EXHIBIT 10.5
WHITELIGHT TECHNOLOGIES, INC.
Debenture
Date: May 12, 2004
FOR VALUE RECEIVED, Whitelight Technologies, Inc., a Nevada corporation
(hereinafter called Borrower), hereby promises to pay to Trymetris Capital
Fund I, LLC (hereinafter called the Holder) or order the sum of TWO HUNDRED
THOUSAND DOLLARS ($200,000) and to pay interest thereon at the rate of TEN
PERCENT (10%) per annum from the date hereof until paid. Principal and all
accrued and unpaid Interest shall be payable at maturity on November 12,
2004, or on the date that the Borrower raises equity and or debt funding in
an aggregate amount in excess of $1,500,000, whichever first occurs.
Both principal hereof and interest thereon are payable in lawful money of
the United States of America at the direction of Holder, or at 170 Newport
Center Dr., Suite 210, Newport Beach, CA 92660. The securities represented
hereby have not be registered under the Securities Act of 1933 (the Act) or
any state securities laws and may not be resold, transferred, pledged,
hypothecated, or otherwise assigned until (1) the Borrower has received
from any registered Holder's counsel an opinion satisfactory to Borrower
that such transfer can be made without compliance with registration
provisions of the Act and without the necessity of perfection of an
exemption pursuant to Regulation A adopted pursuant to the Act, or
(2) Borrower and any registered Holder(s) shall have complied with Rule 144
promulgated under the Act, or (3) a registration statement filed by
Borrower is declared effective (or steps necessary to perfect an exemption
under Regulation A are completed).
Article One
Equity Consideration
1.1 Equity Consideration. As and for additional consideration for
purchasing this Debenture, the Holder shall receive 100,000 shares of
$.001 par value common shares of stock ("Stock") of the Borrower. The
Stock shall be issued within ten days of the date of this Debenture.
Article Two
Prepayment
2.1 Prepayment. This Debenture shall be subject to prepayment, in whole
or in part, prior to maturity at the option of Borrower and upon 10
days written notice to the Holder hereof, at a prepayment price equal
100 percent of the principal amount to be prepaid plus interest to the
prepayment date. In the case of partial prepayment, the amount and
other details thereof shall not be noted on this Debenture.
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Article Two
Representations and Warranties
Borrower represents and warrants that:
3.1 Existence and Rights. Borrower is a corporation duly organized and
existing under the laws of Nevada without limit as to the duration of
its existence, and is authorized and in good standing to do business
in Nevada and California; Borrower has corporate powers and adequate
authority, rights, and franchises to own its property and to carry on
its business as now conducted and is duly qualified and in good
standing in each state in which the character of the properties owned
by it therein or the conduct of its business makes such qualification
necessary; and Borrower has the corporate power and adequate authority
to issue this Debenture and the underlying shares of Common Stock.
3.2 Debenture Authorized. The execution and delivery of this Debenture
and the performance of the provisions of this Debenture are not in
contravention of or in conflict with any law or regulation or any term
or provision of Borrower's articles of incorporation or by-laws and
are duly authorized and do not require the consent or approval of any
governmental body or other regulatory authority; and this Debenture is
the valid, binding, and legally enforceable obligations of Borrower in
accordance with the terms therein.
3.3 No Conflict. The execution, delivery, and performance of this
Debenture are not in contravention of or conflict with any agreement,
indenture, or undertaking to which Borrower is a party or by which is
or any of its property may be bound or affected and does not cause any
lien, charge, or other encumbrance to be created or imposed upon any
such property by reason thereof.
3.4 Litigation. There is no litigation or other proceeding pending or
threatened against or which affect the Borrower, and the Borrower is
not in default with respect to any order, writ, injunction, decree, or
demand of any court or other governmental or regulatory authority.
