Exhibit 4.12
FORM OF DEBENTURE
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
AMOUNT $_______________
DEBENTURE NUMBER APRIL-2001-101
ISSUANCE DATE APRIL , 2001
MATURITY DATE APRIL , 2006
FOR VALUE RECEIVED, iVoice.com, Inc., a Delaware corporation (the
"Company"), hereby promises to pay _______________________ or registered assigns
(the "Holder") on April __, 2006, (the "Maturity Date"), the principal amount of
__________________________ Dollars ($________) U.S., and to pay interest on the
principal amount hereof, in such amounts, at such times and on such terms and
conditions as are specified herein.
Article 1. Interest
The Company shall pay interest on the unpaid principal amount of this
Debenture (the "Debenture") at the time of each conversion until the principal
amount hereof is paid in full or has been converted. The Debentures shall pay 8%
cumulative interest, in cash or in shares of Class A common stock, par value
$.01 per share, of the Company ("Common Stock"), at the Company's option, at the
time of each conversion. If paid in Common Stock, the number of shares of the
Company's Common Stock to be received shall be determined by dividing the dollar
amount of the interest by the lesser of (i) 140% of the closing bid price for
the Common Stock on the Closing Date, as that term is defined below or (ii) 80%
of the Market Price, each being referred to as the "Conversion Price". "Market
Price" shall mean the average of the three (3) lowest closing bid prices for the
Common Stock, as reported by Bloomberg, LP, during the twenty-two (22) trading
days immediately preceding the date of conversion. The closing shall be deemed
to have occurred on the date the funds are received by the Company (the "Closing
Date"). If the interest is to be paid in cash, the Company shall make such
payment within five (5) business days of the date of conversion. If the interest
is to be paid in Common Stock, said Common Stock shall be delivered to the
Holder, or per Holder's instructions, within five (5) business days of the date
of conversion. The Debentures are subject to automatic conversion at the end of
five (5) years from the date of issuance at which time all Debentures
outstanding will be automatically converted based upon the formula set forth in
Section 3.2.
Article 2. Method of Payment
This Debenture must be surrendered to the Company in order for the Holder
to receive payment of the principal amount hereof. The Company shall have the
option of paying the interest on this Debenture in United States dollars or in
Common Stock upon conversion pursuant to Article 1 hereof. The Company may draw
a check for the payment of interest to the order of the Holder of this Debenture
and mail it to the Holder's address as shown on the Register (as defined in
Section 7.2 below). Interest and principal payments shall be subject to
withholding under applicable United States Federal Internal Revenue Service
Regulations.
Article 3. Conversion
Section 3.1. Conversion Privilege
(a) The Holder of this Debenture shall have the right, at its option, to
convert it into shares of Common Stock at any time following the Closing Date
and which is before the close of business on the Maturity Date, except as set
forth in Section 3.1(c) below. The number of shares of Common Stock issuable
upon the conversion of this Debenture is determined pursuant to Section 3.2 and
rounding the result to the nearest whole share.
(b) Less than all of the principal amount of this Debenture may be
converted into Common Stock if the portion converted is $5,000 or a whole
multiple of $5,000 and the provisions of this Article 3 that apply to the
conversion of all of the Debenture shall also apply to the conversion of a
portion of it. This Debenture may not be converted, whether in whole or in part,
except in accordance with Article 3.
(c) In the event all or any portion of this Debenture remains outstanding
on the Maturity Date, the unconverted portion of such Debenture will
automatically be converted into shares of Common Stock on such date in the
manner set forth in Section 3.2.
Section 3.2. Conversion Procedure.
(a) Debentures. Upon receipt by the Company or its designated attorney of
a facsimile or original of Holder's signed of Conversion (See Exhibit A attached
hereto) preceded by, together with or followed by receipt of the original
Debenture to be converted in whole or in part in the manner set forth in 3.2(b)
below, the Company shall instruct its transfer agent to issue one or more
Certificates representing that number of shares of
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Common Stock into which the Debenture is convertible. The Seller's transfer
agent or attorney shall act as Registrar and shall maintain an appropriate
ledger containing the necessary information with respect to each Debenture.
