EX 4.6- Promissory note/warrant/debenture-Aug.13,04/amended letter-Aug.16,04
Promissory Note
RECITATIONS:
Date:
Borrower: McKenzie Bay International Limited
Borrower's Address: 975 Spaulding Avenue
Grand Rapids, MI 49546
Payee:_______________________________
Place for Payment:___________________
Principal Amount:$____________________
INTEREST RATE: 12%. Annual interest rate on matured, unpaid amounts shall be
the maximum amount permitted by the Laws of the State of Michigan. Interest
will be paid for the actual number of days the debt has been outstanding, from
the date of the loan thru the date of repayment.
PAYMENT TERMS. This Note is due and payable as follows, to-wit:
$__________________ principal. The payment and interest are due and payable on
the 14th day of November 2004, unless previously converted by the debenture
holder, or, Borrower has received an effective registration statement from the
US Securities and Exchange Commission, which extends the maturity date of the
Note 90 days from the date the registration statement goes effective. If each
payment is not paid on time, the remaining balance will be subject to the
maximum amount of interest permitted by the Laws of the State of Michigan.
BORROWER'S PRE-PAYMENT RIGHT. Borrower reserves the right to prepay this Note
in whole or in part, prior to maturity, without penalty.
PLACE FOR PAYMENT. Borrower promises to pay to the order of Payee at the place
for payment and according to the terms for payment the principal amount plus
interest at the rates stated above. All unpaid amounts shall be due by the final
scheduled payment date.
DEFAULT AND ACCELERATION CLAUSE. If Borrower defaults in the payment of this
Note or in the performance of any obligation, and the default continues after
Payee gives Borrower notice of the default and the time within which it must be
cured, as may be required by law or written agreement, then Payee may declare
the unpaid principal balance and earned interest on this Note immediately due.
Borrower and each surety, endorser, and guarantor waive all demands for payment,
presentation for payment, notices of intentions to accelerate maturity, notices
of acceleration of maturity, protests, and notices of protest, to the extent
permitted by law.
INTEREST ON PAST DUE AMOUNT. All past due payments of principal and/or interest
and/or all other past-due incurred charges shall bear interest after maturity at
the maximum amount of interest permitted by the Laws of the State of Michigan
until paid. Failure by Borrower to remit any payment by the 15th day following
the date that such payment is due entitles the Payee hereof to declare the
entire principal and accrued interest immediately due and payable. Payee's
forbearance in enforcing a right or remedy, as set forth herein, shall not be
deemed a waiver of said right or remedy for a subsequent cause, breach or
default of the Borrower's obligations herein.
INTEREST. Interest on this debt evidenced by this Note shall not exceed the
maximum amount of non-usurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of the maximum
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this instrument (and any other instruments) concerning this debt.
FORM OF PAYMENT. Any check, draft, wire transfer, or other instrument given in
payment of all or any portion hereof may be accepted by the holder and handled
in collection in the customary manner, but the same shall not constitute payment
hereunder or diminish any rights of the holder hereof except to the extent that
actual cash proceeds of such instruments are unconditionally received by the
payee and applied to this indebtedness in the manner elsewhere herein provided.
ATTORNEY'S FEES. If this Note is given to an attorney for collection or
enforcement, or if suit is brought for collection or enforcement, or if it is
collected or enforced through bankruptcy, or other judicial proceeding, then
Borrower shall pay Payee all reasonable costs of collection and enforcement,
including reasonable attorney's fees and court costs in addition to other
amounts due.
SEVERABILITY. If any provision of this Note or the application thereof shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Note nor the application of the provision to other persons,
entities or circumstances shall be affected thereby, but instead shall be
enforced to the maximum extent permitted by law.
BINDING EFFECT. The covenants, obligations and conditions herein contained
shall be binding on and inure to the benefit of the heirs, legal
representatives, and assigns of the parties hereto.
DESCRIPTIVE HEADINGS. The descriptive headings used herein are for convenience
of reference only and they are not intended to have any effect whatsoever in
determining the rights or obligations under this Note.
CONSTRUCTION. The pronouns used herein shall include, where appropriate, either
gender or both, singular and plural.
GOVERNING LAW. This Note shall be governed, construed and interpreted by,
through and under the Laws of the State of Michigan.
Borrower is responsible for all obligations represented by this Note.
EXECUTED this __________ day of _______________________, 20_____.
