EXHIBIT 10.24
SECURITY PURCHASE AGREEMENT DEBENTURE
THIS NOTE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE
"SECURITIES"), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER 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
TCPI, INC.
2000 6% Convertible Debenture
Due: August , 2005
No.000 $
This Debenture is issued by TCPI, Inc., ( the "Company") to [ ]
(together with its successors and assigns, the "Holder") pursuant to exemptions
from registration under the U.S. Securities Act of 1933, as amended.
ARTICLE I
1.01 Principal and Interest. For value received, on August [ ], 2000
(the "Maturity Date"), the Company hereby promises to pay to the order of the
Holder, [ ], in lawful money of the United States of America and in immediately
available fund the principal sum of $ [ ] together with interest on the unpaid
principal of this Debenture at the rate of 6% per year (computed on the basis of
a 365 day year and the actual days elapsed) from the date of this Debenture
until paid.
1.02. Conversion. The Holder is entitled, at its option, to convert at
any time and from time to time, 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 the Company's common stock, $0. 001 par
value ("Common Stock"), at the price per share (the "Conversion Price") equal to
either (i) $1.05 or (ii) 80% of the average closing bid prices of the Common
Stock on the Principal market quoted by Bloomberg L.P. (the "Closing Bid Price")
for the five (5) trading days immediately preceding the Conversion Date (the
"Conversion Price"). As used herein, "Principal Market" shall mean the Nasdaq
National Market, the Nasdaq SmallCap Market, Bulletin Board, Over the Counter
Market, the American Stock Exchange or the New York Stock Exchange, whichever is
at the time the principal trading exchange or market for the Common Stock. 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
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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 set forth
above. 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,
provided that the Company delivers the Conversion Shares within three (3)
business days after receipt of a Conversion Notice, otherwise, the holder shall
have the right to revoke the Conversion Notice, or to specify the date on which
it actually receives the Conversion Shares as the Conversion Date.
1.02 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 call and hold a special meeting of its stockholders within 120
days of that time for the sole purpose of increasing in the number of authorized
shares of Common Stock.
1.03 Registration Rights. The Company is obligated to register the
resale of the Conversion Shares under the Securities Act of 1933, as amended,
pursuant to the terms of a Registration Rights Agreement between the Company and
the Holder of even date herewith.
1.04 Interest Payments. The interest so payable will be paid at the
time of maturity or conversion to the person in whose name this Debenture is
registered. At the time such interest is payable, the Company, 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 Section 3.01 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, the
Company will pay the balance in cash.
1.05 Paying Agent and Registrar. Initially, the Company 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 10 days' written notice
of its election to do so, specifying the name, address, telephone number and
facsimile number of the Paying Agent or Registrar. The Company may act in any
such capacity.
1.06 Subordinated Nature of Debenture. This Debenture and all payments
hereon, including principal or interest, shall be subordinate and junior in
right of payment to all Company Debt (as defined hereinafter), but only to the
extent set forth as follows:
(a) upon the maturity of any Company Debt, or any installment thereof
then due by lapse of time, acceleration or otherwise, all Company Debt then due
shall first be paid in full (or provision made for payment in full thereof)
before any additional payment on account of principal or interest is made on
this Debenture; and
(b) in the event of any insolvency or bankruptcy proceedings affecting
the Company, or any receivership, liquidation, reorganization or other similar
proceedings affecting the Company, and, in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy, then the holders of Company Debt
shall be entitled to receive payment in full of all principal of and interest on
all Company Debt before the holder of this Debenture is entitled to receive any
payment on account of principal, interest or premium on this Debenture.
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The provisions of the preceding paragraphs are solely for the purpose
of defining the relative rights of the holders of Company Debt on the one hand
and the holder of this Debenture on the other hand and nothing herein shall
impair, as between the Company and the holder of this Debenture, the obligation
of the Company, which is unconditional and absolute, to pay the holder of this
Debenture the principal, interest and premiums hereon in accordance with its
terms, nor shall anything herein prevent the holder of this Debenture from
exercising all remedies otherwise permitted by law or hereunder upon default
hereunder, subject to the relative rights of the holders of Company Debt
expressed in the preceding paragraphs.
For the purpose of this Notice, the term "Company Debt" shall mean and
include current bank debt and all indebtedness incurred by the Company
subsequent to the date hereof, other than indebtedness incurred to any officer,
director or other person who has beneficial ownership of 10% or more of the
Company's issued and outstanding shares of Common Stock.
