Exhibit 10.23

 

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

 

No. 09  - -   

 US$ 1,440,000

                                         

 

OMNICOMM SYSTEMS, INC.

 

12% CONVERTIBLE DEBENTURE SERIES 09

DUE June 30, 2011

 

FOR VALUE RECEIVED, OMNICOMM SYSTEMS, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), promises to pay to
                          or its assigns as the registered holder hereof (the
"Holder"), the principal sum of ONE MILLION FOUR HUNDRED FORTY THOUSAND and
00/100 Dollars (US ) on June 30, 2011 (the “Maturity Date”) and to pay interest
on the principal sum outstanding from time to time in arrears at the rate of 12%
per annum, accruing from the date of initial issuance of this Debenture (the
“Issue Date”), on the date (each, an “Interest Payment Date”) which is the
earlier of (i) the next Conversion Date (as defined below), (ii) the date which
is one month from the Issue Date and every one month thereafter, or (iii) the
Maturity Date, as the case may be. Interest shall accrue monthly (pro-rated on a
daily basis for any period longer or shorter than a month) from the later of the
Issue Date or the previous Interest Payment Date and shall be payable, subject
to the other provisions of this Debenture, in cash or in Common Stock at the
option of the Holder. If not paid in full on an Interest Payment Date, interest
shall be fully cumulative and shall accrue on a daily basis, based on a 365-day
year, and compound monthly until paid. Additional provisions regarding the
payment of interest are provided in Section 4(D) below (the terms of which shall
govern as if this sentence were not included in this Debenture).

 

This Debenture is subject to the following additional provisions:

 

1.     The Debentures will initially be issued in denominations determined by
the Company, but are exchangeable for an equal aggregate principal amount of
Debentures of different denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration or transfer or
exchange.

 

2.     The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

 

 
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3.     This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a new
Debenture in the name of such other person, that it receive reasonable transfer
documentation that is sufficient to evidence that such proposed transfer
complies with the Act and other applicable state and foreign securities laws and
the terms of the Securities Purchase Agreement between the Company, the Holder
and the other parties to the Securities Purchase Agreement of even date herewith
(Securities Purchase Agreement”). Prior to due presentment 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 on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.

 

4.     A.       (i) At any time on or after the Issue Date and prior to the time
this Debenture is paid in full in accordance with its terms (including, without
limitation, after the occurrence of an Event of Default, as defined below, or,
if the Debenture is not fully paid or converted after the Maturity Date), the
Holder of this Debenture is entitled, at its option, subject to the following
provisions of this Section 4, to convert this Debenture at any time into shares
of Common Stock, $0.001 par value ("Common Stock"), of the Company at the
Conversion Price (as defined below). Any such conversion is referred to as a
“Voluntary Conversion.”

 

(ii) On the Maturity Date the Company shall pay the principal and accrued
interest (through the actual date of payment) of any portion of this Debenture
which is then outstanding.

 

(iii) For purposes of this Debenture, the following terms shall have the
meanings indicated below:

 

“Conversion Price” means the Fixed Conversion Price or the Interest Conversion
Price, as the case may be.

 

“Conversion Shares” has the meaning ascribed to in Section 4(D)(iii) hereof.

 

“Fixed Conversion Price” means initially $0.25 (which amount is subject to the
adjustment provisions specified in Section 4(g) of the Securities Purchase
Agreement).

 

“Interest Conversion Price” means (i) the VWAP for the ten (10) Regular Trading
Days ending on the Trading Day immediately before the relevant Conversion Date,
multiplied by (ii) ninety percent (90%).

 

“Regular Trading Day,” “Reporting Service,” “Trading Day,” and “VWAP” have the
meanings ascribed to them in the Securities Purchase Agreement. “Conversion
Date” means the date on which the Holder faxes or otherwise delivers a Notice of
Conversion to the Company so that it is received by the Company on or before
such specified date.

 

 
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B.     A Voluntary Conversion shall be effectuated by the Holder by faxing a
notice of conversion (“Notice of Conversion”) to the Company as provided in this
paragraph. The Notice of Conversion shall be executed by the Holder of this
Debenture and shall evidence such Holder's intention to convert this Debenture
or a specified portion hereof in the form annexed hereto as Exhibit A. Delivery
of the Notice of Conversion shall be accepted by the Company by hand, mail or
courier delivery at the address specified in said Exhibit A or at the facsimile
number specified in said Exhibit A (each of such address or facsimile number may
be changed by notice given to the Holder in the manner provided in the
Securities Purchase Agreement).