3.5 Financial Condition. Its consolidated and consolidating financial
statements and all factual information provided by Borrower to Holder
are true and correct. Since the date of the last of such statements,
there has been no materially adverse change in its consolidated
financial condition or operations, nor it is aware of any pending,
threatened, or probable litigation or other circumstance not reflected
in said statement that might create such a materially adverse change.
3.6 Conduct of Business. The business of the Borrower has been conducted
in full compliance with all applicable federal, state, and local laws.
3.7 Shares Outstanding. As of the date hereof, the Borrower's authorized
Capital Stock consists of 100,000,000 shares of $.001 par value Common
Stock, of which 1,100,000 shares are outstanding and 3,250,000 have
been authorized for issuance, including the
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100,000 shares pursuant to this Debenture. There are not other shares
of Common or Preferred Stock reserved for issuance or subject to any
agreement, right, option, or warrant with respect to the sale or
issuance thereof by borrower.
3.8 Subsidiaries of Borrower. Each subsidiary of Borrower is a
corporation duly organized and existing under the laws of the
jurisdiction of its incorporation without limit as to the duration of
its existence and is duly qualified and in good standing in each
jurisdiction in which the character of the properties owned by it
therein or the conduct of its business makes such qualification
necessary.
Article Four
Borrower's Affirmative Covenants
Borrower aggress that until this Debenture is paid in full, Borrower (and
each subsidiary of Borrower unless the context otherwise requires) will:
4.1 Maintain Corporate Rights and Facilities. Maintain and preserve its
corporate existence and all rights, franchises, and other authority
adequate for the conduct of its business; maintain its properties,
equipment, and facilities in good order and repair and conduct its
business in an orderly manner without voluntary interruption.
4.2 Maintain Insurance. Maintain public liability, property damage, and
workers' compensation insurance and insurance on all its insurable
property against fire and other hazards with responsible insurance
carriers to the extent usually maintained by companies in the same
business.
4.3 Pay Taxes and Other Liabilities. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes,
assessments, and governmental charges upon or against it or any of its
properties, and all its other material liabilities at any time
existing, except to the extent and so long as (a) the same are being
contested in good faith and by appropriate proceedings in such manner
as not to cause any materially adverse effect upon its financial
condition or the loss of any right of redemption from any sale
thereunder; and (b) it shall have set aside on its books reserves
(segregated to the extent required by sound accounting practice)
deemed by it adequate with respect thereto; and pay all governmental
charges or taxes at any time payable or ruled to be payable in respect
of any existing or hereafter enacted federal or state statute, and
indemnify and hold Holder harmless against liability in connection
with any such charges or taxes.
4.4 Net Worth. Maintain consolidated, effective, tangible net worth
(meaning the excess of all assets, excluding any value for good will,
trademarks, patents, copyrights, organization expense, appraisal,
surplus, or excess cost over related net assets of business acquired
and other similar intangible items, over all liabilities excluding
therefrom indebtedness of Borrower, in substance and form satisfactory
to Holder, to indebtedness of Borrower, in substance and form
satisfactory to Holder, to indebtedness of Borrower represented by the
Debenture).