ARTICLE II
2.01 Amendments and Waiver of Default. The Debenture may be amended
with the consent of the Holder. Without the consent of the Holder, the Debenture
may be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company obligations to the Holder or to make any change that
does not adversely affect the rights of the Holder.
ARTICLE III
3.01 Events of Default. An Event of Default is defined as follows: (a)
failure by the Company to pay amounts due hereunder within two (2) days of
receipt of written notice that the the Maturity Date has occurred and the
aforementioned amounts have not been recieved; (b) failure by the Company to
advise its transfer agent to issue Common Stock to the Holder within two (2)
business days of the Company's receipt of the attached Notice of Conversion from
Holder; (c) failure by the Company for thirty (30) days after notice to it to
comply with any of its other agreements in the Debenture; (d) events of
bankruptcy or insolvency; (e) a breach by the Company of its obligations under
the Registration Rights Agreement, dated August 19 , 2000, by and between the
Company and the Holder. (the "Registration Rights Agreement"). The Holder may
not enforce the Debenture except as provided herein.
3.02 Failure to Issue Unrestricted Common Stock. As indicated in
Article III Section
3.01, a breach by the Company of its obligations under the Registration
Rights Agreement shall be deemed an Event of Default, which if not cured within
ten (10) days, shall entitle the Investor(s) accelerated full repayment of all
debentures outstanding. The Company acknowledges that failure to honor a Notice
of Conversion shall cause hardship to the Investor(s).
ARTICLE IV
4.01 Rights and Terms of Conversion. This Debenture, in whole or in
part, may be converted at any time following the date of closing, into shares of
Common Stock at a price equal to the Conversion Price.
4.02 Reissuance of Debenture. When the Holder elects to convert a part
of the Debenture, then the Company shall reissue a new Debenture in the same
form as this Debenture to reflect the new principal amount.
4.03 Limitation on Right and Power to Exercise. Any provision in this
Debenture or any other document to the contrary not withstanding, the Holder
shall not have the right or power to convert this Debenture into Common Stock,
either in whole or in part, and any attempt to do so shall be void, if, after
having given effect to such conversion, the Holder shall be or shall be deemed
to be the beneficial owner of 10% or more of the then outstanding Common Stock
within the meaning or for the purposes of Section 13(d) or 13(g) of the U.S.
Securities Exchange Act of 1934, as amended, or as the term "beneficial owner"
is defined in Rule 13d-3 of the U.S. Securities and Exchange Commission or
otherwise.
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4.04 Termination of Conversion Rights. The Holder's right to convert
the Debenture into the Common Stock in accordance with paragraph 4.01 shall
terminate on August , 2005, and this Debenture shall be automatically converted
on that date in accordance with the formula set forth in Section 4.01 hereof,
and the appropriate shares of common stock and amount of interest shall be
issued to the Holder.
ARTICLE V
5.01 Antidilution. In case 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 case 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.
So long as any of the principal of or interest on this Note remains
unpaid and unconverted, the Company shall not, without the prior consent of the
holder, issue or sell (i) any Common Stock without consideration or for a
consideration per share less than its fair market value determined immediately
prior to its issuance, or (ii) issue or sell any warrant, option, right,
contract, call, or other security or instrument granting the holder thereof the
right to acquire Common Stock without consideration or for a consideration per
share less than than such Common Stock's fair market value determined
immediately prior to its issuance. This paragraph shall not apply to (a)
agreements entered into prior to the date hereof whose provisions are contained
in documents filed with the Securities and Exchange Commission or (b) benefit
plans applicable to the Company's officers, directors, employees and independent
contractors.
ARTICLE VI
6.01 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: TCPI, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxxxx Xxxxx, XX 00000.
Attention: President
If to Holder:
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 York 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 Southern
District of the State of New York or the state courts of the State of New York
sitting in Manhattan 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.
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.
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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.
6.05 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 has executed this Debenture as of August [ ], 2000.
ATTEST:
TCPI, Inc.
By: By:
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Name: Xxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Secretary Title: Chief Financial Officer
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EXHIBIT "A"
NOTICE OF CONVERSION
(To be executed by the Holder in order to Convert the Note)
TO: TCPI, INC.
The undersigned hereby irrevocably elects to convert $________________ of
the principal amount of the above Note into Shares of Common Stock of TCPI,
Inc., according to the conditions stated therein, as of the Conversion Date
written below.
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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