Exhibit
4.2


 


THE
CONVERTIBLE DEBENTURES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND HAVE NOT BEEN QUALIFIED
UNDER THE SECURITIES LAWS OF ANY OTHER STATE. 
THE CONVERTIBLE DEBENTURES CANNOT BE SOLD OR TRANSFERRED WITHOUT SUCH
REGISTRATION OR QUALIFICATION UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS THEN AVAILABLE.


 


INTERNATIONAL INTEGRATED INCORPORATED

FORM OF CONVERTIBLE DEBENTURE


 


	
  DEBENTURE #:

  	
   

  	
  DATE OF ISSUANCE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  #

  	
   

  	
   

  	
   

  	
   

  
					



 


AMOUNT:


 


$


 


 


FOR VALUE RECEIVED,
the undersigned, INTERNATIONAL INTEGRATED
INCORPORATED, a British Virgin Islands Corporation (“III”) promises
to pay to the order of
                                                       
(the “Holder”), or order, at Holder’s address as designated on the signature
page hereof, or at such other address as the Holder designates, on or before
twelve (12) months from the date hereof (the “Maturity Date”) at the Holder’s
sole discretion as indicated to III in writing, either: (a.) the principal sum of                                                        ($           )
(the “Principal Amount”) herein evidenced; or (b) shares of III common
stock (the “Debenture Shares”) equal to the Principal Amount divided by FIVE
DOLLARS ($5.00) per share (the “Conversion Price”).  This Convertible Debenture is subject to that certain Convertible
Debenture Loan Agreement between the Holder and III (the “Loan
Agreement”).  The provisions of the Loan
Agreement are hereby incorporated herein by this reference.


 


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1.                                      PAYMENTS
AND INTEREST.


 


This Convertible
Debenture shall bear interest at the rate of Ten Percent (10%) per annum,
prepaid to the Holder by III in the amount of
                           
THOUSAND DOLLARS
($                 )
payable by III within Ten (10) business days of bank clearance of the Holder’s
Principal Amount, in the form of a bank wire or check. This Convertible
Debenture is payable either by repayment of III of the Principal Amount hereof
or by the issuance by III of the Debenture Shares, at the Holder’s sole
discretion and written notification thereof. No fractional shares will be
issued and any fractional shares which may be issuable hereunder will be paid
in cash by III pursuant to Section 8 hereof.


 


2.                                      SEVERABILITY.


 


If any provision of this
Convertible Debenture is invalid by operation of any law or interpretation
placed thereon by any court, this Convertible Debenture shall be construed as
not containing such provision and all other provisions of this Convertible
Debenture which are otherwise lawful shall remain in full force and effect, and
to this end the provisions of this Convertible Debenture are declared to be
severable.


 


3.                                      GOVERNING
LAW.


 


This Convertible
Debenture and the Investment Agreement shall be governed by and construed in
accordance with the laws of the British Virgin Islands.


 


4.                                      ASSIGNMENT.


 


Except to the extent
provided in Section 9 below, the Holder shall have the right to sell,
assign, or otherwise transfer, either in part or in its entirety, this
Convertible Debenture, and any other instrument evidencing or securing the
indebtedness of this Convertible Debenture, without III’s consent.  Such transferee or transferees shall be
deemed to be entitled, as to III, to be treated in all favorable respects as a
holder or holders in due course. Notwithstanding the above, Holder agrees not to sell, assign or
otherwise dispose of the Convertible Debenture or the Debenture Shares to any
competitor of III, including but not limited to Inamed Corporation or Mentor
Corporation, or to any executive officer of any competitor of III, including
but not limited to any executive officer of Inamed Corporation or Mentor
Corporation.


 


5.                                      FORBEARANCE
NOT A WAIVER.


 


No delay or omission on
the part of the Holder in exercising any rights under this Convertible
Debenture or under the Investment Agreement as defined herein, on default by
III, shall operate as a waiver of such right or of any other right under this
Convertible Debenture, for the same default or any other default.