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4.5 Records and Reports. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles
and on a consistent basis; permit representatives of Holder, as long
as it holds this Debenture or any securities acquired upon conversion
of this Debenture, to have access to and to examine its properties,
books, and records at all reasonable times; furnish Holder, as long as
it holds this Debenture or any securities acquired upon conversion of
this Debenture:
A. As soon as available and in any event within 10 days after the
close of each month, a balance sheet of Borrower as of the end of
such month and a profit and loss statement for the portion of
Borrower's fiscal year ending with the last day of such month,
all in reasonable detail, prepared and certified by an authorized
financial officer of Borrower as fairly presenting the financial
condition as of the balance sheet date and results of operations
for the period then ended, in accordance with generally accepted
accounting principles on a basis consistently applied;
B. As soon as available and in any event within 30 days after the
close of each fiscal year of Borrower, a certificate in a form
satisfactory to Holder of the chief executive officer of
Borrower, stating that Borrower has performed and observed each
and every covenant contained in this Debenture to be performed by
it and that no event has occurred and no condition exists which
constitutes an Event of Default hereunder or would constitute
such an Event of Default upon the lapse of time or upon the
giving of notice and the lapse of time specified herein; or, if
any such event occurred or any such condition exists, specifying
the nature thereof;
C. The foregoing statements on a Consolidated Basis, and Holder
shall be provided consolidating statements in support thereof;
D. Within 15 days after the end of each quarter and 30 days after
the end of each fiscal year of Borrower, a certificate in a form
satisfactory to Holder of the chief executive officer of Borrower
has performed and observed each and every covenant contained in
this Debenture to be performed by it and that no event has
occurred and no condition then exists which constitutes and Event
of Default hereunder or would constitute such an Event of Default
upon the lapse of time or upon the giving of notice and the lapse
of time specified herein; or, if any such event has occurred or
any such condition exists, specifying the nature thereof;
E. Promptly after the receipt thereof by Borrower, copies of any
detailed audit reports submitted to Borrowers by independent
accountants in connection with each annual or interim audit of
the accounts of Borrower made by such accountants;
F. Promptly after the same are available, copies of all proxy
statements, financial statements, and reports as Borrower shall
send to its stockholders and copies of all reports which Borrower
may file with the Securities and Exchange Commission or any
governmental authority at any time substituted thereof;
G. Such information concerning Borrower as may be required or
requested by Holder for the purpose of enabling Holder to file
such forms and reports as Holder may be required to file with
regulatory agencies or governmental authorities; and
H. Such other information relating to the affairs of Borrower as
Holder reasonably may request from time to time.
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4.6 Notice of Litigation and Disputes. Promptly notify the Holder of any
suits or litigation instituted against the Borrower or disputes that
have a high probability of resulting in a suit of significance against
the Borrower.
4.7 Notice of Default. Promptly notify the Holder of this Debenture in
writing of the occurrence of any Event of Default hereunder or of any
event which would become an Event of Default hereunder upon the lapse
of time specified in this Debenture.
4.8 Conduct of Business. Conduct the business of Borrower in accordance
with all applicable provisions of federal, state and local law,
including but not limited to ERISA.
4.9 Directors' Meetings. Hold meetings of the board of directors of the
Borrower no less frequently than once each month; give Holder not less
than three days' prior notice of the time and place of each such
meeting and permit a representative of the Holder of the Debenture to
attend the same.
Article Five
Borrower's Negative Covenants
Borrower agrees that until this Debenture is repaid, Borrower (and each
subsidiary of Borrower unless the context otherwise requires) will not:
5.1 Changes in Type of Business. Make any substantial change in the
character of its business.
5.2 Outside Indebtedness. Without the prior written consent of Holder,
create, incur, assume, or permit to exist any material indebtedness
for borrowed moneys other than indebtedness evidenced by this
Debenture, indebtedness to banks, and indebtedness secured by security
interests in Borrower's equipment for the purchase of such equipment
in an amount in excess of $5,000.
5.3 Liens and Encumbrances. Create, incur, or assume any material
mortgage, pledge, encumbrance, lien, or charge of any kind (including
the charge upon the property at any time purchased or acquired under
conditional sale or other title retention agreement) upon any property
or other asset now owned or hereafter acquired by it, other than liens
for current taxes not delinquent and security interests and liens
securing indebtedness permitted under Section 5.2.
5.4 Loans, Investments, Secondary Liabilities. Make any loans or advances
to pay any person or other entity other than in the ordinary and
normal course of its business as now conducted or make any investments
in the securities of any person or other entity other than the United
States Government; or guarantee or otherwise become liable upon the
obligation of any person or other entity, except by endorsement of
negotiable instruments for deposit or collection in the ordinary and
normal course of its business, and except for guarantees and similar
liabilities by Borrower on behalf of any subsidiary of Borrower or
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any subsidiary on behalf of Borrower or any other subsidiary of
Borrower, provided such guarantees are brought to Holder's attention
when granted, and such guarantees are for indebtedness which is
indebtedness consolidated and included in determination of compliance
with Sections 5.2 and 5.3.
