Attached files
THIS
SECURED DEBENTURE (THE “SECURITIES”) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
SECURED
CONVERTIBLE REDEEMABLE DEBENTURE
MAN
SHING AGRICULTURAL HOLDINGS, INC.
January
4, 2010
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No. MSAH
- 1
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US$100,000
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This
Secured Convertible Redeemable Debenture (the “Debenture”) is issued
on January 4, 2010 (the “Closing Date”)
by Man Shing Agricultural
Holdings, Inc., a Nevada company, Unit 1005, 10/F, Tower, Hunghom
Commercial Centre, 37 Ma Tau Wai Road, Hunghom, Kowloon, Hong Kong (the “Company”), to China Angel Assets Management Limited
(together with its permitted successors and assigns, the “Holder”) as part of a
Unit as defined in the Securities Purchase Agreement and pursuant to exemptions
from registration under the Securities Act of 1933, as amended.
ARTICLE
I.
Section
1.01 Principal
and Interest. For value
received, the Company hereby promises to pay to the order of the Holder by
January 4, 2013 (the “Maturity Date”) in lawful money of the United States
of America and in immediately available funds the unpaid principal sum of
$100,000 U.S. Dollars (US$100,000) together with
interest on the unpaid principal of this Debenture at the rate
of: (a) eight percent (8.00%) paid quarterly in U.S. Dollars, in
arrears, with a default interest rate of sixteen percent (16.00%), payable
quarterly in U.S. Dollars, in arrears. All payments will not be
subject to deduction for withholding taxes, other taxes, transfer fees, currency
commission expenses, or any other fees, expenses or commissions due on any
payments to the holders to for internal transfers to provide the Company the
money to pay the interest and principal due along with any other expenses of the
Company due to the Holder hereunder. Interest shall be computed on
the basis of a 360-day year and the actual days elapsed.
Section
1.02 Optional
Conversion. The Holder is
entitled, at its option, subject to the limitations set forth herein, to
convert, and sell on the same day or at any subsequent time, at any time and
from time to time, until payment in full of the remaining outstanding principal balance
of this
Debenture, plus any interest, all or any
part of the principal amount of the Debenture, plus accrued interest, into
shares (the “Conversion Shares”)
of Common Stock at the price per share equal to two dollars ($2) per share (the
“Conversion
Price”). 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 as set forth herein. 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. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of
this Debenture in an amount equal to the applicable conversion and payment of
the interest then due. The Holder and the Company shall maintain
records showing the principal amount converted and the date of such
conversions. In
no event shall the Holder be entitled to convert this Debenture for a number of
shares of Common Stock in excess of that number of shares of Common Stock which,
upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the Holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following such
conversion without the approval of the Company.
Section
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 file a preliminary proxy
statement with the Securities and Exchange Commission within ten (10) business
day after such occurrence and shall call and hold a special meeting of its
stockholders as soon as practicable after such occurrence for the sole purpose
of increasing the number of authorized shares of Common Stock.
Section
1.04 Conversion
Cap. During any week in which the Company’s Common Stock
trades at a price per share in excess of two US Dollars ($2.00.), the Holder
shall be permitted to convert up to one hundred thousand dollars ($100,000)
principal amount of this Debenture.
Section
1.05 Redemption. At
any time prior to the Maturity Date and after 12 months from the date of
Closing, the Company will have the right to redeem all the Debentures then
outstanding, by payment in full, and not in part, of the outstanding principal
amount due plus a premium equal to 50% of the principal amount being paid, plus
all accrued and unpaid interest due through the date of payment without
premium. A payment schedule is attached hereto as Exhibit
B.
Section
1.06 Interest
Payments. Upon the occurrence of an Event of Default (as defined
in Section 3.01
below) by the Company, the Holder
has the option to elect that the interest due and payable hereunder 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, that number of shares of Common Stock with a value
equal to the amount of interest due shall be issued. The amount of stock to be issued will be
calculated as follows: the value of the stock shall be eighty-five percent of
the lower of: (i) the VWAP as quoted by Bloomberg L.P. on the
date the interest payment is due; or (ii) if the interest payment is not
made when due, the VWAP as quoted by Bloomberg L.P. on the date the interest
payment is made. 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.
