EXHIBIT 4.5
98-D DEBENTURE
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
No._________ US $______________
SGI International
98-D 12% CONVERTIBLE DEBENTURE DUE SEPTEMBER 30, 1999
THIS DEBENTURE is one of a duly authorized issue of $3,590,000.00 in
Debentures of SGI International, a corporation organized and existing under the
laws of Utah (the "Company") designated as the Series 98-D 12% Convertible
Debentures (the "98-D Debentures"), due on September 30, 1999.
FOR VALUE RECEIVED, the Company promises to pay to
_____________________________, the registered holder hereof (the "Holder"), the
principal sum of ($_________) Dollars on September 30, 1999 (the "Maturity
Date") and to pay interest on the principal sum outstanding from time to time in
arrears as provided herein quarterly, beginning on October 1, 1998 at the rate
of 12% per annum accruing from the date of initial issuance. Accrual of interest
shall commence on the first such business day to occur after the date hereof
until payment in full of the principal sum has been made or other consideration
paid in accordance with Paragraph 4. Subject to the provisions of paragraph 4
below, the principal of, and interest on, this 98-D Debenture are convertible 15
days after the Closing Date as defined in the September 9, 1998, Private
Placement Memorandum (the "Memorandum" or "Exchange Offering") in whole or in
part at the option of the Holder, into shares of common stock of the Company.
The Company will pay the principal of and interest upon this 98-D Debenture on
the Maturity Date, less any amounts converted or required by law to be deducted,
to the Holder of this 98-D Debenture, and addressed to such Holder. The
forwarding of such check or other consideration in accordance with Paragraph 4
shall constitute a full payment of principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Debenture
to the extent of the sum represented by such check plus any amounts so deducted.
This 98-D Debenture is subject to the following additional provisions:
1. The 98-D Debentures are exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This 98-D Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws. In the event of
any proposed transfer of this 98-D Debenture, the Company may require, prior to
issuance of a new Debenture in the name of such other person, that it receive
reasonable transfer documentation including legal opinions that the issuance of
the 98-D Debenture in such other name does not and will not cause a violation of
the Act or any applicable state or foreign securities laws. Prior to due
presentment for transfer of this 98-D Debenture, the Company and any agent of
the Company may treat the person in whose name this 98-D Debenture is duly
registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this 98-D Debenture be overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
4. The Holder of this 98-D Debenture is entitled, at its option, to
convert at any time commencing fifteen (15) days after the Closing Date, as
defined in the Memorandum, the principal amount of this 98-D Debenture, and any
and all interest payable thereon, provided that the principal amount is at least
US $5,000 (unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than Five
Thousand Dollars (US $5,000), then the whole amount thereof). The 98-D Debenture
will, at the option of the Holder, 15 days after the Closing Date, in whole or
in part convert unto the number of shares of SGI International common stock
determined by dividing the face amount of the Debenture or any part thereof in
an amount of $5,000 or more, and all interest payable thereon, by the lesser of
(i) the average of the closing bid price of the Company's common stock for the
ten days prior to the close of the Exchange Offering or (ii) the average of the
ten day closing bid price of the Company's common stock prior to the date the
notice of conversion is received by the Company. In the event that the Debenture
is not converted by Holder by September 30, 1999, then SGI International shall
on September 30, 1999, pay the full amount owing under the 98-D Debenture, which
shall be the face amount plus all accrued and unpaid interest payable thereon,
less any amount converted into common stock. Conversion shall be effectuated by
surrendering the 98-D Debentures to be converted to SGI International at 1200
Prospect, Suite 325, La Jolla, Calif. 92037, with the form of conversion notice
attached hereto as Exhibit A, executed by the Holder of the 98-D Debenture
evidencing such Holder's intention to convert this Debenture (as above provided)
hereof, and accompanied, if required by the Company, by proper assignment hereof
in blank. No fraction of shares or certificates representing fractions of shares
will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. The date on which notice of conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Company receives
the conversion notice duly executed, provided the Debenture is received by the
Company within 5 business days thereafter. In the event the original Debenture
is not received within such 5 business days, the notice of conversion shall be
considered void. Facsimile delivery of the conversion notice shall be accepted
by the Company at facsimile number (619) 551-0247; Attn: Controller).