(b) Conversion Procedures. The face amount of this Debenture may be
converted, in whole or in part, anytime following the Closing Date. Such
conversion shall be effectuated by surrendering to the Company, or its attorney,
this Debenture to be converted together with a facsimile or original of the
signed Notice of Conversion which evidences Holder's intention to convert the
Debenture indicated. The date on which the Notice of Conversion is effective
("Conversion Date") shall be deemed to be the date on which the Holder has
delivered to the Company or its designated attorney a facsimile or original of
the signed Notice of Conversion, as long as the original Debenture(s) to be
converted are received by the Company or its designated attorney within five (5)
business days thereafter. Notwithstanding the above, any Notice of Conversion
not received by 5:00 P.M. EST, shall be deemed to have been received the next
business day. Unless otherwise notified by the Company in writing via facsimile
the Company's designated attorney is Lawrence Muenz, Esq. Meritz & Muenz,
L.L.P., Three Hughes Place, Dix Hills, New York 11746 (P) 631-242-7384 (F)
631-242-6715.
(c) Common Stock to be Issued. Upon the conversion of any Debentures and
upon receipt by the Company or its attorney of a facsimile or original of
Holder's signed Notice of Conversion Seller shall instruct Seller's transfer
agent to issue Stock Certificates without restrictive legend or stop transfer
instructions, if at that time the Registration Statement has been deemed
effective (or with proper restrictive legend if the Registration Statement has
not as yet been declared effective), provided that the shares have been sold in
accordance with the prospectus, in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion, as applicable. Seller warrants that no instructions, other than
these instructions, have been given or will be given to the transfer agent and
that the Common Stock shall otherwise be freely transferable on the books and
records of Seller, except as may be set forth herein.
(d) Conversion Rate. Holder is entitled, at its option to convert the face
amount of this Debenture, plus accrued interest, anytime following the Closing
Date, at the lesser of (i) 140% of the closing bid price for Common Stock on the
Closing Date or (ii) 80% of the Market Price as defined in Article 1, each being
referred to as the "Conversion Price". No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded up or down, as the case may be, to the nearest
whole share.
(e) Nothing contained in this Debenture shall be deemed to establish or
require the payment of interest to the Holder at a rate in excess of the maximum
rate permitted by governing law. In the event that the rate of interest required
to be paid exceeds the maximum rate permitted by governing law, the rate of
interest required to be paid thereunder shall be automatically reduced to the
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maximum rate permitted under the governing law and such excess shall be returned
with reasonable promptness by the Holder to the Company.
(f) It shall be the Company's responsibility to take all necessary actions
and to bear all such costs to issue the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter to the
transfer agent, if so required. The person in whose name the certificate of
Common Stock is to be registered shall be treated as a shareholder of record on
and after the conversion date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Holder a new Debenture equal
to the unconverted amount, if so requested in writing by Holder.
(g) Within five (5) business days after receipt of the documentation
referred to above in Section 3.2(b), the Company shall deliver a certificate, in
accordance with Section 3.2(c) for the number of shares of Common Stock issuable
upon the conversion. In the event the Company does not make delivery of the
Common Stock, as instructed by Holder, within five (5) business days after
delivery of this original Debenture, then in such event the Company shall pay to
Holder an amount, in cash in accordance with the following schedule, wherein
"No. Business Days Late" is defined as the number of business days beyond the
five (5) business days delivery period.
Late Payment for Each
$10,000 of Debenture
No. Business Days Late Amount Being Converted
- ---------------------- ----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $100 for each
Business Day Beyond 10
The Company acknowledges that its failure to deliver the Common Stock
within five (5) business days after the Conversion Date will cause the Holder to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Debenture a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the
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Company from its obligations to deliver the Common Stock pursuant to the terms
of this Debenture.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 3.2(g) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 3.2(g) shall not
apply but instead the provisions of Section 3.2(h) shall apply.
The Company shall make any payments incurred under this Section 3.2(g) in
immediately available funds within five (5) business days from the date the
Common Stock is fully delivered. Nothing herein shall limit a Holder's right to
pursue actual damages or cancel the conversion for the Company's failure to
issue and deliver Common Stock to the Holder within five (5) business days after
the Conversion Date.
