EXHIBIT 10.2
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FTHIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY,
THE "SECURITIES"), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY
STATE. THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES
ARE REGISTERED UNDER THE ACT PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH
OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
DEBENTURE
THOMAS PHARMACEUTICAL ACQUISITION CORP.
10% SECURED CONVERTIBLE DEBENTURE
DUE JANUARY 25, 2014
NO. 1 $103,200
This Debenture is issued by Thomas Pharmaceutical Acquisition Corp.
("Thomas Acquisition"), a _________ corporation with its principal office
located at __________________________, to the undersigned where indicated as
Holder (together with its permitted successors and assigns, the "Holder")
pursuant to exemptions from registration under the Act.
ARTICLE I.
SECTION 1.01 PRINCIPAL AND INTEREST. For value received, on January 26,
2007 Thomas Acquisition hereby promises to pay to the order of the Holder in
lawful money of the United States of America and in immediately available funds
the principal sum of One Hundred and Three Thousand Two Hundred Dollars (US
$103,200) on January 25, 2014 (the "Maturity Date"), together with interest,
compounded quarterly, on the unpaid principal of this Debenture at the rate of
ten percent (10%) per year (computed on the basis of a 365-day year and the
actual days elapsed) from the date of this Debenture until paid.
SECTION 1.02 OPTIONAL CONVERSION. In exchange and the consideration for the
Holder purchasing this Debenture and thereby permitting Thomas Acquisition to
loan to Thomas Pharmaceuticals Ltd, (the "Company") in the aggregate One Hundred
and Sixty Thousand Dollars ($160,000) on the date hereof in the form of a Note,
the Company hereby grants to the Holder a right, at its option, to convert, and
sell on the same day, at any time and from time to
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time, subject to the registration requirements of the Act, until payment in full
of this Debenture, all or any part of the principal amount of the Debenture,
plus accrued interest, into shares (the "Conversion Shares") of common stock of
the Company, no par value per share ("Common Stock"), at the price per share
(the "Conversion Price") equal to an amount equal to eighty percent (80%) of the
lowest closing bid price of the Common Stock for the five (5) trading days
immediately preceding the Conversion Date (as defined herein). This is the
"Conversion Price".
As used herein, "Principal Market" shall mean The National Association of
Securities Dealers Inc. Over-The-Counter Bulletin Board, Nasdaq SmallCap Market,
or American Stock Exchange. If the Common Stock is not traded on a Principal
Market, the Closing Bid Price shall mean, the reported closing bid price for the
Common Stock, as furnished by the National Association of Securities Dealers,
Inc., for the applicable periods. 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.
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; provided, however, until such time
as the Conversion Price has been fixed, but solely for the purposes of this
Section 1.03 only, the Conversion Price shall be deemed to be $0.002 or, if
there is a trading market for the Common Stock, the lowest bid price for the
preceding thirty (30) days. If at any time the Company does not have a
sufficient number of Conversion Shares authorized and available, then the
Company shall call and hold a special meeting of its stockholders within sixty
(60) days of that time for the sole purpose of increasing the number of
authorized shares of Common Stock.
Section 1.04 RIGHT OF REDEMPTION. Thomas Acquisition at its option shall
have the right to redeem, with thirty (30) business days advance written notice
(the "Redemption Notice"), a portion of or the entire outstanding principal sum
under this Debenture. The redemption price shall be equal to one hundred
twenty-five percent (125%) multiplied by the portion of the principal sum being
redeemed, plus any accrued and unpaid interest. Once Thomas Acquisition has
issued to the Holder a Redemption Notice, the Holder may continue to convert
this Debenture, in accordance with Section 1.02 hereof, for the thirty (30) day
business period after the Holder receives the Redemption Notice.
Section 1.05 REGISTRATION RIGHTS. The Company shall be under no obligation
to register the resale of the Conversion Shares under the Securities Act of
1933, as amended.
Section 1.06 GUARANTY. Upon the occurrence of an Event of Default (as
defined in Article III hereto), this Convertible Debenture shall be immediately
due and payable. Notwithstanding anything to the contrary, the Company's
signature to this instrument shall not serve as a guaranty for the obligations
of Thomas Acquisitions, but rather shall only be
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enforceable against the Company for those obligations set forth within this
Debenture and expressly listed as an obligation or covenant of the Company.
Section 1.07 INTEREST PAYMENTS. The interest so payable will be paid at the
time of maturity or conversion to the person or company in whose name this
Debenture is registered. At the time such interest is payable, Thomas
Acquisition, in its sole discretion, may elect to pay interest in cash (via wire
transfer or certified funds) or in the form of common stock. In the event of
default, as described in Article III hereunder, the Holder may elect that the
interest 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, the amount of stock to be
issued will be calculated as follows: the value of the stock shall be the
closing bid price on: (i) the date the interest payment is due; or (ii) if the
interest payment is not made when due, the date the interest payment is made. A
number of shares of common stock with a value equal to the amount of interest
due shall be issued. 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, Thomas Acquisition will pay the balance in cash.
