas J. Mazzarisi
Title: Executive Vice President &
General Counsel
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EXHIBIT "A"
NOTICE OF CONVERSION
(To be executed by the Holder in order to Convert the Debenture)
TO: JAGNOTES.COM
The undersigned hereby irrevocably elects to convert $________________
of the principal amount of the above Debenture into Shares of Common Stock of
JagNotes.com Inc., according to the conditions stated therein, as of the
Conversion Date written below.
Conversion Date_______________________________________
Applicable Conversion Price ____________________________
Signature_____________________________________________
Name________________________________________________
Address______________________________________________
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