(h) The Company shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have available all
Common Stock necessary to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock (or alternative shares of Common Stock as may be
contributed by Stockholders) available to effect, in full, a conversion of the
Debentures (a "Conversion Default", the date of such default being referred to
herein as the "Conversion Default Date"), the Company shall issue to the Holder
all of the shares of Common Stock which are available, and the Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted Debentures"), upon Holder's sole option, may be deemed null and
void. The Company shall provide notice of such Conversion Default ("Notice of
Conversion Default") to all existing Holders of outstanding Debentures, by
facsimile, within three (3) business day of such default (with the original
delivered by overnight or two day courier), and the Holder shall give notice to
the Company by facsimile within five business days of receipt of the original
Notice of Conversion Default (with the original delivered by overnight or two
day courier) of its election to either nullify or confirm the Notice of
Conversion.
The Company agrees to pay to all Holders of outstanding Debentures
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Holder where N = the number
of days from the Conversion Default Date to the date (the "Authorization Date")
that the Company authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Holder's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or shall be convertible into Common
Stock at the Conversion Rate, at the Holder's option, payable as follows: (i) in
the event Holder elects to take such payment in cash, cash payments shall be
made to such Holder of outstanding Debentures by the fifth day of the following
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calendar month, or (ii) in the event Holder elects to take such payment in
stock, the Holder may convert such payment amount into Common Stock at the
conversion rate set forth in section 3.2(d) at anytime after the 5th day of the
calendar month following the month in which the Authorization Notice was
received, until the expiration of the mandatory 4 year conversion period.
The Company acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Holder to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture. Nothing herein shall limit the Holder's
right to pursue actual damages for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock.
(i) If, by the fifth (5th) business day after the Conversion Date of any
portion of the Debentures to be converted (the "Delivery Date"), the transfer
agent fails for any reason to deliver the Common Stock upon conversion by the
Holder and after such Delivery Date, the Holder purchases, in an open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") solely
in order to make delivery in satisfaction of a sale of Common Stock by the
Holder (the "Sold Shares"), which delivery such Holder anticipated to make using
the Common Stock issuable upon conversion (a "Buy-In"), the Company shall pay to
the Holder, in addition to any other amounts due to Holder pursuant to this
Debenture, and not in lieu thereof, the Buy-In Adjustment Amount (as defined
below). The "Buy In Adjustment Amount" is the amount equal to the excess, if
any, of (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Holder from the sale of the Sold Shares.
The Company shall pay the Buy-In Adjustment Amount to the Holder in immediately
available funds within five (5) business days of written demand by the Holder.
By way of illustration and not in limitation of the foregoing, if the Holder
purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which the Company will be required to pay to the Holder will be $1,000.
(j) The Company shall furnish to Holder such number of prospectuses and
other documents incidental to the registration of the shares of Common Stock
underlying the Debentures, including any amendment of or supplements thereto.
(k) Limitation on Issuance of Shares. If the Company's Common Stock
becomes listed on the Nasdaq SmallCap Market after the issuance of the
Debentures, the Company may be limited in the number of shares of Common Stock
it may issue by
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virtue of (X) the number of authorized shares or (Y) the applicable rules and
regulations of the principal securities market on which the Common Stock is
listed or traded, including, but not necessarily limited to, NASDAQ Rule
4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable (collectively, the
"Cap Regulations"). Without limiting the other provisions thereof, the
Debentures shall provide that (i) the Company will take all steps reasonably
necessary to be in a position to issue shares of Common Stock on conversion of
the Debentures without violating the Cap Regulations and (ii) if, despite taking
such steps, the Company still cannot issue such shares of Common Stock without
violating the Cap Regulations, the holder of a Debenture which cannot be
converted as result of the Cap Regulations (each such Debenture, an "Unconverted
Debenture") shall have the option, exercisable in such holder's sole and
absolute discretion, to elect either of the following remedies:
(x) if permitted by the Cap Regulations, require the Company
to issue shares of Common Stock in accordance with such holder's Notice of
Conversion at a conversion purchase price equal to the average of the
closing bid price per share of Common Stock for any five (5) consecutive
trading days (subject to certain equitable adjustments for certain events
occurring during such period) during the sixty (60) trading days
immediately preceding the Conversion Date; or
(y) require the Company to redeem each Unconverted Debenture
for an amount (the "Redemption Amount"), payable in cash, equal to the sum
of (i) one hundred thirty-three percent (133%) of the principal of an
Unconverted Debenture, plus (ii) any accrued but unpaid interest thereon
through and including the date (the "Redemption Date") on which the
Redemption Amount is paid to the holder.