____________________________________
Gregory N. Bakeman
Chief Financial Officer
McKenzie Bay International Ltd
==========================================================
McKenzie Bay International Ltd.
DEBENTURE
Issuer: McKenzie Bay International Ltd.
Securities: $500,000 Convertible Securities (the "Convertible"),
convertible into shares of McKenzie Bay International
Ltd. (the "Company") common stock (the "Common
Stock"). May be divided into individual issues of
$25,000 debentures.
Interest Accrual To Begin: July 16, 2004.
Promise to Pay: McKenzie Bay International Ltd., a corporation duly
organized and existing under the laws of the State of
Delaware will, in accordance with the terms of this
Convertible Debenture, pay to the Investor or the
Investor's successors, assigns or legal
representatives, the sum of $500,000 with interest
thereon until the principal and interest shall have
been fully paid at the rate of 10% per annum.
Interest shall be payable in cash upon Conversion of
this Convertible into shares of common stock.
Conversion Date: Investor can convert the Convertible anytime during
the first 90- days after the Company has an effective
registration statement declared effective by the US
Securities and Exchange Commission (the "SEC").
Conversion Price: The $500,000 Convertible is convertible into 416,666
shares of Common Stock.
Funds Disbursement: $500,000 immediately released, upon Closing Date, to
Company by wire transfer.
Security: Negative Pledge on Company's assets
Maturity: Company agrees to pay in full no later than November
14, 2004 if not converted.
Right of Redemption: The Company shall have the right to redeem any or
all-outstanding Convertible in its sole discretion
anytime after the Closing Date with (3) three-
business days advance notice. The redemption price
shall be the face amount redeemed plus accrued
interest.
Warrants: The Investor shall receive 750,000 warrants, with the
Convertible, to purchase 750,000 shares of Common
Stock. The warrant will be exercisable on a cash
basis and will have "piggy-back" registration rights
and survive for two years from the Closing Date.
Exercise Price of such warrants shall be equal to
$1.75 per Common Stock share.
Registration: Promptly, but no later than 60 days from the Closing
Date, the Company shall file a registration statement
with the United States Securities & Exchange
Commission ("SEC") and use its best efforts to ensure
that such registration statement is declared
effective within 120 days. In the event the
registration statement is not declared effective
within 120 days, Company shall redeem the entire
outstanding Convertible plus accrued interest. In the
event Company has not fully completed this redemption
within 30 days after the expiration of the 120-day
period, Company shall be deemed to be in default
under the terms of this Debenture.
Share Issuance: Failure to issue unrestricted, freely tradable Common
Stock to the Investor(s) upon Conversion after the
registration statement filed pursuant to this
transaction has been declared effective shall be
considered an Event of Default, which if not cured
within 10 days, shall entitle the Investor(s) to
accelerate full repayment of the Convertible then
outstanding. The Company acknowledges that the
failure to honor the Conversion shall cause definable
financial hardship on the Investor. At all times, the
Company shall keep available Common Stock duly
authorized for issuance against the Convertible. If
at any time, the Company does not have available an
amount of authorized and non-issued Common Stock
necessary to satisfy full Conversion of the then
outstanding amount of the Convertible, the Company
shall call and hold a special meeting within 30 days
of such occurrence, for the sole purpose of
increasing the number of shares of Common Stock
authorized. Management of the Company shall recommend
to shareholders to vote in favor of increasing the
number of Common Stock authorized. Management shall
also vote all of its shares in favor of increasing
the number of Common Stock authorized.
Legal Fees: The Company and Investor will each be responsible for
and pay their respective legal expenses.
Choice of Law: This Debenture shall be enforced, governed and
construed in all respects in accordance with the laws
of the State of Michigan as such laws are applied by
Michigan courts to agreements entered into and to be
performed in the State of Michigan.
============================================================================
AMENDMENT LETTER
August 16, 2004
Original Purchasers of $500,000 Debenture of McKenzie Bay International Limited
Dear Purchaser:
As a result of negotiations with our placement agent, and with other accredited
investors, McKenzie Bay International Limited (the "Company") has agreed to make
the following modifications to reflect the final terms of the Company's $500,000
Debenture Offering; To Wit:
Original Language:
Promise to Pay: McKenzie Bay International Ltd., a corporation duly organized
and existing under the laws of the State of Delaware will, in accordance with
the terms of this Convertible Debenture, pay to the Investor or the Investor's
successors, assigns or legal representatives, the sum of $500,000 with interest
thereon until the principal and interest shall have been fully paid at the rate
of 10% per annum. Interest shall be payable in cash upon Conversion of this
Convertible into shares of common stock.
