EXHIBIT 4.1
FORM OF DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S
UNDER THE ACT) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS
DEFINED IN REGULATION S UNDER THE ACT) EXCEPT PURSUANT TO REGISTRATION
UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND APPLICABLE STATE SECURITIES LAWS.
No.____________________ US $____________
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
9% SERIES C CONVERTIBLE SUBORDINATED REDEEMABLE DEBENTURE
DUE JANUARY 9, 2000
THIS DEBENTURE is one of a duly authorized issue of Debentures of
American International Petroleum Corp., a corporation duly organized and
existing under the laws of the State of Nevada (the "Company") designated as its
9% Series C Convertible Subordinated Redeemable Debentures Due January 9, 2000,
in an aggregate principal amount not exceeding ________________________ (U.S.
$_____________).
FOR VALUE RECEIVED, the Company promises to pay to __________________________,
whose address is _____________________________________, the registered holder
hereof and its successors and assigns (the "Holder"), the principal sum of
_______________________ Dollars (US $________________) on January 9, 2000 (the
"Maturity Date"), and to pay interest on the principal sum outstanding, at the
rate of 9% per annum due and payable quarterly in arrears commencing January 9,
1997. Accrual of interest shall commence on the date hereof and shall continue
until payment in full of the outstanding principal sum has been made or duly
provided for. The interest so payable will be paid to the person in whose name
this Debenture (or one or more predecessor Debentures) is registered on the
records of the Company regarding registration and transfers of the Debentures
(the "Debenture Register"); provided, however, that the Company's obligation to
a transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the Offshore
Securities Subscription Agreement dated as of January 7, 1997 between the
Company and the Holder (the "Subscription Agreement"). The principal of, and
interest on, this Debenture are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder hereof from time
to time. The Company
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will pay the outstanding principal of and all accrued and unpaid interest due
upon this Debenture on the Maturity Date, less any amounts required by law to be
deducted or withheld, to the Holder of this Debenture as of the tenth (10th) day
prior to the Maturity Date by check or on the Maturity Date by wire transfer and
addressed to such Holder at the last address appearing on the Debenture
Register. The forwarding of such check shall constitute a payment of outstanding
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 Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Twenty-Five Thousand
Dollars (US$25,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same but
not less than U.S. $25,000. No service charge will be made for such registration
or transfer or exchange, except that transferee shall pay any tax or other
governmental charges payable in connection therewith.
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 or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged in the U.S.
only in compliance with the Securities Act of 1933, as amended (the "Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this 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 Debenture be overdue, and neither
the Company nor any such agent shall be affected or bound by notice to the
contrary. Any holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, is also
required to give the Company (i) written confirmation that it is not a U.S.
Person and the Debenture is not being converted on behalf of a U.S. Person
("Notice of Conversion") or (ii) an opinion of U.S. counsel to the effect that
the Debenture and shares of common stock issuable upon conversion or transfer
thereof have been registered under the 1933 Act or are exempt from such
registration. In the event a Notice of Conversion or opinion of counsel is not
provided the Holder hereof will not be entitled to exercise the right to convert
or transfer the Debentures.
4. (a) The Holder of this Debenture is entitled, at its option, at any
time commencing 45 days after closing of the Offering hereof, by delivery of the
notice of conversion to convert all or any amount remaining of the original
principal amount of this Debenture into shares of common stock, $0.08 par value
per share, of the Company (the "Common Stock"), at
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a conversion price for each share of Common Stock equal to the lower of (x) 70%
of the average closing bid price of the Common Stock for the five (5) business
days immediately preceding the date of receipt by the Company of notice of
conversion or (y) 75% of the average of the closing bid price of the Common
Stock for the five (5) business days immediately preceding the date of
Subscription by the Holder accepted by the Company as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") (the
"Conversion Price") ("Conversion Shares"). Such conversion shall be effectuated
by surrendering the Debentures to be converted with the form of conversion
notice attached hereto as Exhibit I, executed by the Holder of this Debenture
evidencing such Holder's intention to convert this Debenture or a specified
portion (as above provided) hereof, and accompanied by proper assignment hereof
in blank. Accrued but unpaid interest shall be subject to conversion. No
fractional 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. The transferee or issuee shall execute such investment
representations or other documents as are respectively required by counsel in
order to ascertain the available registration exemption. The date on which
notice of conversion is given shall be deemed to be the date on which the Holder
has delivered this Debenture, with the assignment and conversion notice duly
executed, to the Seller, or, if earlier, the date set forth in such notice of
conversion if the Debenture is received by the Company within five (5) business
days thereafter. The transferee or issuee shall execute such investment
representations or other documents as are reasonably required by counsel in
order to ascertain the available registration exemption.