A holder of an Unconverted Debenture may elect one of the above remedies
with respect to a portion of such Unconverted Debenture and the other remedy
with respect to other portions of the Unconverted Debenture. The Debentures
shall contain provisions substantially consistent with the above terms, with
such additional provisions as may be consented to by the Holder. The provisions
of this section are not intended to limit the scope of the provisions otherwise
included in the Debentures.
(l) Limitation on Amount of Conversion and Ownership. Notwithstanding
anything to the contrary in this Debenture, in no event shall the Holder be
entitled to convert that amount of Debenture, and in no event shall the Company
permit that amount of conversion, into that number of shares, which when added
to the sum of the number of shares of Common Stock beneficially owned, (as such
term is defined under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act of 1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99% of the number of shares of Common Stock outstanding on the Conversion
Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act. In the
event that the number of shares of Common Stock outstanding as determined in
accordance with Section 13(d) of the 1934 Act is different on any Conversion
Date than it was on the Closing Date, then the number of shares of
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Common Stock outstanding on such Conversion Date shall govern for purposes of
determining whether the Holder would be acquiring beneficial ownership of more
than 4.99% of the number of shares of Common Stock outstanding on such
Conversion Date.
(m) Right of Redemption by the Company. The Company shall have the right,
at its sole option, to require a redemption of any percentage of the balance of
this Debenture by giving ten (10) business day written notice to the Purchaser
via facsimile transmission stating the date that the Company shall redeem. Upon
exercise of redemption by the Company, the Company shall be required to pay 125%
of the balance remaining on the Debenture, plus accrued but unpaid interest and
outstanding liquidated damages. The Holder shall be entitled to convert the
Debenture up to the date that the Company intends to redeem. In the event the
Company sends notice of redemption to the Holder but fails to redeem as stated
in the redemption notice, the Company shall be precluded from effecting any
further redemptions.
(n) Legend. The Holder acknowledges that each certificate representing the
Debentures, and the Common Stock unless registered pursuant to the Registration
Rights Agreement, shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) IF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
(o) Prior to conversion of all the Debentures and exercise of all the
Warrants, if at anytime the conversion of all the Debentures and exercise of all
the Warrants outstanding would result in an insufficient number of authorized
shares of Common Stock being available to cover all the conversions, then in
such event, the Company will move to call and hold a shareholder's meeting or
have shareholder action with written consent of the proper number of
shareholders within thirty (30) days of such event, or such greater period of
time if statutorily required or reasonably necessary as regards standard
brokerage house and/or SEC requirements and/or procedures, for the purpose of
authorizing additional shares of Common Stock to facilitate the conversions. In
such an event management of the Company shall recommend to all shareholders to
vote their shares in favor of increasing the authorized number of shares of
Common Stock. Management of the Company shall vote all of its shares of Common
Stock in favor of increasing the number of shares of authorized Common Stock.
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Company represents and warrants that under no circumstances will it deny or
prevent Holder's right to convert the Debentures as permitted under the terms of
this Subscription Agreement or the Registration Rights Agreement. Nothing in
this Section shall limit the obligation of the Company to make the payments set
forth in Section 3.2(g). In the event the Company's shareholder's meeting does
not result in the necessary authorization, the Company shall redeem the
outstanding Debentures for an amount equal to (x) the sum of the principal of
the outstanding Debentures plus accrued interest thereon multiplied by (y) 133%.
Section 3.3. Fractional Shares. The Company shall not issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
conversion of this Debenture. Instead, the Company shall round up or down, as
the case may be, to the nearest whole share.
Section 3.4. Taxes on Conversion. The Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion of this Debenture. However, the Holder shall pay any
such tax which is due because the shares are issued in a name other than its
name.
Section 3.5. Company to Reserve Stock. The Company shall reserve the
number of shares of Common Stock required pursuant to and upon the terms set
forth in the Subscription Agreement to permit the conversion of this Debenture.