Amended Language:
Promise to Pay: McKenzie Bay International Ltd., a corporation duly organized
and existing under the laws of the State of Delaware will, in accordance with
the terms of this Convertible Debenture, pay to the Investor or the Investor's
successors, assigns or legal representatives, the sum of $500,000 with interest
thereon until the principal and interest shall have been fully paid at the rate
of 12% per annum. Interest shall be payable in cash upon Conversion of this
Convertible into shares of common stock.
Original Language:
Interest Accrual
To Begin: June 16, 2004.
Amended Language:
Interest Accrual
To Begin: August 16, 2004.
Original Language:
Conversion Price: The $500,000 Convertible is convertible into 416,666
shares of Common Stock.
Amended Language:
Conversion Price: The $500,000 Convertible is convertible into 666,666
shares of Common Stock.
Original Language:
Maturity: Company agrees to pay in full no later than September 30, 2004
if not converted.
Amended Language:
Maturity: Company agrees to pay in full no later than November 14, 2004 if
not converted.
Original Language:
Warrants: The Investor shall receive 750,000 warrants, with the
Convertible, to purchase 750,000 shares of Common Stock. The warrant will be
exercisable on a cash basis and will have "piggy-back" registration rights and
survive for two years from the Closing Date. Exercise Price of such warrants
shall be equal to $1.75 per Common Stock share.
Amended Language:
Warrants: The Investor shall receive 750,000 warrants, with the
Convertible, to purchase 750,000 shares of Common Stock. The warrant will be
exercisable on a cash basis and will have "piggy-back" registration rights and
survive for two years from the Closing Date. Exercise Price of such warrants
shall be equal to 105 percent of the closing price of the stock on the closing
date of the Debenture purchase.
To summarize, the conversion price was lowered to $0.75 from $1.20 and the
warrant strike price was reduced from the original $1.75 to the new strike price
of $1.07. Finally, the maturity was extended to November 15, 2004 from September
30, 2004 with a corresponding increase in the interest rate from 10% to 12%, and
the interest accrual was changed to August 16, 2004 from June 16, 2004.
Please execute below to evidence you agreement and acceptance of the new terms.
Sincerely,
_______________________
Greg Bakeman
Chief Financial Officer
McKenzie Bay International Limited
Agreed and accepted on this __________ day of _____________, 2004
________________________________
Signature of Debenture Holder
_________________________________
Printed Name of Debenture Holder
_________________________________
Amount of Debentures Held
===============================================================
WARRANT
Warrant for _____________________ Shares of Common Stock
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW. NEITHER THIS WARRANT, THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT, NOR ANY PORTION THEREOF OR INTEREST THEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED, AT THE
EXPENSE OF THE HOLDER THEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY).
Right to Purchase _________ Shares
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK OF McKENZIE BAY
INTERNATIONAL, LTD. This is to Certify that, for value received, _____________
(the "Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from McKenzie Bay International L Ltd., a Delaware corporation (the
"Company"), at any time on or after date hereof, and not later than 5:00 p.m.
EST, two years after July ____, 2004,
___________________________________________shares of the Common Stock, US$.001
par value, of the Company (the "Common Stock") at a purchase price per share
equal to US$____, subject to adjustment as to the number of shares and purchase
price as hereinafter set forth. The shares of the Company's Common Stock
issuable upon the exercise of this Warrant are called herein the "Warrant
Stock." The price per share of the Warrant Stock as adjusted from time to time
as hereinafter set forth is sometimes referred to as the "Exercise Price." The
Holder hereof may exercise this Warrant as to all or any portion of the shares
of the Warrant Stock which such Holder shall have the right to acquire
hereunder. This Warrant is the Warrant referred to in that certain Subscription
Agreement of even date herewith (the "Subscription Agreement") between the
Company and the Holder.
(a) Exercise of Warrant. This Warrant may be exercised by presentation and
surrender hereof to the Company with the Exercise Notice attached hereto as
Annex A. The Warrant shall be deemed to have been exercised when (i) the Company
has received a completed Exercise Notice, and (ii) the Company has received
payment in the amount of the applicable Exercise Price, notwithstanding that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder. If the stock transfer books of the Company shall be
closed on the date of receipt of the Exercise Notice and the Exercise Price as
aforesaid, the Holder shall be deemed to be the holder of such shares of Common
Stock on the next succeeding day on which the stock transfer books of the
Company shall be opened. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the shares purchasable hereunder. In the event this Warrant shall not be
exercised on or before five years after the date of issue, this Warrant shall
become void and all rights hereunder shall cease.