Certificates representing Common stock issued upon conversion, will be delivered
within 5 days or as soon as practicable from the date the notice of conversion
and the original Debenture, is delivered to the Company. No payment or
adjustment shall be made upon conversion with respect to any interest accrued on
any Debenture guaranteed for conversion prior to an interest payment date or to
any dividend on the common stock delivered upon conversion. (Such notice shall
be effective when mailed to last known address on date mailed.)
5. Company may prepay this Debenture, in whole or in part, at any time
without incurring any penalty for such prepayment. After Company gives Holder
notice of its intent to prepay, Holder may not therefore convert any part of
this Debenture. No provision of this 98-D Debenture, except as is specifically
described in Paragraph 4, shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, and interest on,
this 98-D Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This 98-D Debenture and all other Debentures now or hereafter
issued of similar terms are direct obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this 98-D Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
7. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common stock are entitled to receive stock, securities or
property in respect of or in exchange for Common stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the 98-D Debenture may thereafter
be converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a Holder of the number of shares of Common
stock into which this 98-D Debenture might have been converted immediately
before such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable. In the event of any
proposed merger, consolidation or sale or transfer of all or substantially all
of the assets of the Company (a "Sale"), the Holder hereof shall have the right
to convert by delivering a Notice of Conversion to the Company within fifteen
(15) days of receipt of notice of such Sale from the Company.
8. The Holder of the 98-D Debenture, by acceptance hereof, agrees that
this 98-D Debenture is being acquired for investment and that, notwithstanding
any other provision of this 98-D Debenture, such Holder will not offer, sell or
otherwise dispose of this 98-D Debenture or the Shares of Common stock issuable
upon conversion thereof, except under circumstances which will not result in a
violation of the Act or any applicable state Blue Sky or foreign laws or similar
laws relating to the sale of securities.
9. This 98-D Debenture shall be governed by and construed in accordance
with the laws of the State of Utah. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of San Diego or the state courts of the State of California sitting in the
City of San Diego in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing of any
such proceeding in such jurisdictions.
10. The following shall constitute an "Event of Default":
a. The Company shall fail to make any payment due under
this 98-D Debenture and the same shall continue for a
period of more than thirty (30) days; or
b. The Company shall make (1) an assignment for the
benefit of creditors or commence proceedings for its
dissolution; or (2) apply for or consent to the
appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or
business; or
c. A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall
not be discharged within sixty (60) days after such
appointment; or
d. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within sixty (60) days after such
institution or the Company shall by any action or
answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations
of, or default in answering a petition filed in any
such proceeding; or
In the Event of Default or at any time thereafter, and in each and every such
case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder's sole discretion, the
Holder may consider this 98-D Debenture immediately due and payable, without
presentment, demand, protest or notice of any kinds, all of which are hereby
expressly waived, anything herein or in any note or other instruments contained
to the contrary notwithstanding, and the Holder may immediately enforce any and
all of the Holder's rights and remedies provided herein or any other rights or
remedies afforded by law.
11. Nothing contained in this 98-D Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: __________________, 1998
SGI INTERNATIONAL
/s/ JOSEPH A. SAVOCA
By:_______________________________
Joseph A. Savoca
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert of the principal
amount and any interest due thereon of the above Debenture No. ___ into Shares
of common stock of SGI INTERNATIONAL (the "Company") according to the conditions
hereof, as of the date written below.
Date of Conversion* ___________________________________________________________
Signature: ____________________________________________________________________
Name: _________________________________________________________________________
Address: ______________________________________________________________________
* This original Debenture and Notice of Conversion must be received by the
Company's transfer agent by the fifth business date following the Date of
Conversion.
The signature on this Notice of Conversion must correspond with the name as
written on the face of this Debenture in every particular without alteration,
enlargement or any change whatsoever.