5.5 Acquisition or Sale of Business, Merger or Consolidation. Purchase or
otherwise acquire the assets or business of any person or other
entity; or liquidate, dissolve, merge, or consolidate or commence any
proceedings therefore; or sell any assets except in the ordinary and
normal course of its business as now conducted; or sell, lease,
assign, or transfer any substantial part of its business or fixed
assets or any property or other assets necessary for the continuance
of its business as now conducted, including without limitation the
selling of any property or other assets necessary for the continuance
of its business as now conducted, including without limitation the
selling of any property or other asset accompanied by the leasing back
of the same, or undergo a substantial (prima facia in excess of 25
percent) change in share ownership, whether by tender offer or
Borrower negotiation in any single or related series of transactions.
5.6 Issuance of Shares, Dividends, Stock Payments. Except as to the
current Private Offering by the Borrower, of 2,000,000 shares at $.75
per share, (the "Offering") declare or pay any dividend or make or
authorize any other distribution on its capital stock now outstanding
or hereafter issued; or purchase or otherwise acquire or redeem or
retire any of such stock; or, unless approved by the Holder, issue or
authorize the issuance of any such stock of any kind or class except
as required to meet the Borrower's obligations under the Debenture; or
reclassify or subdivide or authorize the reclassification or
subdividing of any such stock.
5.7 Employment Contracts. Enter into or assume any employment or
consulting contracts for officers or other management employees, or
amend or modify existing employment or consulting contracts in any
manner which will increase employee benefits thereunder.
5.9 By-Laws. The Borrower will not change its corporate by-laws without
the prior approval of the Holder.
Article Six
Events of Default
The occurrence of any of the following Events of Default shall, at the
option of the Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately
due and payable, all without demand, presentment, or notice, all of which
hereby are expressly waived:
6.1 Failure to Pay Principal or Interest. Failure to pay any installment
of principal or interest hereon when due and continuance thereof for a
period of five days after written notice to Borrower from Holder.
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6.2 Breach of Covenant. The breach of any covenant or other term or
condition of this Debenture and continuance thereof for a period of 10
days after written notice to Borrower from Holder.
6.3 Breach of Representations and Warranties. Any of Borrower's
representations or warranties made herein or any statement or
certificate at any time given in writing pursuant hereto or in
connection herewith being false or misleading in any material respect.
6.4 Insolvency; Receiver or Trustee. Borrower's becoming insolvent or
admitting in writing its inability to pay its debts as they mature; or
making an assignment for the benefit of creditors; or applying for or
consenting to the appointment of a receiver or trustee for it or for a
substantial part of its property or business; or such a receiver or
trustee otherwise being appointed.
6.5 Judgments. Any material money judgment, writ, or similar process
being entered or filed against Borrower or any of its property or
other assets and remaining unvacated, unbonded, or unstayed for a
period of ten days or in any event later than five days prior to the
date of any proposed sale thereunder.
6.6 Bankruptcy. Bankruptcy, insolvency, reorganization, liquidation
proceedings, or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors being instituted by or against
borrower.
6.7 Attachments. Any material writ of attachment being levied against any
property or other assets of Borrower and Borrower not posting a bond
for the release of such attachment.
6.8 Default on Other Loan Agreements. Failure to pay when due any other
material obligation for money borrowed or dividend or redemption
payments or defaulting under any other agreement or obligation
involving the borrowing of money or the advance of credit.
6.9 Change in Senior Management. A change in senior management of
Borrower which Holder reasonably determines to be material and
detrimental.
