CONVERTIBLE DEBENTURE
PRINCIPAL SUM: $15,000 USD
FOR VALUE RECEIVED from Thomas Mills (the "INVESTOR"), Kingston Mines Ltd. (the
"COMPANY") hereby acknowledges itself indebted and promises pay by December 31,
2007, to or to the order of the Investor the sum of $15,000 in lawful money of
the United States of America (the "PRINCIPAL") upon presentation and surrender
of this Debenture at Company's offices at 106-1990 S.E. Kent Avenue, Vancouver,
British Columbia (or at such other place as the Investor may designate by notice
in writing to Company).
1. CONSIDERATION
The total indebtedness of Company to the Investor hereunder is limited to the
amount of the Principal. No interest or other consideration shall be payable on
or in respect of the Principal.
2. CONVERSION
(1) At any time after the date hereof and while the Principal remains
payable by Company, the Investor shall have the right to convert all of the
Principal owing to it hereunder (as at the date of election to so convert) into
fully paid and non-assessable common shares of Company at a conversion rate
equal to one common share for each $0.50 USD of Principal hereunder so
converted. Such conversion may be effected by Investor signing the Endorsement
of Surrender and Notice of Conversion on in this Debenture and delivering a copy
of this Debenture to the office of Company.
(2) As promptly as practicable after the surrender of this Debenture for
conversion, Company shall issue to the Investor or its nominee(s) a certificate
or certificates representing the number of fully paid and non-assessable common
shares into which the Principal hereunder has been converted.
(3) No fractional share or scrip representing a fractional share shall be
required to be issued upon the conversion of this Debenture. If the conversion
of this Debenture would otherwise result in a fractional share, Company shall,
in lieu of issuing such fractional share, pay to the Investor an amount equal to
the fair market value of the fractional share.
(4) The conversion of this Debenture shall be deemed to have been made at
the close of business on the date on which this Debenture is surrendered for
conversion, so that the Investor's rights in respect of the converted portion
shall terminate at such time, and the person or persons entitled to receive the
shares into which this Debenture is converted shall be treated, as between
Company and such person or persons, as having become the holder or holders of
record of such shares at such time.
(5) If Company at any time subdivides or consolidates the shares issuable
upon conversion, the Investor shall thereafter be entitled on conversion to
receive the shares to which it was before such subdivision or consolidation
entitled, as subdivided or consolidated, and the conversion rate of indebtedness
shall be adjusted accordingly. Any such adjustment shall become effective on the
date and at the time that such subdivision or consolidation becomes effective.
(6) In case of:
(a) any reclassification or change of shares issuable upon conversion;
(b) any consolidation, merger or amalgamation of Company with or into
another corporation or corporations;
(c) the sale of the properties and assets of Company substantially as
an entirety to any other corporation or corporations followed by a winding-up of
Company or a distribution of its assets to the shareholders; or
(d) the sale of the properties and assets of Company substantially as
an entirety to another person or persons in exchange for securities in or of
such other person or persons or any affiliate thereof;
the Investor shall have the right thereafter to convert this Debenture into the
kind and amount of shares or other securities and property (or the applicable
portion thereof) receivable on such reclassification, change, consolidation,
merger, amalgamation or sale that the Investor would have been entitled to
receive thereupon had the Investor been the registered holder of the number of
shares into which this Debenture might have been converted immediately prior
thereto. The provisions of this section shall similarly apply to successive
reclassifications and changes of shares and to successive consolidations,
mergers, amalgamations and sales.
3. PREPAYMENT
Company may, at any time prepay the Principal amount outstanding hereunder
without penalty.
4. NON-NEGOTIABILITY
This Debenture is not a negotiable instrument and is not transferable or
assignable without the consent of Company.
5. WAIVER
No consent or waiver by the Investor shall be effective unless made in writing
and signed by an authorized officer of the Investor.
6. NOTICE
Any demand, notice or other communication in connection with this Debenture
shall be in writing and shall be personally delivered to an officer or other
responsible employee of the addressee, mailed by registered mail or sent by
telefacsimile or other direct written electronic means, charges prepaid, at or
to the address or telefacsimile number of the addressee set out opposite its
name below or to such other address or addresses, telex or telefacsimile number
or numbers as either Company or the Investor may from time to time designate to
the other party in such manner.
In the case of Company:
KINGSTON MINES LTD.
1990 S.E. Kent Avenue
Suite 106
Vancouver, BC
V5P 4X5
ATTENTION: LOU HILFORD
In the case of the Investor:
Thomas Mills
1050 Burrard Street
Suite 807
Vancouver, BC
V6Z 2S3
Any communication which is personally delivered as aforesaid shall be deemed to
have been validly and effectively given on the date of such delivery if such
date is a business day and such delivery was made during normal business hours
of the recipient; otherwise, it shall be deemed to have been validly and
effectively given on the business day next following such date of delivery. Any
communication mailed as aforesaid shall be deemed to have been validly and
effectively given on the fifth business day following the date of mailing
provided that, in the event of an interruption in postal services before such
fifth business day, such communication shall be given by one of the other means.
Any communication which is transmitted by telefacsimile or other direct written
electronic means as aforesaid shall be deemed to have been validly and
effectively given on the date of transmission if such date is a business day and
such transmission was made during normal business hours of the recipient;
otherwise, it shall be deemed to have been validly and effectively given on the
business day next following such date of transmission.
7. GOVERNING LAW
This Debenture shall be interpreted in accordance with the laws of the Province
of British Columbia.
IN WITNESS WHEREOF Company has duly executed this Debenture this 22nd day of
August, 2005.
KINGSTON MINES LTD.
per: /s/ Lou Hilford
Lou Hilford
President
ENDORSEMENT OF SURRENDER AND NOTICE OF CONVERSION
TO: KINGSTON MINES LTD. (THE "COMPANY")
106-1990 S.E. KENT AVENUE
VANCOUVER, BC V6C 2S3
The Investor hereby surrenders to Company this Debenture pursuant to paragraph
2(1) of this Debenture with the intent that, and Investor hereby demands that,
the Principal be forthwith converted to shares in the common stock of Company
and delivered to Investor in accordance with paragraphs 2(2) of this Debenture.
__________________________
Thomas Mills