Section
1.07 Paying
Agent and Registrar. Initially, the Escrow Agent 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 ten (10)
business days’ written notice of its election to do so, specifying the name,
address, telephone number and facsimile number of the paying agent or
registrar.
Section
1.08 Favor.
As long as
there are shares of the Debentures are outstanding, the Company shall extend to
the Holder any language in future transactions that is more preferable, as
evaluated by the Holder, to these Debentures.
Secured
Nature of Debenture. This Debenture is secured by a pro rata
portion of a majority position in the Company’s common stock owned by Mr. Shili
Liu.
Section
1.09 [Reserved]
Section
1.01 Amendments
and Waiver of Default. The Debenture may
not be amended without the written consent of both the Holder and the
Company.
ARTICLE
II.
Section
2.01 Events of
Default. An Event of
Default is defined as follows: (a) failure by the Company to pay amounts
due hereunder, including any installment payment of interest or principal
redemption, and the balance due upon the maturity of the Company’s obligations
to pay all amounts in full, within five (5) business days of the date such
payment is due under this Debenture, without notice or demand, (b) after the
Registration Statement required by the Registration Rights Agreement has been
declared effective, failure by the Company’s transfer agent to issue freely
tradeable Common Stock (including Common Stock tradeable under Rule 144) to the
Holder within three (3) days of the Company’s receipt of a Notice of
Conversion or Notice of Exercise from Holder; (c) failure by the Company
for five (5) business days after notice to it to comply with any of its
other agreements in the Debenture; (d) events of bankruptcy or insolvency
or (e) a breach by the Company of any material obligation under the
Securities Purchase Agreement which is not cured by the Company within five (5)
business days after receipt of written notice thereof, (f) a breach by the
Company of any of the Covenants under the Securities Purchase Agreement which is
not cured within five (5) business days of the Company’s receipt of written
notice thereof. Upon the occurrence of an Event of Default, the
Holder may, in its sole discretion, accelerate full repayment of all debentures
outstanding and accrued interest thereon notwithstanding any limitations
contained in this Debenture and/or the Securities Purchase Agreement dated the
date hereof between the Company and the Holder (the “Securities Purchase
Agreement”).
Section
2.02 Failure
to Issue Unrestricted Common Stock. As indicated in
Article III Section 3.01, a breach by the Company of its obligations
under the Securities Purchase Agreement shall be deemed an Event of Default,
which if not cured within the periods specified in Section 3.01, shall entitle
the Holder to accelerate full repayment of the Debentures together with accrued
interest thereon or, notwithstanding any limitations contained in this Debenture
and/or the Securities Purchase Agreement, to convert all amounts outstanding
under the Debentures together with accrued interest thereon into shares of
Common Stock pursuant to Section 1.02 herein. The Company
acknowledges that failure to honor a Notice of Conversion except as set forth
herein, shall cause irreparable harm to the Holder.
Section
2.03 Re-issuance
of Debenture. When the Holder
elects to convert a part of the Debenture, upon the Holder’s request, the
Company shall reissue a new Debenture in the same form as this Debenture to
reflect the new principal amount. Upon Company’s request, Holder
shall surrender this Debenture prior to the issuance of such new
Debenture.
ARTICLE
III.
Section
3.01 [Reserved]
ARTICLE
IV.
Section
4.01 Anti-dilution. In the event that
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 the event that 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.
Section
4.02 Consent of
Holder to Sell Capital Stock, Incur Debt or Grant Security Interests. Except for the
second and third tranches of the current financing as contemplates and the
Securities Purchase Agreement dated the date hereof between the Company and
China Angel Assets Management Limited so long as any of the principal of or
interest on this Debenture remains unpaid, the Company shall not, without the
prior consent of a majority of the Holders, after Closing (i) issue
or sell shares of Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common Stock determined
immediately prior to its issuance, (ii) issue or sell any warrant, option,
right, contract, call, or other security instrument granting the holder thereof,
the right to acquire Common Stock without consideration or for a consideration
less than such Common Stock’s bid price value determined immediately prior to
it’s issuance, (iii) enter into any security instrument granting the holder a
security interest in any and all assets of the Company or any subsidiary of the
Company (whether now owned or acquired in the future while the Debentures are
outstanding) unless such security interest is junior to the security interest
held by the Holder hereunder and under the Security Agreement and in no way or
manner diminishes Holder’s rights hereunder or under the Security Agreement,
(iv) permit any subsidiary of the Company (whether now owned or acquired in the
future while the Debentures are outstanding) to enter into any security
instrument granting the holder a security interest in any and all assets of such
subsidiary (v) file any registration statement on Form S-8 or (vi) incur any
additional secured debt or permit any subsidiary of the Company to incur any
additional secured debt without the Holder’s prior written consent unless the
security interest on such secured debt is junior to the security interest held
by the Holder hereunder and under the Security Agreement.