Article Seven
Conversion
The Holder of this Debenture shall have the right from and after the date
hereof and then at any time on or prior to 18 months from the date hereof,
to convert any portion of this Debenture up to the maximum allowed as in
Paragraph 2.1 into fully paid and nonassessable shares of Capital Stock of
Borrower offered pursuant to the Offering. "Capital Stock" shall mean the
common voting stock of Borrower offered and issued pursuant to the
Offering. Upon the surrender hereof, accompanied by such Holder's written
request for conversion, Borrower shall pay within 10 days all interest
accrued hereon to the date of conversion and issue and deliver to such
Holder certificates evidencing such shares of stock as hereinafter set
forth. If a portion is converted,
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Borrower shall deliver to the Holder a certificate for the proper number of
shares of stock for the portion converted and a new Debenture in the form
hereof for the balance of the principal amount hereof. Upon transfer of
this Debenture, the then unexercised conversion or purchase right set forth
in this Article Seven shall inure to the transferees in proportion to their
respective interests in remaining principal, or as Holder shall allocate
said conversion or purchase right.
7.1 Conversion Price. Subject to readjustment as provided in paragraph
7.3 hereof, each debenture dollar will be convertible into Offering
Capital Stock at $0.75 per share.
7.2 Adjustment of Conversion Terms. The Conversion Price and number of
shares to be issued upon conversion or purchase determined pursuant to
paragraph 7.1 shall not be subject to any adjustment, and shall only
be convertible into Capital Stock offered and sold in the Offering.
7.3 Cash Distribution. No adjustment on account of cash dividends or
interest on Capital Stock or other securities purchasable hereunder
will be made to the Conversion Price.
7.4 Fractional Shares. No fractional shares of Capital Stock will be
issued in connection with any conversion or purchase hereunder but in
lieu of such fractional shares, Borrower shall make a cash payment
therefore upon the basis of the Conversion Price then in effect.
7.5 Authorized Shares. Borrower covenants that during the period the
conversion or purchase right exists, Borrower will reserve from its
authorized and unissued Capital Stock a sufficient number of shares to
provide for the issuance of Capital Stock upon the conversion of this
Debenture. Borrower agrees that its issuance of this Debenture shall
constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the
necessary certificates for shares of Capital Stock upon the conversion
of this Debenture or purchase of shares pursuant hereto.
7.6 Method of Conversion. This Debenture may be converted by the Holder in
whole or in part by the surrender of this Debenture at the principal
office of the Borrower. Upon partial exercise hereof, a new Debenture
containing the same date and provisions of this Debenture shall be
issued by the Borrower to said Holder for the remaining principal
balance and the number of shares of Capital Stock with respect to
which this Debenture shall not have been converted.
Article Eight
Registration
8.1 Investment Representation. Holder hereby represents and warrants that
it has acquired this Debenture and the Securities set forth in Section
1.1 for purpose of investment and with no present intent to sell or
distribute the same.
8.2 Definitions. The following constitute definitions of certain of the
terms used in this Article Eight:
A. Act means the Securities Act of 1933 as amended.
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B. Commission means the Securities and Exchange Commission.
C. Securities means the Debenture and any of the shares issuable
upon the conversion thereof.
8.3 Registration Initiated by Others. The Borrower agrees that it will
give at least 45 days' prior written notice to all Holders of its
intention to file any registration statement covering any of its
Securities and will afford Holders the opportunity to register their
holdings of Securities thereunder and to take advantage, to a
reasonable extent, of all blue-sky qualifications effected by the
Borrower in connection therewith, upon receiving request for such
registration within 15 days thereafter. The costs and expenses of
registration statements to be filed by the Borrower as provided in
this Section 8.3 upon request or requests made to the Borrower shall
be borne by the Borrower.