(1) Method of Payment. Holder maypay the applicable Exercise Price by cash,
check or cash equivalent.
(2) Expenses of Issuance. The Company shall issue the Shares upon exercise of
this Warrant without charge to Holder for any issuance tax or other cost
incurred by the Company in connection with such exercise and the related
issuance of the Shares. Each of the Shares shall, upon payment of the Exercise
Price therefor, be fully paid and nonassessable and free from all liens and
charges with respect to the issuance thereof.
(3) Withholding Taxes. Holder shall satisfy any federal, state, local or foreign
withholding tax obligations arising from the exercise of the Warrant or the
subsequent disposition of the Shares.
(b) Reservation of Shares; Stock Fully Paid. The Company agrees that at all
times there shall be authorized and reserved for issuance upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance or delivery upon exercise of this Warrant. All shares that may be
issued upon exercise hereof, will upon issuance, be validly issued, fully paid
and non-assessable.
(c) Fractional Shares. This Warrant shall be exercisable in such manner as not
to require the issuance of fractional shares or scrip representing fractional
shares. If, as a result of adjustment in the Exercise Price or the number of
shares of Common Stock to be received upon exercise of this Warrant fractional
shares would be issuable, no such fractional shares shall be issued. In lieu
thereof the Company shall pay the Holder an amount in cash equal to such
fraction multiplied by the current market value of such fractional share. The
current value shall be an amount, not less than twice book value, determined in
such reasonable manner as may be prescribed by the Board of Directors of the
Company, such determination to be final and binding on the Holder.
(d) Exchange or Assignment of Warrant. Holder may not, directly or indirectly,
voluntarily or involuntarily, sell, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of, voluntarily or involuntarily, directly or
indirectly (each, a "Transfer") this Warrant, except that Holder may transfer
the Warrant to Holder's spouse and direct descendants of Holder, and the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
Holder's estate upon death (each, a "Permitted Transferee"); provided, however,
that (x) any such Permitted Transferee shall have agreed in writing to be bound
by the terms of this Agreement with respect to the Shares and (y) any transfer
to a Permitted Transferee shall not be in violation of applicable federal or
state securities laws.
(e) Rights of the Holder; Limitation on Liability. The Holder shall not, prior
to exercise of this Warrant, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant. No provision hereof, in
absence of an affirmative action by the Holder to purchase the Warrant Stock,
and no enumeration herein of rights or privileges by the Holder, shall give rise
to any liability of the Holder for the Exercise Price of the Warrant Stock.
(f) Adjustment of Exercise Rights. The Exercise Price or the number of shares of
Common Stock to be received upon the exercise of this Warrant, or both shall be
subject to adjustment from time to time as follows: (l) Dividends. In case any
additional shares of Common Stock or any obligation or stock convertible into or
exchangeable for shares of Common Stock (such convertible or exchangeable
obligations or stock being hereinafter called "Convertible Securities") shall be
issued as a dividend on any class of stock of the Company, such shares or
Convertible Securities shall be deemed to have been issued without
consideration, on the day next succeeding the date for the determination of
stockholders' entitled to such dividend; and any issuance of any such additional
shares of Common Stock as a dividend on Common Stock shall be treated as a
subdivision as a whole of the number of shares of Common Stock then outstanding
into a greater number of shares, and the Exercise Price shall be adjusted under
Subsection
(2) of this Section (f) and not under this Subsection (l). If at any time
the Company shall declare a cash dividend on its Common Stock and
shall, contemporaneously therewith, give to the holders of Common
Stock the option to purchase additional Common Stock at a price which
shall net the Company in the aggregate substantially the amount, or
less than the amount, of such cash dividend, the aggregate number of
shares of Common Stock actually issued and issuable pursuant to the
exercise of such option shall be deemed to have been issued as a
stock dividend on the date of the expiration of such option. Anything
herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment in the Exercise Price in the case of
the issuance at any time or from time to time of any shares of Common
Stock pursuant to any exercise of this Warrant. Effect of "Split-ups"
and "Split-down" and Certain Dividends. In case at any time or from
time to time the Company shall subdivide as a whole, by
reclassification, by the issuance of a stock dividend on the Common
Stock payable in Common Stock, or otherwise, the number of shares of
Common Stock then outstanding into a greater number of shares of
Common Stock, with or without par value, the Exercise Price then in
effect shall be reduced proportionately, and the number of shares of
Warrant Stock then exercisable hereunder shall be increased
proportionately. In case at any time or from time to time the Company
shall consolidate as a whole, by reclassification or otherwise, the
number of shares of Common Stock then outstanding into a lesser
number of shares of Common Stock, with or without par value, the
Exercise Price then in effect shall be increased proportionately and
the number of shares of Warrant Stock then exercisable hereunder
shall be decreased proportionately.