All shares of Common Stock which may be issued upon the conversion hereof shall
upon issuance be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof.
Section 3.6. Restrictions on Transfer. This Debenture has not been
registered under the Securities Act of 1933, as amended, (the "Act") and is
being issued under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated under the Act. This Debenture and the Common Stock issuable upon the
conversion thereof may only be offered or sold pursuant to registration under or
an exemption from the Act.
Section 3.7. Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.
Article 4. Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes in
writing the obligations of
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the Company under this Debenture and immediately after such transaction no Event
of Default exists. Any reference herein to the Company shall refer to such
surviving or transferee corporation and the obligations of the Company shall
terminate upon such written assumption.
Article 5. Reports
The Company will mail to the Holder hereof at its address as shown on the
Register a copy of any annual, quarterly or current report that it files with
the Securities and Exchange Commission promptly after the filing thereof and a
copy of any annual, quarterly or other report or proxy statement that it gives
to its shareholders generally at the time such report or statement is sent to
shareholders.
Article 6. Defaults and Remedies
Section 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture when the
same becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment, other than a payment of principal, for a period
of five (5) business days thereafter, (c) any of the Company's representations
or warranties contained in the Subscription Agreement or this Debenture were
false when made or the Company fails to comply with any of its other agreements
in the Subscription Agreement or this Debenture and such failure continues for
the period and after the notice specified below, (d) the Company pursuant to or
within the meaning of any Bankruptcy Law (as hereinafter defined): (i) commences
a voluntary case; (ii) consents to the entry of an order for relief against it
in an involuntary case; (iii) consents to the appointment of a Custodian (as
hereinafter defined) of it or for all or substantially all of its property or
(iv) makes a general assignment for the benefit of its creditors or (v) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against the Company in an involuntary case; (B) appoints
a Custodian of the Company or for all or substantially all of its property or
(C) orders the liquidation of the Company, and the order or decree remains
unstayed and in effect for sixty (60) calendar days, (e) the Company's Common
Stock is suspended or no longer listed on any recognized exchange including
electronic over-the-counter bulletin board for in excess of five (5) consecutive
trading days. As used in this Section 6.1, the term "Bankruptcy Law" means Title
11 of the United States Code or any similar federal or state law for the relief
of debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law. A default under clause
(c) above is not an Event of Default until the holders of at least 25% of the
aggregate principal amount of the Debentures outstanding notify the Company of
such default and the Company does not cure it within thirty (30) business days
after the receipt of such notice, unless the Company commences to cure such
default within such period, which must specify the default, demand that it be
remedied and state that it is a "Notice of Default".
Section 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
remaining principal amount of this Debenture, together with all accrued interest
and any liquidated damages, to be due
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and payable. Upon such declaration, the remaining principal amount shall be due
and payable immediately.
Section 6.3 Seniority. No indebtedness of the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. The Company will not and will not
permit any of its subsidiaries to, directly or indirectly, enter into, create,
incur, assume or suffer to exist any indebtedness of any kind, on or with
respect to any of its property or assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom that is senior in any
respect to the Company's obligations under the Debentures.
Section 6.4 Liquidation Value. The liquidation value of this Debenture
shall be equal to 125% of the outstanding balance remaining on this Debenture
plus accrued but unpaid interest and liquidated damages.
Article 7. Registered Debentures
Section 7.1. Series. This Debenture is one of a numbered series of
Debentures which are identical except as to the principal amount and date of
issuance thereof and as to any restriction on the transfer thereof in order to
comply with the Securities Act of 1933 and the regulations of the Securities and
Exchange Commission promulgated thereunder. Such Debentures are referred to
herein collectively as the "Debentures". The Debentures shall be issued in whole
multiples of $5,000.
Section 7.2. Record Ownership. The Company, or its attorney, shall
maintain a register of the holders of the Debentures (the "Register") showing
their names and addresses and the serial numbers and principal amounts of
Debentures issued to or transferred of record by them from time to time. The
Register may be maintained in electronic, magnetic or other computerized form.
The Company may treat the person named as the Holder of this Debenture in the
Register as the sole owner of this Debenture. The Holder of this Debenture is
the person exclusively entitled to receive payments of interest on this
Debenture, receive notifications with respect to this Debenture, convert it into
Common Stock and otherwise exercise all of the rights and powers as the absolute
owner hereof.
