Exhibit 10.2

 

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

Date of Issuance: 8/15/14

 

$150,000

 

10% CONVERTIBLE DEBENTURE

DUE 8/15/15

 

THIS DEBENTURE is a duly authorized and issued 10% Convertible Debenture of
3DIcon Corporation having a principal place of business at 6804 South Canton
Avenue Suite 150 Tulsa, OK 74136 ("Company"), due 8/15/15 (the "Debenture").

 

FOR VALUE RECEIVED, the Company promises to pay to Redwood Management, LLC or
its registered assigns (the "Holder"), the principal sum of $150,000 plus
interest on 8/15/15 or such earlier date as the Debenture is required or
permitted to be repaid as provided hereunder (the "Maturity Date"), and to pay
interest to the Holder on the aggregate unconverted and then outstanding
principal amount of this Debenture at the rate of (10%) Ten percent guaranteed
interest payable regardless of how long the Debenture remains outstanding,
unless the Debenture is converted to shares of common stock in accordance with
the terms and conditions herein. The Debenture shall also have an original issue
discount of three percent (3%) from the stated Principal Amount.

 

The Holder will pay $150,000 upon execution.

 

THE COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT AT 130% OF SUCH
AMOUNT ALONG WITH ANY ACCRUED INTEREST OF THIS DEBENTURE AT ANY TIME UPON SEVEN
DAYS WRITTEN NOTICE TO THE HOLDER

 

This Debenture is subject to the following additional provisions:

 

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Section 1. DENOMINATIONS. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

 

Section 2.TRANSFER. This Debenture may be transferred or exchanged only in
compliance with applicable federal and state securities laws and regulations.
Prior to due presentment to the Company for transfer of this Debenture, the
Company and any agent of the Company may treat the Person in whose name this
Debenture is duly registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

 

Section 3. EVENTS OF DEFAULT.

 

(a)           "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
(including Late Fees) on, or liquidated damages in respect to this Debenture,
free of any claim of subordination, as and when the same shall become due and
payable (whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default is not cured, if possible to cure, within 5 days of
notice of such default sent by the Holder;

 

(ii)           the Company or any of its subsidiaries shall commence, or there
shall be commenced against the Company or any such subsidiary a case under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company 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 the Company or any subsidiary thereof or there
is commenced against the Company or any subsidiary thereof any such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of 60
days; or the Company or any subsidiary thereof is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60 days; or
the Company or any subsidiary thereof makes a general assignment for the benefit
of creditors; or the Company 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
the Company or any subsidiary thereof shall call a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts; or
the Company or any subsidiary thereof 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 the Company or any
subsidiary thereof for the purpose of effecting any of the foregoing; or

 

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(iii)          the Company shall fail to timely file all reports required to be
filed by it with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise required by
the Exchange Act.

 

(iv)          the material breach of any promise or representation in this
Debenture and or related representation or agreement made by the Company and or
any of its officers, which shall include, without limitation, the failure to
deliver shares of common stock due Holder on a conversion within three Business
Days from the date of conversion or sooner, which delivery must be otherwise
made per reasonable specifications of the Holder (e.g. to brokerage firm
account).

 

(b)           If any Event of Default occurs and is continuing, 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. The Holder need not
provide and the Company 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 and the
Holder shall have all rights as a Debenture holder until such time, if any, as
the full payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

 

(c)           If the Company fails to perform hereunder by delivering shares or
paying principal and or interest within 3 Business Days of said being due, then
for the first up to 30 calendar days from the due date of said performance, the
Company shall also owe payable immediately an amount equal to $1,000 per day as
a reasonable "Late Fee" in addition to any other damages and reasonable attorney
fees and costs payable, to cover, on a non accountable basis, the time, expense,
efforts and or distress of the Holder having to focus its management, advisors,
and counselors on the matter of the Company failing to honor its written
obligations, and said figure is deemed a reasonable liquidated damages provision
and is not an election of remedy and is non exclusive so the Holder can add and
pursue all rights otherwise.

 

Section 4. Conversion.

 

(a) (i) Holder's Conversion Right. At any time after the Date of Issuance until
this Debenture is no longer outstanding, this Debenture, including interest and
principal, shall be convertible into shares of Common Stock at a price of Sixty
Five Percent (65%) of the lowest traded VWAP, determined on the then current
trading market for the Company’s common stock, for 15 trading days prior to
conversion (the “Set Price”) at the option of the Holder, in whole at any time
and from time to time. The Holder shall effect conversions by delivering to the
Company the form of Notice of Conversion attached hereto as Exhibit B ("Notice
of Conversion"), specifying the date on which such conversion is to be effected
(a "Conversion Date"). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is provided hereunder. To effect conversions hereunder, the Holder shall not be
required to physically surrender Debentures to the Company. The Company shall
deliver any objection to any Notice of Conversion within TWO (2) Business Days
of receipt of such notice. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. If the Company does not request the issuance of the shares
underlying this Debenture after receipt of a Notice of Conversion within TWO (2)
Business Days following the period allowed for any objection, the Company shall
be responsible for any differential in the value of the converted shares
underlying this Debenture between the value of the closing price on the date the
shares should have been delivered and the date the shares are delivered. In
addition, if the Company fails to timely (within 72 hours, 3 business days),
deliver the shares per the instructions of the Holder, free and clear of all
legends in legal free trading form, the Company shall allow Holder to add two
(2) days to the lookback (the mechanism used to obtain the conversion price
along with discount) for each day the Company fails to timely (within 72 hours,
3 business days)) deliver shares, on the next conversion.