 


6.                                      MANNER
OF NOTIFICATION.


 


Any notice to III
provided for in this Convertible Debenture shall be given by personal delivery
or by mailing such notice by first class or certified mail, return receipt
requested, addressed to III at the management office address stated below, or
to such other address as III may designate by written notice to the
Holder.  Any notice to the Holder shall
be given by personal delivery or by mailing such notice by first class or
certified mail, return receipt requested, to the Holder at the address stated
on the signature page hereof, or at such other address as may have been
designated the Holder by


 


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written notice to III.  Mailed
notices shall be deemed delivered and received on the delivery date as shown on
the postal return receipt or the receipt furnished by an independent courier
service, and any notices transmitted by confirmed facsimile transmission will
be deemed delivered and received as of the date of the transmission.


 


7.                                      CONVERSION
RIGHTS OF HOLDER.


 


At the Holder’s option,
at any time prior to the Maturity Date as defined above, Holder may elect to
convert all of this Convertible Debenture, in accordance with the provisions of
this Section 7. into fully paid and non-assessable shares of Common Stock
of III (the “Common Stock”).  The number
of Convertible Debenture Shares into which this Convertible Debenture may be
converted shall be determined by dividing the unpaid Principal Amount by the
Conversion Price of FIVE DOLLARS ($5.00) PER SHARE. On the Maturity Date
hereof, III will automatically convert the Convertible Debenture into the
Convertible Debenture Shares, unless notified in writing by the Holder of
Holder’s decision to be repaid the Principal Amount, and III shall be forever
released from all of its obligations and liabilities under the Convertible
Debenture.


 


7.1                               Conversion
Procedure; Notice of Conversion.


 


Before the Holder shall
be entitled to convert this Convertible Debenture into shares of Common Stock,
the Holder shall surrender this Convertible Debenture at the office of III and
shall give written notice by mail, postage prepaid, to III at its management
office, of the election to convert the same. 
III shall, as soon as practicable thereafter, issue and deliver at such
office to the Holder a certificate or certificates for the Convertible
Debenture Shares to which the Holder shall be entitled as aforesaid (bearing
such legends as are required by applicable state and federal securities laws in
the opinion of counsel to III), including a check payable to the Holder for any
cash amounts payable as described in Section 7.3.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender
of this Convertible Debenture, and the Holder shall be treated for all purposes
as the record holder or holders of such shares of the Common Stock as of such
date.


 


7.2                               Delivery
of Stock Certificate.


 


As promptly as
practicable after the conversation of this Convertible Debenture, III at its
expense will issue and deliver to the Holder a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion.


 


7.3                               Mechanics
and Effect of Conversion.


 


No fractional shares of
the Common Stock shall be issued upon conversion of this Convertible Debenture.
In lieu of III issuing any fractional shares to the Holder upon the conversion
of this Convertible Debenture, III shall pay to the Holder the amount of
outstanding principal that is not so converted because of a fractional share.


 


7.4                               Reservation
of Stock Issuable Under Conversion.


 


III shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the Convertible
Debenture, such number of its shares of Common Stock as shall, from time to
time, be sufficient to effect the conversion of the Convertible Debentures; and
if at any time the number of authorized by unissued shares of the Common Stock,
for issuance on conversion of such Common Stock shall not be sufficient to
effect the conversion of the entire outstanding principal amount of this
Convertible Debenture, in addition to such other remedies as shall be available
to the Holder of this Convertible Debenture, III will use its best efforts to
take such corporate actions as may, in the opinion of its counsel, be necessary


 


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to increase its authorized, but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.