Section 7.3. Registration of Transfer. Transfers of this Debenture may be
registered on the books of the Company maintained for such purpose pursuant to
Section 7.2 above (i.e., the Register). Transfers shall be registered when this
Debenture is presented to the Company with a request to register the transfer
hereof and the Debenture is duly endorsed by the appropriate person, reasonable
assurances are given that the endorsements are genuine and effective, and the
Company has received evidence satisfactory to it that such transfer is rightful
and in compliance with all applicable laws, including tax laws and state and
federal securities laws. When this Debenture is presented for transfer and duly
transferred hereunder, it shall be canceled and a new Debenture showing the name
of the transferee as the record holder thereof shall be issued in lieu hereof.
When this Debenture is presented to the Company with a
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reasonable request to exchange it for an equal principal amount of Debentures of
other denominations, the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a total principal amount
equal to this Debenture in such denominations as agreed to by the Company and
Holder.
Section 7.4. Worn or Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delivered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or verification
as the Company may request.
Article 8. Notice.
Any notice, other than the Notice of Conversion, which is required or
convenient under the terms of this Debenture shall be duly given if it is in
writing and delivered in person or mailed by first class mail, postage prepaid
and directed to the Holder of the Debenture at its address as it appears on the
Register or if to the Company to its principal executive offices, with a copy by
fax to Lawrence Muenz, Esq. Meritz & Muenz, L.L.P., Three Hughes Place, Dix
Hills, New York 11746 (P) 631-242-7384 (F) 631-242-6715. The time when such
notice is sent shall be the time of the giving of the notice.
Article 9. Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. A "business day" shall
mean a day on which the banks in New York are not required or allowed to be
closed.
Article 10. Waivers
The holders of a majority in principal amount of the Debentures may waive
a default or rescind the declaration of an Event of Default and its consequences
except for a default in the payment of principal or conversion into Common
Stock.
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Article 11. Rules of Construction.
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in the Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.
Article 12. Governing Law
The validity, terms, performance and enforcement of this Debenture shall
be governed and construed by the provisions hereof and in accordance with the
laws of the State of New York applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of New York.
Article 13. Litigation
(a) Forum Selection and Consent to Jurisdiction. Any litigation arising
out of, under, or in connection with, this Debenture or any course of conduct,
course of dealing, statements (whether oral or written) or actions of the
Company or Holder shall be brought and maintained exclusively in the courts of
the State of New York. The Company hereby expressly and irrevocably submits to
the jurisdiction of the state and federal courts of the State of New York for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service of process
by registered mail, postage prepaid, or by personal service within or without
the State of New York. The Company hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in any inconvenient forum. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Debenture.
(b) Waiver of Jury Trial. The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this Debenture, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the Company.
The Company acknowledges and
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agrees that it has received full and sufficient consideration for this provision
and that this provision is a material inducement for the Holder purchasing this
Debenture.
(c) Governing Law. The terms of this Debenture shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date first written above.
iVoice.com, Inc.
By
----------------------------------
Name: Jerome R. Mahoney,
Title: Chief Executive Officer
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Exhibit C
NOTICE OF CONVERSION
(To be Executed by the Registered owner in order to Convert the Debentures.)
The undersigned hereby irrevocably elects, as of ______________, 200_ to
convert $__________ of Convertible Debentures into Common Stock of iVoice.com,
Inc. (the "Company") according to the conditions set forth in the Subscription
Agreement dated April of 2001.
Date of Conversion__________________________________________
Applicable Conversion Price_________________________________
Number of Shares Issuable upon this conversion______________
Signature___________________________________________________
[Name]
Address_____________________________________________________
____________________________________________________________
Phone______________________ Fax___________________________
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Assignment of Debenture
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
- --------------------------------------------------------------------------------
(name, address and SSN or EIN of assignee)
Dollars ($ )
- --------------------------------------------------------------------------------
(principal amount of Debenture, $5,000 or integral multiples of $5,000)
of principal amount of this Debenture together with all accrued and unpaid
interest hereon.
Date: Signed:
------------- -----------------------------------------
(Signature must conform in all
respects to name of Holder shown
of face of Debenture)
Signature Guaranteed:
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