(3) Statement of Adjusted Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any of the foregoing provisions of this Section
(f), the Company shall forthwith prepare a written statement signed
by the President or the Treasurer of the Company, setting forth the
adjusted Exercise Price and any adjustment in the number of shares
purchasable hereunder, determined as provided in this Section (f),
and in reasonable detail the facts requiring such adjustment. Such
statement shall be filed among the permanent records of the Company,
shall be furnished to the Holder of each Warrant upon request, and
shall be open to inspection by the Holders of the Warrants during
normal business hours.
(4) Effect of Merger or Consolidation. In case the Company shall enter
into any consolidation with or merger into any other corporation wherein
the Company is not the surviving corporation, or sell or convey its
property as an entirety or substantially as an entirety and in
connection with such consolidation, merger, sale or conveyance shares of
stock or other securities shall be issuable or deliverable in exchange
for the Common Stock of the Company, the Holder of any Warrant shall
thereafter be entitled to purchase pursuant to such Warrant (in lieu of
the number of shares of Common Stock which such Holder would have been
entitled to purchase immediately prior to such consolidation, merger,
sale or conveyance) the shares of stock or other securities to which
such number of shares of Common Stock would have been entitled at the
time of such consolidation, merger sale or conveyance, at an aggregate
Exercise Price equal to that which would have been payable if such
number of shares of Common Stock had been purchased immediately prior
thereto. In case of any such consolidation, merger, sale or conveyance,
appropriate provision (as determined by resolution of the Board of
Directors of the Company with the approval of the Holder) shall be made
with respect to the rights and interests thereafter of the Holders of
Warrants, to the end that all the provisions of the Warrants (including
adjustment provisions) shall thereafter be applicable, as nearly as
reasonably practicable, in relation to such stock or other securities.
(5) Reorganization and Reclassification. In case of any capital
reorganization or any reclassification of the capital stock of the
Company (except as provided in Subsection (2) of this Section (f)); the
Holder of any Warrant shall thereafter be entitled to purchase pursuant
to such Warrant (in lieu of the number of shares of Common Stock which
such Holder would have been entitled to purchase immediately prior to
such reorganization or reclassification) the shares of stock of any
class or classes or other securities or property to which the holder of
such number of shares of Common Stock would have been entitled at the
time of such reorganization or reclassification, at an aggregate
Exercise Price equal to that which would have been payable if such
number of shares of Common Stock had been purchased immediately prior to
such reorganization or reclassification, appropriate provision (as
determined by resolution of the Board of Directors of the Company with
the approval of the Holder) shall be made with respect to the rights and
interest thereafter of the Warrants (including adjustment provisions)
shall thereafter be applicable, as nearly as reasonably practicable, in
relation to such stock or other securities or property.
6) Distributions. In case the Company shall make any distribution of its
assets to holders of its Common Stock as a liquidation or partial
liquidation dividend or by way of return of capital, or other than as a
dividend payable out of earnings or any surplus legally available for
dividends under the laws of the State of Michigan, then the Holder of
this Warrant who thereafter exercises the same as herein provided after
the date of record for the determination of those holders of Common Stock
entitled to such distribution of assets, shall be entitled to receive for
the purchase price of the shares of Common Stock stated in this Warrant,
in addition to the Shares of Common Stock, the amount of such assets (or
at the option of the Company, a sum equal to the value thereof at the
time of such distribution to holders of Common Stock, as such value is
determined by the Board of Directors of the Company in good faith), which
would have been payable to such Holder had he been the holder of record
of such shares of Common Stock on the record date for the determination
of those entitled to such distribution.