(b) Notwithstanding the provisions of paragraph 4(a) hereof,
the Company may redeem upon five days notice any or all of the Debentures after
issue hereof and prior to conversion by paying to the Holder in cash 125% of the
then outstanding principal balance of the Debenture plus accrued interest to
such date, and shall be less any amounts required by law to be deducted or
withheld. Such payment shall be made by delivering immediately available funds
in United States Dollars by wire transfer to the Holder, or if no wiring
instructions have been provided to the company, by cashier's or certified check
to the last address of Holder appearing on the Debenture Register. The wiring of
such funds or the forwarding of such check shall constitute 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 wire or check plus any amount so deducted. Such payment also to be made by
the Company within 2 business days of receipt of a conversion notice by the
Company from the Investor.
5. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
currency, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder.
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7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in converting
and/or collecting any amount due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur and continue for 30 days:
(a) The Company shall default in the payment of principal
or interest on this Debenture; or
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in
any certificate or financial or other written
statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the
execution and delivery of this Debenture or the
Subscription Agreement shall be false or misleading
in any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any
material respect, any other covenant, term,
provision, condition, agreement or obligation of the
Company under this Debenture [and such failure shall
continue uncured for a period of thirty (30) days
after notice from the Holder of such failure]; or
(d) The Company shall (1) become insolvent; (2) admit in
writing its liability to pay its debts generally as
they mature; (3) make an assignment for the benefit
of creditors or commence proceedings for its
dissolution; or (4) 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
(e) 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 thirty (30) days after such
appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the Company and shall not be dismissed
within thirty (30) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of One Hundred Thousand
($100,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15)
days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or
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(h) 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 thirty (30) days after such
instruction of 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
(i) The Company shall have its Common Stock delisted from
the over-the-counter market.
Then, 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
Debenture immediately due and payable, without presentment, demand, protest or
(further) notice of any kind (other than notice of acceleration), 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, and
without expiration of any period of grace, enforce any and all of the Holder's
rights and remedies provided herein or any other rights or remedies afforded by
law.
9. (a) This Debenture represents a general unsecured obligation
of the Company. No recourse shall be had for the payment of
the principal of, or the interest on, this 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.
(b) The rights of any Holder to receive the principal sum or
any part thereof, and to receive the interest due on this
Debenture is and shall remain subordinate in priority to the
payment of the principal of and interest on (i) all future
obligations and guarantees of the Issuer for money borrowed
from any bank, trust company, insurance company or other
financial institution engaged in the business of lending
money, for which the Issuer is at the time of determination
responsible or liable as obligor or guarantor; (ii) all
existing or future obligations of the Corporation secured by a
lien, mortgage, pledge or other encumbrance against real or
personal property (including common stock of the Corporation
or any of its subsidiaries) of the Corporation; (iii) any
modifications, renewals, extensions or refunding of the
foregoing, except for any of such obligations of the
Corporation the payment of which is made expressly subordinate
and junior to this Debenture; (iv) indebtedness under the MG
Trade Finance Corp. ("MGTF") loan agreement
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(the "Loan Agreement") or any indebtedness incurred to
refinance such obligations; (v) other indebtedness of the
Corporation existing on the date of this Debenture; and (vi)
trade payables incurred in the ordinary course of business of
the Corporation or its subsidiaries.
10. The Holder of this Debenture, by acceptance hereof, agrees that
this Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon exercise thereof except under circumstances which will not result
in a violation of the Act or any applicable state Blue Sky law or similar laws
relating to the sale of securities.
11. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
12. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
13. This Debenture shall be governed by and construed in accordance
with the laws of New York. Holder hereby waives trial by jury and consents to
exclusive jurisdiction and venue in the State of New York.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: , 1997
AMERICAN INTERNATIONAL PETROLEUM CORP.
By:______________________________________
Denis J. Fitzpatrick, Vice President
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EXHIBIT I
"NOTICE OF CONVERSION" FOLLOWS
(ONE PAGE)
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 above Debenture No. ___ into Shares of Common Stock of American
International Petroleum Corp. (the "Company") according to the conditions set
forth in such Debenture, as of the date written below.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Debenture on behalf of any U.S. Person and the
representations contained in the Subscription Agreement are true. If Shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Date of Conversion*____________________________________________________________
Applicable Conversion Price____________________________________________________
Signature______________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:_______________________________________________________________________
_______________________________________________________________________________
_____________________________________________________________________
* This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.