 

C.     (i) Subject to the terms of this Section 4(C), interest on the principal
amount of this Debenture payable on an Interest Payment Date shall be due and
payable, at the option of the Holder, in cash or in shares of Common Stock on
the Interest Payment Date.

 

(ii) If the interest payable hereunder is to be paid in cash, the Company shall
make such payment within three (3) Trading Days after the Interest Payment Date.

 

(iii) If interest is to be paid in Common Stock, the number of shares of Common
Stock to be received shall be determined by dividing the dollar amount of the
interest by Interest Conversion Price in effect on the relevant Interest Payment
Date.

 

D.     (i) The following provisions apply to the issuances of Common Stock in
payment of the amounts due under this Debenture, whether as principal or
interest, as provided in the preceding provisions of this Section 4.

 

(ii) No fractional shares of Common Stock 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.

 

(iii) All shares issuable with respect to a Conversion Date or an Interest
Payment Date shall be deemed “Conversion Shares” for all purposes of this
Debenture. Certificates representing the relevant Conversion Shares (“Conversion
Certificates”) will be delivered to the Holder at the address specified in the
relevant Notice of Conversion. which address the Holder may change from time to
time, via express courier, by electronic transfer or otherwise, within three (3)
Trading Days (such third Trading Day, the “Delivery Date”) after the relevant
Conversion Date. The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the relevant provisions of this Debenture on
the Conversion Date or Interest Payment Date, as the case may be.

 

E.     Except as may be specified in a specific provision of this Debenture, any
payments under this Debenture shall be applied in the following order of
priority: (i) first to amounts due to the Holder for accrued but unpaid interest
on this Debenture; and (ii) then, to principal of this Debenture.

 

 
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5.     No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency or where contemplated herein in shares of its Common Stock, as
applicable, as herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.

 

6.     No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released. Notwithstanding the forgoing, it is expressly
understood and agreed between the Company and the Holder that the Holder is not
waiving any rights or remedies it may have as a result of any fraud, gross
negligence or malfeasance on the part of any incorporator, shareholder, officer
or director of the Company or any successor corporation.

 

7.     All payments contemplated hereby to be made “in cash” shall be made in
immediately available good funds of United States of America currency by wire
transfer to an account designated in writing by the Holder to the Company (which
account may be changed by notice similarly given). All payments of cash and each
delivery of shares of Common Stock issuable to the Holder as contemplated hereby
shall be made to the Holder at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder from time to
time; except that the Holder can designate, by notice to the Company, a
different delivery address for any one or more specific payments or deliveries.

 

8.     If, for as long as this Debenture remains outstanding, the Company enters
into a merger (other than where the Company is the surviving entity) or
consolidation with another corporation or other entity or a sale or transfer of
all or substantially all of the assets of the Company to another person
(collectively, a "Sale"), the Company will require, in the agreements reflecting
such transaction, that the surviving entity expressly assume the obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company enters into
a Sale 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 Sale, the Company and any such successor, purchaser or
transferee will agree that the Debenture 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. In the event of any such proposed Sale, (i)
the Holder hereof shall have the right to convert by delivering a Notice of
Conversion to the Company within fifteen (15) days of receipt of notice of such
Sale from the Company, except that Section 4(C) shall not apply to such
conversion.

 

9.     If, at any time while any portion of this Debenture remains outstanding,
the Company spins off or otherwise divests itself of a part of its business or
operations or disposes of all or of a part of its assets in a transaction (the
“Spin Off”) in which the Company, in addition to or in lieu of any other
compensation received and retained by the Company for such business, operations
or assets, causes securities of another entity (the “Spin Off Securities”) to be
issued to security holders of the Company, the Company shall cause (i) to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the Holder’s Debentures outstanding on the
record date (the “Record Date”) for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the “Outstanding
Debentures”) been converted as of the close of business on the Trading Day
immediately before the Record Date (the “Reserved Spin Off Shares”), and (ii) to
be issued to the Holder on the conversion of all or any of the Outstanding
Debentures, such amount of the Reserved Spin Off Shares equal to (x) the
Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the
numerator is the principal amount of the Outstanding Debentures then being
converted, and (II) the denominator is the principal amount of the Outstanding
Debentures.