Section 1.08 PAYING AGENT AND REGISTRAR. Initially, Thomas Acquisition will
act as paying agent and registrar. Thomas Acquisition 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 1.09 SECURITY AGREEMENT. This Debenture is secured by a Security
Agreement (the "Security Agreement") dated January 31, 2007 between Thomas
Acquisition, the Company and the Holder.
ARTICLE II.
SECTION 2.01 AMENDMENTS AND WAIVER OF DEFAULT. The Debenture may not be
amended without the consent of the Holder. Notwithstanding the above, without
the consent of the Holder, the Debenture may be amended to cure any ambiguity,
defect or inconsistency, to provide for assumption of Thomas Acquisition
obligations to the Holder or to make any change that does not adversely affect
the rights of the Holder.
ARTICLE III.
SECTION 3.01 EVENTS OF DEFAULT. An "Event of Default", wherever used
herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant
to any judgment, decree or order of any court, or any order, rule or regulation
of any administrative or governmental body):
(i) Any default in the payment of the principal of, interest on or other
charges in respect of this Debenture, free of any claim of subordination, as
and when the same shall become due and payable and that is not cured within
ten (10) days of Thomas Acquisition's receipt of written notice from the
Holder explaining such default in reasonable detail (whether on an
installment, a Principal Payment Date, an Interest Payment Date, a
Conversion Date or the Maturity Date or by acceleration or otherwise);
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(ii) The Company and/or Thomas Acquisition shall fail to observe or perform
any other covenant, agreement or warranty contained in, or otherwise commit
any breach or default of any provision of this Debenture hereof or the
Security Agreement which is not cured with in the time prescribed;
(iii) Thomas Acquisition or any subsidiary of Thomas Acquisition shall
commence, or there shall be commenced against Thomas Acquisition or any
subsidiary of Thomas Acquisition under any applicable bankruptcy or
insolvency laws as now or hereafter in effect or any successor thereto, or
Thomas Acquisition or any subsidiary of Thomas Acquisition commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to Thomas
Acquisition or any subsidiary of Thomas Acquisition or there is commenced
against Thomas Acquisition or any subsidiary of Thomas Acquisition any such
bankruptcy, insolvency or other proceeding which remains undismissed for a
period of sixty one (61) days; or Thomas Acquisition or any subsidiary of
Thomas Acquisition is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or
Thomas Acquisition or any subsidiary of Thomas Acquisition suffers any
appointment of any custodian, private or court appointed receiver or the
like for it or any substantial part of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or Thomas
Acquisition or any subsidiary of Thomas Acquisition makes a general
assignment for the benefit of creditors; or Thomas Acquisition or any
subsidiary of Thomas Acquisition shall fail to pay, or shall state that it
is unable to pay, or shall be unable to pay, its debts generally as they
become due; or Thomas Acquisition or any subsidiary of Thomas Acquisition
shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or Thomas Acquisition
or any subsidiary of Thomas Acquisition shall by any act or failure to act
expressly indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by Thomas Acquisition
or any subsidiary of Thomas Acquisition for the purpose of effecting any of
the foregoing;
(iv) Thomas Acquisition or any subsidiary of Thomas Acquisition shall
default in any of its obligations under any other debenture or any mortgage,
credit agreement or other facility, indenture agreement, factoring agreement
or other instrument under which there may be issued, or by which there may
be secured or evidenced any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement of Thomas Acquisition
or any subsidiary of Thomas Acquisition in an amount exceeding $20,000,
whether such indebtedness now exists or shall hereafter be created and such
default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and
payable;
(v) The Company shall fail for any reason to deliver Common Stock
certificates to a Holder prior to the fifth (5th) trading day after a
Conversion Date or the Company shall provide notice to the Holder, including
by way of public announcement, at any time, of its intention not to comply
with requests for conversions of this Debenture in accordance with the terms
hereof;
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Section 3.02 PAYMENT ON EVENT OF DEFAULT. During the time that any
portion of this Debenture is outstanding, if any Event of Default has occurred,
the full principal amount of this Debenture, together with interest and other
amounts owing in respect thereof, to the date of acceleration shall become at
the Holder's election, immediately due and payable in cash, provided however,
the Holder may request (but shall have no obligation to request) payment of such
amounts in Common Stock of Thomas Acquisition. 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. The Holder need not
provide and Thomas Acquisition hereby waives any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon. Upon an Event of Default, notwithstanding any
other provision of this Debenture, the Holder shall have no obligation to Thomas
Acquisition to comply with or adhere to any limitations, if any, on the
conversion of this Debenture or the sale of the Conversion Shares.
Section 3.03 FAILURE TO ISSUE COMMON STOCK. The Company acknowledges that
failure to honor a Notice of Conversion shall cause irreparable harm to the
Holder.
ARTICLE IV.