8.4 Restriction on Transfer. No Holder shall transfer any Securities
until (a) the Borrower has received from Holder's counsel an opinion
satisfactory to Borrower that such transfer can be made without
compliance with the registration provisions of the Act and without the
necessity of perfection of an exemption pursuant to Regulation A
adopted pursuant to the Act, or (b) Borrower and the Holder shall have
complied with Rule 144 promulgated under the Act (and in this
connection Borrower shall use its best efforts to comply, upon
reasonable request of the Holder), or (c) a registration statement
filed by Borrower is declared effective by the Commission or steps
necessary to perfect an exemption under Regulation A are completed.
8.5 Demand Registration Right. If Holder desires to so transfer any
Securities, and if such transfer, in the opinion of counsel to Holder
after consultation with counsel for Borrower, would require
registration or perfection of an exemption under Regulation A, such
Holder may make written request to Borrower to file, at Holder's
election, a registration statement or notification and offering
circular covering the Securities owned by such Holder.
8.6 Registration Procedure. The Borrower agrees upon receiving such
written request to comply therewith as promptly as practicable,
subject to the following terms and conditions:
A. The Borrower shall have the privilege of postponing action under
this Section for a reasonable period of time (not exceeding 90
days) in the event filing would, in the reasonable opinion of the
Borrower's board of directors, adversely affect a material
financing project or a proposed or pending acquisition, merger,
or other corporate reorganization for which the Borrower is or is
expected to be a party.
B. Upon receipt of such written request, the Borrower shall promptly
give written notice thereof of all Holders of the Debentures at
their addresses as they appear on the books of the Borrower,
offering to include such Holder's Securities in a registration
statement to be filed by the Borrower as provided herein, if such
Holder makes a written request therefore within 15 days after the
giving of such notice by the Borrower; provided that if the
Borrower shall have elected under Subsection A above to postpone
action under this Section, it shall in such notice state the
termination date
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of the period of such postponement, and the time for Holders to
make said written requests shall be extended to 15 days after
said termination date.
C. The Borrower shall take such action as may be necessary to
qualify the Securities under the securities or blue-sky laws of
such states as the Holders thereof shall reasonably designate.
D. The costs and expenses of the registration statement or other
filing as provided in Section 8.5 and 8.6 shall be borne by
Borrower for the first and second such requests by Holders of the
Debentures and for the third and all subsequent requests pro rata
by all Holders of Securities being registered or covered thereby
and other persons for whose account Securities are also being
registered or covered thereby, and such Holders agree to pay
their pro rata portion of all out-pocket-expenses including
without limitation fees and disbursements of Borrower's counsel,
printing costs, registration, qualification, and blue-sky costs
and expenses incurred by Borrower in connection therewith and
such Holder's pro rata portion of any accounting fees incurred by
Borrower in connection with registration or qualification, except
accounting fees pertaining to a report of audit at the close of
any fiscal year of Borrower.
E. Regardless of any other provision of this Article Eight, the
Company shall not be obliged to file on behalf of a Holder more
than one registration statement or notification under Regulation
A pursuant to the terms of this Article Six in any 12-month
period, not including for his purpose any registration statement
or notification described in Section 8.3.
8.7 Rule 144 Covenants. With a view to making available to the Holder the
benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the Securities and Exchange Commission which may at any
time permit Holders to sell the Securities to the public without
registration, Borrower agrees to register its Capital Stock under
section 12(g) of the Securities Exchange Act of 1934, as amended, as
soon as practicable but in no event later than 120 days from the date
such Capital Stock first is publicly traded in any established market
system (including OTC trading whether or not listed in NASDAQ) and
thereafter (a) to file with the Securities and Exchange Commission in
a timely manner all reports and other documents required to be filed
by an issuer of securities registered under the Securities Exchange
Act of 1934, as amended; (b) at its expense, forthwith upon Holder's
request, to deliver to Borrower a certificate signed by Borrower's
principal financial officer, stating (i) Borrower's name, address, and
telephone number (including area code), (ii) Borrower's Internal
Revenue Service Identification number, (iii) Borrower's Securities and
Exchange Commission file number, (iv) the number of shares of Common
Stock outstanding as shown by the most recent report or statement
published by Borrower, and (v) whether Borrower has filed the reports
required to be filed under the Securities Exchange Act of 1934, as
amended, for a period of at least 90 days prior to the date of such
certificate and in addition had filed the most recent annual report
required to be filed thereunder; and (c) upon reasonable satisfaction
that Rule 144 is being complied with, to deliver Securities not
bearing the legend prescribed by Section 8.9 or any other legend
restricting transfer, as may be
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requested from time to time by Holder, to Holder to be held for delivery
to a purchaser or purchasers in a sale or sales pursuant to Rule 144.