 

 
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10.     If, at any time while any portion of this Debenture remains outstanding,
the Company effectuates a stock split or reverse stock split of its Common Stock
or issues a dividend on its Common Stock consisting of shares of Common Stock,
the prices used in determining the Conversion Price from dates prior to such
action or and any other fixed amounts calculated as contemplated hereby or by
any of the other Transaction Agreements shall be equitably adjusted to reflect
such action.

 

11. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.

 

12.     This Debenture shall be governed by and construed in accordance with the
laws of the State of Florida for contracts to be wholly performed in such state
and without giving effect to the principles thereof regarding the conflict of
laws. Each of the parties consents to the exclusive jurisdiction of the federal
courts whose districts encompass any part of the County of Broward or the state
courts of the State of Florida sitting in the County of Broward 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 coveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Holder for
any reasonable legal fees and disbursements incurred by the Holder in
enforcement of or protection of any of its rights under any of this Debenture.

 

 
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13.     JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out of or in
connection with this Debenture.

 

14.     The term "Event of Default" means the occurrence of any one or more of
the following events:

 

 

a.

The Company shall default in the payment of principal or interest on this
Debenture or any other amount due hereunder when due and such default, shall
continue for a period of five (5) Trading Days; or

 

 

b.

Any of the representations or warranties made by the Company herein, or in any
certificate or financial or other written statements heretofore or hereafter
furnished by the Company in connection with the execution and delivery of this
Debenture or the Securities Purchase Agreement shall be false or misleading in
any material respect at the time made; or

 

 

c.

The Company fails to authorize or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Debenture (provided, however, that for
purposes of this provision, such failure to cause the Transfer Agent to issue
such shares shall not be deemed to occur until two (2) Trading Days after the
Delivery Date), fails to transfer or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon conversion of
this Debenture and when required by this Debenture, and such transfer is
otherwise lawful, or fails to remove any restrictive legend on any certificate
or fails to cause its Transfer Agent to remove such restricted legend, in each
case where such removal is lawful, as and when required by this Debenture, and
any such failure shall continue uncured for ten (10) Trading Days; or

 

 

d.

The Company shall fail to perform or observe, in any material respect, any other
covenant, term, provision, condition, agreement or obligation of this Debenture
(other than a failure to pay money) and such failure shall continue uncured for
a period of ten (10) days after the Company’s receipt written notice from the
Holder of such failure, or the Company 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 any the Transaction Agreements (as such
term is defined in the Securities Purchase Agreement) which is not cured with in
the time prescribed; or

 

 
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e.

The Company shall (1) admit in writing its inability to pay its debts generally
as they mature; (2) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (3) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial part of its
property or business; or

 

 

f.

A trustee, liquidator or receiver shall be appointed for the Company or for a
substantial part of its property or business without its consent and shall not
be discharged within sixty (60) days after such appointment; or

 

 

g.

Any governmental agency or any court of competent jurisdiction at the instance
of any governmental agency shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company and shall not be
dismissed within sixty (60) days thereafter; or

 

 

h.

Bankruptcy, reorganization, insolvency or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Company and, if instituted against
the Company, shall not be dismissed within sixty (60) days after such
institution or the Company shall by any action or answer approve of, consent to,
or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in any such proceeding; or

 

If an Event of Default shall have occurred and is continuing, then, unless and
until such Event of Default shall have been cured or waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent
default), at the option of the Holder and in the Holder’s sole discretion, but
without further notice from the Holder, the unpaid amount of this Debenture,
computed as of such date, will bear interest at the rate (the “Default Rate”)
equal to eighteen percent (18%) per annum or the highest rate allowed by law,
whichever is lower, from the date of the Event of Default to until and including
the date actually paid; and any partial payments shall be applied as provided in
Section 4(I) hereof. In addition, the Holder shall have the option to declare
that all principal and accrued interest under this Debenture is immediately due
and payable and the Holder shall have the rights to any remedies expressly
provided under the Security Agreement.

 

15. Ranking; Seniority. This Debenture is a direct obligation of the Company.
This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. Except as referenced in Sections 3(s)
of the Securities Purchase Agreement and an amount not exceeding $500,000, 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. Without the Holder’s consent, the Company will not and will not
permit any of their 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 there from that is senior in any
respect to the obligations of the Company under this Debenture.

 

 
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16. Nothing contained in this Debenture shall be construed as conferring upon
the Holder the right to vote or to receive dividends or to consent or receive
notice as a shareholder in respect of any meeting of shareholders or any rights
whatsoever as a shareholder of the Company, unless and to the extent converted
in accordance with the terms hereof.