(7) Dissolution or Liquidation. In case the Company shall liquidate or wind
up its affairs, the Holder of this Warrant shall be entitled, upon the
exercise thereof, to receive, in lieu of the shares of Common Stock of
the Company which it would have been entitled to receive, the same kind
and amount of assets as would have been issued, distributed or paid to it
upon any such dissolution, liquidation or winding up with respect to such
shares of Common Stock of the Company, had it been the holder of record
of such shares of Common Stock on the record date for the determination
of those entitled to receive any such liquidating distribution; provided,
however, that all rights under this Warrant shall terminate on a date
fixed by the Company, such date to be not earlier than the date of
commencement of proceedings for dissolution, liquidation or winding up
and not later than 30 days after such commencement date, unless the
Holder shall have, prior to such termination date, exercised this
Warrant. Notice of such termination of rights under this Warrant shall be
given to the last registered Holder hereof, as the same shall appear on
the books of the Company, by mail at least 30 days prior to such
termination date. In the event of such notice the Holder may exercise
this Warrant prior to the fifth anniversary hereof.
(g) Limitations on Transfer of Warrant Stock. The Common Stock issuable
pursuant hereto has not been registered under the Act. Accordingly, by
acceptance hereof the Holder agrees that:
(l) It will acquire the Common Stock issuable pursuant hereto to be
held as an investment and that it will not attempt to sell,
distribute or dispose of the same except pursuant to this
agreement and:
(a) pursuant to a registration statement filed and rendered
effective under the Act;
or
(b) pursuant to a specific exemption from registration under the
Act.
(2) There shall appear on the certificate or certificates evidencing
any Common Stock issued pursuant hereto a legend as follows:
THIS SECURITY HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAW. NEITHER THIS SECURITY NOR
ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS
REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW,
OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER
HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE
CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION).
(h) Company shall cover all shares which may be issued to Investor under
the terms of this Warrant in the Registration Statement filed with the
SEC under the terms of the Debenture pursuant to which this warrant is
being granted. (i) Notices. All notices, payments, requests and
demands and other communications required or permitted under this
Warrant shall be deemed to have been duly given, delivered and made if
in writing and if served either by personal delivery to the party for
whom it is intended or by being deposited, postage prepaid, certified
or registered mail return receipt requested to the address shown below
or such other address as may be designated in writing hereafter by
such party:
If to the Company: McKenzie Bay, International, Ltd. Gregory N.
Bakeman 975 Spaulding Ave. Grand Rapids, MI 49546
With a copy to:
If to the Holder: With a copy to: ____________________
____________________ ____________________ ____________________
(i) Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of Michigan.
(j) Controversy. In the event of any controversy, claim or dispute between
the parties hereto, arising out of or relating to this Warrant, the
prevailing party shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys' fees, and costs. (k) Further Assurances. The
parties agree to execute, acknowledge and deliver any and all such other
documents and to take any and all such of the action as may, in the
reasonable opinion of either of the parties hereto be necessary or
convenient to efficiently carry out any or all of the purposes of this
Warrant.
(l) Severability. Each and all provisions of this Warrant deemed to be
prohibited by law or otherwise held invalid shall be ineffective only to the
extent of such prohibition or invalidity and shall not invalidate or
otherwise render ineffective any or all of the remaining provisions of this
Warrant.
(m) Parties in Interest Assignment. The Company may assign any and all of
its rights under this Agreement to its successors, and this Agreement shall
inure to the benefit of, and be binding on, the successors of the Company.
Subject to the restrictions on transfer herein set forth, this Agreement
shall be binding upon the Holder and his heirs, executors, administrators,
successors and assigns.
(n) Entire Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supercedes in its
entirety all prior undertakings and agreements of the Company and the Holder
with respect to the subject matter hereof, and may not be modified adversely
to the Holder interest except by means of a writing signed by the Company
and the Holder.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this instrument to be signed by its
Chief Financial Officer, and attested by its President as of the ____ day of
July, 2004.
ATTEST: McKENZIE BAY INTERNATIONAL, LTD. Gary Westerholm President
-----------------------------
Gregory N. Bakeman Chief Financial Officer
-----------------------------
ANNEX A EXERCISE NOTICE To: McKenzie Bay International, Ltd.
Dated: The undersigned, pursuant to the provisions set forth in the Stock
Warrant Agreement dated effective as of _____, 2004 (the "Agreement"), hereby
exercises his right to purchase __________ of the Shares at the Exercise Price
of $___ as provided in the Agreement, and makes payment herewith in full
therefor, either in the form of cash, check or cash equivalent at the price per
share provided in the Agreement.
Signature _____________________