SECTION 4.01 RIGHTS AND TERMS OF CONVERSION. This Debenture, in whole or in
part, may be converted at any time following the date hereof into shares of
Common Stock at a price equal to the Conversion Price as described in Section
1.02 above.
SECTION 4.02 RE-ISSUANCE OF DEBENTURE. When the Holder elects to convert a
part of the Debenture, then Thomas Acquisition shall reissue a new Debenture in
the same form as this Debenture to reflect the new principal amount.
ARTICLE V.
SECTION 5.01 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.
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ARTICLE VI.
SECTION 6.01 NOTICE. All notices or other communications required or
permitted to be given pursuant to this Debenture shall be in writing and shall
be considered as duly given on: (a) the date of delivery, if delivered in person
against written receipt therefor, or by nationally recognized overnight delivery
service or (b) five (5) days after mailing if mailed from within the continental
United States by postage pre-paid certified mail, return receipt requested to
the party entitled to receive the same:
If to Thomas Acquisition, to: Thomas Pharmaceutical Acquisition Corp.
c/o Snow Becker Krauss P.C.
605 Third Avenue
New York, NY 10158
Attn: Jack Becker and Charles Snow
Facsimile No.: 212-949-7052
If to the Holder:
If to the Company Thomas Pharmaceuticals, Inc.
750 Route 34
Matawan, NJ 07747
Attn: Jerome Mahoney
Facsimile No.: 732-441-9895
with a copy to: Meritz & Muenz LLP
2021 O Street, NW
Washington, DC 20036
Attention: Lawrence A. Muenz, Esq.
Facsimile No.: (202) 728-2910
SECTION 6.02 GOVERNING LAW. This Debenture shall be deemed to be made under
and shall be construed in accordance with the laws of the State of New Jersey
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
District of the State of New Jersey or the state courts of the State of New
Jersey sitting in Hudson County, New Jersey 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.
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SECTION 6.03 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 6.04 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 6.05 RELEASE. In consideration for entering into this Debenture,
the Company, Thomas Acquisition, iVoice, Inc. and the Holder, on the date
hereof, knowingly, voluntarily and unconditionally release, forever discharge,
and covenant not to sue the other parties hereto from or for any and all claims,
causes of action, demands, suits, debts, obligations, liabilities, damages,
losses, costs and expenses (including attorneys' fees) of every kind or nature
whatsoever, known or unknown, actual or potential, suspected or unsuspected,
fixed or contingent, that such party has or may have, now or in the future to
the end of the world, arising out of, relating to, or resulting from any act or
omission, error, negligence, breach of contract, tort, violation of law,
discrimination, matter or cause whatsoever from the beginning of time or in the
future to the end of the world; provided, however, that the foregoing release
shall not apply to any claims arising out of this Debenture. Each party hereto
agrees that notwithstanding anything else in this Debenture, the provisions of
this Section 6.05 shall survive termination of this Debenture.
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IN WITNESS WHEREOF, with the intent to be legally bound hereby, Thomas
Acquisition as executed this Debenture as of the date first written above.
THOMAS PHARMACEUTICAL ACQUISITION CORP.
By:
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Name:
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Title:
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THOMAS PHARMACEUTICALS, LTD.
By:
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Name:
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Title:
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IVOICE, INC.
[Limited to Section 6.05 only]
By:
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Name:
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Title:
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HOLDER
By:
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Name:
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Title:
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EXHIBIT "A"
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NOTICE OF CONVERSION
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(TO BE EXECUTED BY THE HOLDER IN ORDER TO CONVERT THE NOTE)
TO:
The undersigned hereby irrevocably elects to convert $ of the principal
amount of this Debenture into Shares of Common Stock of Thomas Pharmaceuticals
Inc., according to the conditions stated therein, as of the Conversion Date
written below.
CONVERSION DATE: _________________________________________________
APPLICABLE CONVERSION PRICE: _________________________________________________
SIGNATURE: _________________________________________________
NAME: _________________________________________________
ADDRESS: _________________________________________________
AMOUNT TO BE CONVERTED: $ _________________________________________________
AMOUNT OF DEBENTURE
UNCONVERTED: $ _________________________________________________
CONVERSION PRICE PER SHARE: $ _________________________________________________
NUMBER OF SHARES OF COMMON
STOCK TO BE ISSUED: _________________________________________________
PLEASE ISSUE THE SHARES OF
COMMON STOCK IN THE FOLLOWING
NAME AND TO THE FOLLOWING
ADDRESS: _________________________________________________
ISSUE TO: _________________________________________________
AUTHORIZED SIGNATURE: _________________________________________________
NAME: _________________________________________________
TITLE: _________________________________________________
PHONE NUMBER: _________________________________________________
BROKER DTC PARTICIPANT CODE: _________________________________________________
ACCOUNT NUMBER: _________________________________________________
ADDRESS OF RECEIVING PARTY: _________________________________________________
SOCIAL SECURITY NUMBER OR TAX
IDENTIFICATION NUMBER OF
RECEIVING PARTY: _________________________________________________