 


8.                                      REGISTRATION
RIGHTS.


 


8.1       For a period commencing with the issuance of the
Convertible Debenture and terminating one year after the Effective Date as
defined below, if at any time III shall propose to register any of its shares
for sale or disposition for its own account for cash under the Act in a public
offering, including an initial public offering (the “IPO”) under an S-1
registration statement, other than a registration relating to its employee
benefit plans, III shall:


 


(a)                                  Promptly give the
Holder at least thirty (30) days’ written notice prior to the filing thereof
(which shall include, if then determined, the proposed date on which the
registration statement is to be filed, the proposed price and registration
price per share, the number of shares proposed to be included in such
registration, the identity of any proposed selling stockholders and a list of
the jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and


 


(b)                                  Subject to
Section 8.2 below, include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, a portion of the Holder’s Shares (as hereinafter defined)
which are specified in a written request, or requests, made by the Holder
within ten (10) days after receipt of such written notice from the Company by
the Holder.


 


The rights of the Holder
to registration pursuant to this Section 8.1 shall be conditioned upon the
Holder’s participation in any underwriting relating to the Company’s registered
public offering.  The Holder shall (together
with the Company) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company.  The Company will use its best efforts to
include the Holder’s Shares in such registration statement.  Notwithstanding any provision of this
Section 8.1, if the underwriter, in its sole discretion, determines that
marketing factors require a limitation of the number of securities to be
underwritten, or that the registration statement should be limited to shares
offered by the Company only, the underwriter may exclude some or all of the
Holder’s Shares for which the Holder seeks registration from inclusion in the
registration and underwriting, which reduction shall be pro rata among the
Holder, the Company, and any other shareholder whose shares are sought to be
included in the registration.  The
Company will bear the expenses of such registration, except for an underwriting
commission or discount and the expenses of special counsel for the Holder.


 


8.2       In addition, from time to time, the Company will
register the Holder’s Shares, at its expense, on registration statements or
Form S-3 after the date upon which the Company meets the requirements to
register Holder’s Shares on a Form S-3.


 


8.3       Definitions.  For purposes of this Section 8:


 


8.3.1                                                                     The
terms “register”,
“registered” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document; and


 


8.3.2                                                                     The
term “Holder’s
Shares” means any Common Stock issued upon conversion of this
Convertible Debenture, held by the Holder and purchased in this Offering; and


 


8.3.3                                                                     The
term “Effective
Date” shall mean the date the effectiveness of the Company’s
registration on Form S-1, or equivalent registration, for an initial public
offering (IPO) is declared effective by the SEC.


 


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8.4                               Indemnification.  In the event any Holder’s Shares are
included in a registration statement under this Section 8:


 


8.4.1                                        To the extent
permitted by law, the Company will indemnify and hold harmless the Holder, and
its partners, against any losses, claims, damages or liabilities (joint or
several) to which it may become subject under the Act, the 1934 Act, or other
federal or state law, insofar as such losses, claims, damages or liabilities
(or action in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a “Violation”):  (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law.  The Company will
reimburse the Holder, and its partners, for any legal or other expense actually
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action. 
Notwithstanding the preceding, the indemnity agreement contained in this
Section 8.4.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based
upon a Violation which occurs solely in reliance upon or in conformity with
written information furnished expressly for use in connection with such
registration by the Holder.


 


8.4.2                                        To the extent
permitted by law, the Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Act, and any underwriter, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter may become subject, under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs solely in reliance upon written information
furnished by the Investor and expressly for use in connection with such registration.  The Holder will reimburse any legal or other
expense reasonably incurred by the Company or any such director, officer,
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action.  Notwithstanding the preceding, the indemnity agreement contained
in this Section 8.4.2 shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld.


 


8.4.3                                        Promptly after
receipt by an indemnified party under this Section 8.4 of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8.4, deliver to the indemnifying
party a written notice of the commencement thereof.  Following receipt of such notice, the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the


 


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counsel retained by the indemnifying party would be inappropriate due
to actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 8.4.  However, the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 8.4.


 


8.4.4                                        The obligations
of the Company under this Section 8.4 shall survive the completing of any
offering of the Holder’s Shares in a registration statement under this
Section 8.