 

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The Holder and any assignee, by acceptance of this Debenture, acknowledge and
agree that, by reason of the provisions of this paragraph, following conversion
of a portion of this Debenture, the unpaid and unconverted principal amount of
this Debenture may be less than the amount stated on the face hereof. Any legal
opinion letter required to effectuate the issuance of the shares pursuant to
this Paragraph 4(a) and the Notice of Conversion shall be provided and issued by
Company. The Holder may use another attorney in its sole discretion for the
opinion. The parties hereby agree that the Company will cover all legal costs
associated with the issuance of the legal opinion letter to the Company’s
transfer agent.

 

(ii)           If the Company, at any time while this Debenture is outstanding:
(A) shall pay a stock dividend or otherwise make a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company pursuant to
this Debenture, including as interest thereon), (B) subdivide outstanding shares
of Common Stock into a larger number of shares, (C) combine (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares, or (D) issue by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then the Set Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding before such event and of
which the denominator shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

(iii)          Whenever the Set Price is adjusted pursuant to any of Section 4,
the Company shall promptly mail to each Holder a notice setting forth the Set
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.

 

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(iv)          If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Debentures, and shall
cause to be mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Debentures during the 20-day
period commencing the date of such notice to the effective date of the event
triggering such notice.

 

(v)          If, at any time while this Debenture is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental Transaction"),
then upon any subsequent conversion of this Debenture, the Holder shall have the
right to receive, for each share of common stock that would have been issuable
upon such conversion absent such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of one share of Common Stock
(the "Alternate Consideration"). For purposes of any such conversion, the
determination of the Set Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Set Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate consideration
it receives upon any conversion of this Debenture following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new debenture consistent with the foregoing
provisions and evidencing the Holder's right to convert such debenture into
Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
and insuring that this Debenture (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. If any Fundamental Transaction constitutes or results in a change
of control of the Company, then at the request of the Holder delivered before
the 90th day after such Fundamental Transaction, the Company (or any such
successor or surviving entity) will purchase the Debenture from the Holder for a
purchase price, payable in cash within 10 Trading Days after such request (or,
if later, on the effective date of the Fundamental Transaction), equal to the
130% of the remaining unconverted principal amount of this Debenture on the date
of such request, plus all accrued and unpaid interest thereon, plus all other
accrued and unpaid amounts due hereunder.

 

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(b)           The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock, sufficient
shares of Common Stock solely for the purpose of issuance upon conversion of
this Debenture, in accordance with the Irrevocable Transfer Agent Letter
attached as Exhibit A hereto. A

 

(c)           Any and all notices or other communications or deliveries to be
provided by the Holders hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, sent by
a nationally recognized overnight courier service, addressed to the Company, at
the address set forth above or such other address or facsimile number as the
Company may specify for such purposes by notice to the Holders delivered in
accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Company, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

 

(d)           Notwithstanding anything to the contrary herein contained, the
Holder may not convert this Debenture to the extent such conversion would result
in the Holder, together with any affiliate thereof, beneficially owning (as
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules promulgated thereunder) in
excess of 4.99% of the then issued and outstanding shares of Common Stock,
including shares issuable upon such conversion and held by the Holder after
application of this section. The provisions of this section may be waived by the
Holder (but only as to itself and not to any other Holder) upon not less than 61
days prior notice to the Company. Other Holders shall be unaffected by any such
waiver.

 

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Section 5. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture:, the following terms shall have the
following meanings:

 

"Business Day" means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

 

"Common Stock" means the common stock of the Company and stock of any other
class into which such shares may hereafter have been reclassified or changed.

 

"Person" means a corporation, an association, a partnership, organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.

 

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

"Set Price" shall have the meaning set forth in Section 4.

 

Section 6. Except as expressly provided herein, no provision of this Debenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This Debenture is a direct debt obligation of the Company.
This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. As long as this Debenture is
outstanding, the Company shall not and shall cause it subsidiaries not to,
without the consent of the Holder, (a) amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holder; (b) repay, repurchase or offer to repay, repurchase or otherwise acquire
more than a de minimis number of shares of its Common Stock or other equity
securities other than as to the shares of Common Stock underlying this Debenture
or as otherwise permitted by this Debenture; or (c) enter into any agreement
with respect to any of the foregoing.

 

Section 7. If this Debenture shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.

 

Section 8. So long as any portion of this Debenture is outstanding, 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 without
the prior consent of the Holder, which consent shall not be unreasonably
withheld.

 

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Section 9. All questions concerning the construction, validity, enforcement and
interpretation of this Debenture shall be governed by and construed and enforced
in accordance with the internal laws of the State of Florida, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Debenture (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in Broward County (the "Florida Courts"). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the Florida Courts for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of this Debenture), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or such Florida Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Debenture
and agrees that such Service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Debenture or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of this
Debenture, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred

with the investigation, preparation and prosecution of such action or
proceeding.

 

Section 10. Any waiver by the Company or the Holder of a breach of any provision
of this Debenture shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

 

Section 11. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

 

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Section 12. Whenever any payment or other obligation hereunder shall be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day.

 

 

 

IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.

 

  3DIcon Corporation       By:       Victor F. Keen   CEO

 

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