8.8 Indemnification
A. In the event of any registration or Regulation A offering of any
securities pursuant to this Article Eight, Borrower will
indemnify and hold harmless any Holder whose Securities are being
so registered or covered, and each person, if any, who controls
such Holder within the meaning of the Act against any losses,
claims, damages, expense (including attorney's fees), or
liabilities (or actions in respect thereof) under the Act or
otherwise, which arise out of or are based upon any untrue
statement or allegedly untrue statement of any material fact
contained in any such registration statement, any preliminary
prospectus, or final prospectus contained therein, or in any
notification statement or offering circular, or any amendment or
supplement thereto, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Borrower will reimburse each such Holder and each
such controlling person for any legal or other expenses
reasonably incurred by such Holder or such controller person in
connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that Borrower
will not be liable in any such case to the extent that any such
loss, claim, damage, or liability arises out of it is based upon
an untrue statement, allegedly untrue statement, omission, or
alleged omission made in said registration statement, said
preliminary prospectus, said prospectus, or in any offering
circular, any said amendment, or supplement in reliance upon and
in conformity with written information furnished by such Holder
for use in the preparation thereof.
B. Such Holder will indemnify and hold harmless Borrower, each of
its directors, each of its officers who has signed any such
registration statement, and such person, if any, who controls
Borrower within the meaning of the Act, against any losses,
claims, damages, or liabilities to which Borrower or any such
director, officer, or controlling person may become subject under
the Act or otherwise insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue or allegedly untrue statement of any
material fact contained in said registration statement, said
preliminary prospectus, said prospectus, said offering circular,
or said amendment of supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
allegedly untrue statement or omission or alleged omission was
made in said registration statement, said preliminary prospectus,
said prospectus, said offering circular, or said amendment or
supplement in reliance upon and in conformity with written
information furnished by such Holder for use in the preparation
thereof; and will reimburse any legal or other expenses
reasonably incurred by Borrower or any such director, officer, or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability, or action.
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C. Promptly after receipt by an indemnified party under this
paragraph 8.8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this paragraph 8.8,
notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve
it from any liability it may have to any indemnified party
otherwise than under this paragraph 8.8.
D. In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
in and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified to assume the defense
thereof with counsel satisfactory to such indemnified party. In
the event the indemnifying party gives notice to the indemnified
party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party
under this Subsection D for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof subsequent to the date of such notice,
other than reasonable costs of investigation.
8.9 Legend. Any certificate representing Securities shall be stamped with
a suitable endorsement under applicable securities laws.
Article Nine
Registration of Transfer
9.1 Register. The Borrower shall maintain a register for the recordation
of transfers of this Debenture, which shall be transferable in whole
or in part. Upon presentation by the Holder and surrender of this
Debenture, the Borrower shall register such transfer and issue a new
Debenture or Debentures of like aggregate principal amount and bearing
the same date.