 


8.5       Delay.  The Holder shall have no right to take any
action to restrain, enjoin or otherwise delay any registration as a result of
any controversy that may arise with respect to the interpretation or
implementation of this undertaking.


 


8.6       Transfer
of Registration Rights.  The rights
granted to the Holder hereunder to cause the Company to register securities
pursuant to the terms hereof may be assigned to a transferee or assignee in
connection with any permitted transfer or assignment of any of the Holder’s
Shares (including, without limitation, any transfers or assignments effected by
operation of law), but excluding any transferee who purchases the Company’s
Common Shares which have been otherwise registered.


 


9.                                      TRANSFER
OF THIS CONVERTIBLE DEBENTURE.


 


With respect to any
offer, sale or other disposition of this Convertible Debenture (or of any
securities issued upon conversion of this Convertible Debenture other than
pursuant to Section 8.6 above), the Holder will give written notice to III
prior thereto, describing briefly the manner thereof, together with a written
opinion of such Holder’s counsel, to the effect that such offer, sale or other
distribution may be effected without registration or qualification (under any
federal or state law then in effect). 
Promptly upon receiving such written notice, III shall notify such
Holder whether such Holder may sell or otherwise dispose of this Convertible
Debenture, all in accordance with the terms of the notice delivered to III. Notwithstanding the above, Holder agrees not
to sell, assign or otherwise dispose of the Convertible Debenture or the
Debenture Shares to any competitor of III, including but not limited to Inamed
Corporation or Mentor Corporation, or to any executive officer of any
competitor of III, including but not limited to any executive officer of Inamed
Corporation or Mentor Corporation.


 


10.                               HEADING;
REFERENCES.


 


All headings used herein
are used for convenience only and shall not be used to construe or interpret
this Convertible Debenture.  Except
where otherwise indicated, all references herein to Sections refer to Sections
hereof.


 


 


Signatures on next page


 


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  THE COMPANY:

  	
   

  
	
  INTERNATIONAL INTEGRATED
  INCORPORATED

  	
   

  	
  THE EFFECTIVE DATE:

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
                                     ,
  2002

  
	
   

  	
  Edward V. Lower, Ph.D.

  	
   

  
	
  Its: 

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  
	
  Registered
  Office Address:

  	
  Management
  Office Address and Address for Notices:

  
	
  International
  Integrated Incorporated

  	
  International
  Integrated Incorporated

  
	
  Craigmuir
  Chambers

  	
  3800
  Howard Hughes Parkway

  
	
  P.O.
  Box 71

  	
  18th
  Floor

  
	
  Road
  Town, Tortola

  	
  Las
  Vegas, NV.  89109

  
	
  British
  Virgin Islands

  	
  Phone:
  702/731-2519

  
	
   

  	
  FAX:
  702/791-5365

  
	
   

  	
   

  
	
  Additional Guarantor:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
                                     ,
  2002

  
	
  Donald
  K. McGhan

  
							



 


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NOTICE OF CONVERSION


 


(To be signed only upon Conversion of
Convertible Debenture)


 


	
  TO:

  	
   

  	
  INTERNATIONAL
  INTEGRATED INCORPORATED

  
	
   

  	
   

  	
  Management Offices

  
	
   

  	
   

  	
  3800 Howard Hughes
  Parkway 18th Floor

  
	
   

  	
   

  	
  Las Vegas, NV.  89109

  



 


The undersigned, the
Holder of the foregoing Convertible Debenture, hereby surrenders such
Convertible Debenture for conversion into shares of the Common Stock of INTERNATIONAL INTEGRATED
INCORPORATED, a British Virgin Islands Corporation, to the extent of
                                       THOUSAND
DOLLARS
($                )
unpaid Principal Amount of such Convertible Debenture, and requests that the
certificates for such shares be issued in the name of, and delivered to:


 


 


	
  whose address is:

  



 


 


Dated: 


 


	
   

  	
  Signed:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform
  in all respects to the name of

  the Holder as specified on the face of the Convertible Debenture)

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				



 


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