 

17. In the event for any reason, any payment by or act of the Company or the
Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation of the law of the jurisdiction applicable to
this Debenture, then ipso facto the obligation of the Company to pay interest or
perform such act or requirement shall be reduced to the limit authorized under
such law, so that in no event shall the Company be obligated to pay any such
interest, perform any such act or be bound by any requirement which would result
in the payment of interest in excess of the limit so authorized. In the event
any payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest free prepayment of this
Debenture. If any part of such excess remains after the principal has been paid
in full, whether by the provisions of the preceding sentences of this Section or
otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section shall control every other provision
of this Debenture.

 

18. All terms not otherwise defined herein shall have the meaning ascribed to
them in the Securities Purchase Agreement.

 

 
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized.

 

Dated: December 31, 2009

 

OMNICOMM SYSTEMS, INC.

 

 

By:_______________________________________

Ronald T. Linares, Chief Financial Officer

 

 
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EXHIBIT A

 

OMNICOMM SYSTEMS, INC.

 

NOTICE OF CONVERSION

OF

12% CONVERTIBLE DEBENTURE SERIES 09 DUE June 30, 2011

(To be Executed by the Registered Holder in Order to Convert the

Debenture)

 

TO:         OMNICOMM SYSTEMS, INC .     VIA FAX: (954) 473-1256

2101 W. Commercial Blvd., Suite 4000

Ft. Lauderdale, FL 33309

Attn: Chief Financial Officer

 

FROM: (“Holder”)

 

DATE: _______________________________________________ (the “Conversion Date”)

 

RE: Conversion of $_________________ principal amount (the “Converted
Debenture”) of the 12% Convertible Debenture Series 09 Due June 30, 2011, No.
09- - (the “Debenture”) of OMNICOMM SYSTEMS, INC. (the “Company”) into _______
shares (the “Principal Conversion Shares”) of Common Stock (defined below)

 

The captioned Holder hereby gives notice to the Company, pursuant to the
Debenture of OMNICOMM SYSTEMS, INC. that the Holder elects to convert the
Converted Debenture into fully paid and non-assessable shares of Common Stock,
$0.001 par value (the “Common Stock”), of the Company as of the Conversion Date
specified above. Said conversion shall be based on Conversion Price of $0.25.

 

 
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As contemplated by the Debenture, the Company should also pay all accrued but
unpaid interest on the Converted Debenture to the Holder. The Holder elects that
such accrued but unpaid interest should be paid

 

■

in ______________ shares of Common Stock (“Interest Conversion Shares”),
representing such interest amount converted at the Interest Conversion Price of
$_____________, which Interest Conversion Shares should be delivered together
with the Principal Conversion Shares, or

 

 

■

in cash, which should be paid as provided in the Debenture by wire transfer as
follows:1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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1Information should include the following:

All Wires:

(1) Bank Name

(2) Bank Address (including street, city, state)

(3) ABA or Wire Routing No.

(4) Account Name

(5) Account Number

If Wire is going to International (Non-US) Bank, all of the above plus:

(6) SWIFT Number

 

 
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Based on the relevant Conversion Prices, the number of Principal Conversion
Shares plus Interest Conversion Shares (collectively, “Conversion Shares”)
indicated above should be issued in the following name(s):

 

 

Name and Record Address

 

Conversion Shares

   

 

       

 

       

 

     

 

 

As contemplated by the Debenture, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.

 

If this Notice of Conversion represents the full conversion of the outstanding
balance of the Converted Debenture, the Holder either (1) has previously
surrendered the Converted Debenture to the Company or (2) will surrender (or
cause to be surrendered) the Converted Debenture to the Company at the address
indicated above by express courier within five (5) Trading Days after delivery
or facsimile transmission of this Notice of Conversion.

 

The certificates representing the Conversion Shares should be transmitted by the
Company to the Holder

 

 

■

via express courier, or

 

■

by electronic transfer

 

within the time contemplated by the Debenture after receipt of this Notice of
Conversion (by facsimile transmission or otherwise) to:

 

 

 

 

 

 

 

 

 

 

 

                (Print name of Holder)  

 

 

 

 

 

By:

 

 

 

 

(Signature of Authorized Person)

 

 

 

 

 

 

 

 

 

         

(Printed Name and Title)

       

(Printed Name and Title)

       

 

 

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