Section
4.03 Registration
with the State Administration of Foreign Exchange. The Company
will take all required action to register the transfer of the proceeds from this
Debenture that are used in the Peoples’ Republic of China with the State
Administration of Foreign Exchange as an external debt and pursuant to the
“Interim Measures on Administration of External Debts” and reserve sufficient
amounts of investment and registered capital to provide for repayment of the
proceeds and interest due on the Debenture. The Company will arrange
a suitable opinion, indicating that the proceeds used in the Peoples’ Republic
of China and the related interest may be paid outside of the Peoples’ Republic
of China. Additionally, the Company will provide a copy of the State
Administration of Foreign Exchange registration of the external debt to the
Holder at Closing.
ARTICLE
V.
Section
5.01 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,
to: Man
Shing Agricultural Holdings, Inc.
Unit 1005, 10/F,
Tower
Hunghom
Commercial Centre
37 Ma Tau
Wai Road, Hunghom
Kowloon,
Hong Kong
Attention: Mr.
Eddie Cheung, CEO
Telephone (86) 536-4644888
Facsimile: (86) 536-4643777
With a
copy
to: Jared
P. Febbroriello, Esq. LL.M.
JPF
Securities Law, LLC
19720
Jetton Road
3rd
Floor
Cornelius,
NC 28031
Phone:
(704) 897-8334
Fax:
(704) 897-8349
Mr.
Patrick Mak
Tai, Mak
and Partners
Room 905
- 907, 9/F.
Nan Fung
Tower
173 Des
Voeux Road Central
Hong
Kong
Telephone:
(852) 2850 6336
Facsimile: (852)
2850 6086
If
to the
Holder: China
Angel Assets Management Limited
P.O. Box
957
Offshore
Incorporations Centre
Road
Town
Tortola
British
Virgin Islands
With
copy
to:
Governing
Law. This Debenture
shall be deemed to be made under and shall be construed in accordance with the
laws of the State of Nevada without giving effect to the principals of conflict
of laws thereof. Each of the parties consents to the jurisdiction of
the U.S. District Court sitting in the State of Nevada or the state courts
of the State of Nevada sitting in Clark County, Nevada 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. As an
alternative the Holder may choose to submit any dispute arising out of this
transaction to binding arbitration in Hong Kong at the Hong Kong International
Arbitration Centre under the rules and auspices of the International Arbitration
Rules.
Section
5.02
Section
5.03 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.
Section
5.04 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.
Section
5.05 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
the date first written above.
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MAN
SHING AGRICULTURAL HOLDINGS, INC.
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By:/s/ Eddie Cheung
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Name: Eddie
Cheung
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Title: Chief
Executive Officer
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EXHIBIT
“A”
NOTICE OF
CONVERSION
(To
be executed by the Holder in order to Convert the Debenture)
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TO:
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The
undersigned hereby irrevocably elects to convert US$ of the principal amount of the above
Debenture into Shares of Common Stock of Man Shing Agricultural Holdings,
Inc., according to the conditions stated therein, as of the Conversion
Date written below.
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Conversion
Date:
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Applicable
Conversion Price:
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Signature:
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Name:
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Address:
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Amount
to be converted:
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US$
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Amount
of Debenture unconverted:
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US$
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Conversion
Price per share:
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US$
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Number
of shares of Common Stock to be issued:
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Please
issue the shares of Common Stock in the following name and to the
following address:
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Issue
to:
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Authorized
Signature:
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Name:
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Title:
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Phone
Number:
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Broker
DTC Participant Code:
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Account
Number:
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EXHIBIT
B