9.2 Lost or Destroyed Debentures. Upon receipt by the Borrower at its
principal office of evidence satisfactory to the Borrower of the loss,
theft, destruction, or mutilation of this Debenture, and in the case
of any such loss, theft, or destruction, upon delivery of indemnity
satisfactory to the Borrower, or in case of any such mutilation, upon
surrender and cancellation of this Debenture, the Borrower will issue
a new Debenture of like tenor in lieu of this Debenture with a
notification thereon of the date from which interest as accrued.
Article Ten
Closing
10.1 Definition. The consummation of the transactions provided herein
(Closing) shall take place at offices of the Borrower at 2:00 P.M.,
May 12, 2004 or at such other place and on such other date as shall be
agreed upon in writing by Borrower and Holder.
10.2 Deliveries by Borrower. At the Closing Borrower shall deliver to
Holder the following:
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A. Copies of the resolutions of the board of directors of Borrower,
certified by the secretary of Borrower, as the case may be, as to
the authorization of the execution, delivery, and performance of
this Debenture;
B. 100,000 Shares of common stock of Borrower.
10.3 Deliveries by Holder. At the Closing, provided Borrower has fully
performed all its obligations hereunder, Holder shall deliver to
Borrower a certified or cashier's check (or wire transfer to
Borrower's account a check) made payable to the order of Borrower in
the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000).
Article Eleven
Miscellaneous
11.1 Survival of Warranties. All agreements, representations, and
warranties made herein shall survive the execution and delivery
hereof.
11.2 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in exercise of any power, right, or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right, or privilege preclude other
or further exercise thereof or of any other right, power, or
privilege. All rights and remedies existing hereunder are cumulative
to and not exclusive of any rights or remedies otherwise available.
11.3 Notices. Any notice herein required or permitted to be given shall be
in writing and may be personally served or sent by United States mail
and shall be deemed to have been given when deposited in the United
States mail, registered, with postage prepaid and properly addressed.
For the purposes hereof the address of the Holder and the address of
Borrower shall be as follows:
Borrower: Whitelight Technologies, Inc.
170 Newport Center Dr., Suite 210
Newport Beach, CA 92660
With a copy to: Ron Vance, Esq.
57 West 200 South, Suite 310
Salt Lake City, UT 84101
Holder: Trymetris Capital Fund I, LLC
170 Newport Center Dr., Suite 220
Newport Beach, CA 92660
With a copy to: Trymetris Capital Management, LLC
170 Newport Center Dr., Suite 220
Newport Beach, CA 92660
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Both Holder and Borrower may change the address for service by service
of written notice to the other as herein provided.
11.4 Amendment Provision. The term Debenture or this Debenture and all
references thereto as used throughout this instrument shall mean this
instrument as originally executed or if later amended or supplemented,
then as so amended or supplemented.
11.5 Assignability. This Debenture shall be binding upon Borrower, its
successors, and assigns and shall inure to the benefit of Holder, its
successors, and assigns.
11.6 Cost of Collection. If default is made in the payment of this
Debenture, Borrower shall pay the Holder hereof costs of collection,
including attorneys' fees.
11.7 Waiver of Statute of Limitations. Borrower hereby waives to the full
extent permitted by law the right to plead any and all statutes of
limitations as defenses to any demand hereunder.
11.8 Governing Law. This Debenture has been executed in and shall be
governed by the laws of California.
11.9 Allocation of Purchase Price. Borrower hereby agrees that if no
conversion rights, purchase rights, or any other rights other than to
receive interest had been granted to Holder, the interest rate payable
by Borrower would have been 10 percent per annum.
11.10 Maximum Interest Rate. Notwithstanding the foregoing, the
maximum total compensation that the Holder shall be entitled to
receive hereunder shall not exceed the maximum rate permitted
under applicable law.
IN WITNESS WHEREOF Borrower has caused this Debenture to be signed in its
name by its duly authorized officers.
Dated: May 12, 2004
Borrower:
By: /s/ Matthew Kerper
Matthew Kerper, President
Attest: /s/ Lynn Carlson
Lynn Carlson, Assistant Secretary