Exhibit 4.1
CONVERTIBLE DEBENTURE AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF
TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM.
THE SECURITIES HAVE
NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
FACE AMOUNT
$710,000
DEBENTURE NUMBER
June 2005-101
ISSUANCE DATE
June 21, 2005
MATURITY DATE
June 21, 2008
FOR VALUE RECEIVED, Jane Butel Corporation, a Florida corporation
(the
"Company"), hereby promises to pay 21st
Century Technologies ("Holder") on June
21, 2008, (the "Maturity Date"), the
principal amount of Seven Hundred and Ten
Thousand Dollars ($710,000) U.S., and to pay interest on the
principal amount
hereof, in such amounts, at such times and on
such terms and conditions as are
specified herein.
Article 1
Interest
The Company shall pay eight percent (8%) annual coupon on the unpaid
principal amount of this Debenture (the
"Debenture") at such times and in such
amounts as outlined in this Debenture
The Debenture is subject to automatic conversion
at the end of three (3) years
from the date of issuance at which time all Debentures
outstanding will be
automatically converted based upon the formula set forth in Section 3.2.
Article 2
Method of Payment
Section 2.1.
Payments made by the Company in satisfaction of this Debenture
(each a "Payment," and collectively, the
"Payments") shall be made monthly on a
the first calendar date of the month,
provided US banks are open and available
to transfer funds, ("Payment Date") following
the U.S. Securities and Exchange
Commission declaring the registration
statement for the underlying common stock
of the Company pursuant to the Equity Line of Credit with
Dutchess Private
Equities Fund, II, ("Dutchess"), effective
("Effective Date"). In the event the
registration statement for the underlying common stock of
the Company pursuant
to the Equity Line of Credit with Dutchess
is not deemed effective by the United
States Securities and Exchange Commission within twelve (12) months of the
Issuance Date, regular monthly Payments shall commence on the
first calendar
date of the thirteenth month following the
Issuance Date ("144A Date"). In the
event US Banks are not open and available to
transfer Payment, funds shall be
immediately paid on the next business day funds are available to
transfer.
Payments shall be in the amount of Twenty-six thousand
one hundred and fifty
dollars and thirty cents ($26,150.30). THE PAYMENTS SHALL BE GUARANTEED
BY
DUTCHESS AS OUTLINED IN SECTION 2.2 BELOW.
Notwithstanding any provision to the
contrary in this Note, the Company may pay in full to the Holder the
Face
Amount, or any balance remaining thereof,
in readily available funds at any time
and from time to time without penalty.
Except for the first twelve (12) payments
made following the Effective Date which shall be made
in cash (the "Cash Only
Payments"), the Company shall retain the right to make a
Payment in either a)
readily available funds; or, b) the Company's Common Stock
priced pursuant to
Section 3.2 (c) below.
Section
2.2. The Payments shall commence on the
first calendar date after
the Effective Date and continue for twelve (12)
consecutive months ("Cash Only
Payment Termination Date"). Regular
monthly Payments (i.e. Payments not defined
as Cash Only Payments herein) shall
commence on the first calendar date in the
month following the Cash Only Payment
Termination Date and shall continue until
the total amount due and owing is paid in full. In
the event the registration
statement for the underlying common stock of
the Company pursuant to the Equity
Line of Credit with Dutchess is not deemed effective by the United
States
Securities and Exchange Commission within twelve (12) months of the
Issuance
Date, regular monthly Payments shall commence on the 144A Date and shall
continue until the total amount due and owing is paid in
full. The Cash Only
Payments shall be guaranteed to the Holder
by Dutchess from proceeds raised off
the equity line of credit between Dutchess and JBTL,
from the Effective Date
through the Cash Only Payment Termination Date. Dutchess shall not be
held
accountable or liable for Payments before the
Effective Date or after the Cash
Only Payment Termination Date.
The Payments (Cash Only Payments and the remaining monthly Payments)
shall
increase based on the following schedule,
based on the net proceeds received by
the Company from the Equity Line:
Over $1,000,000 to $2,000,000 Payments shall increase to thirty-five
thousand dollars ($35,000)
Over $2,000,000 to $3,000,000 Payments shall increase to forty-five
thousand dollars
($45,000)
Over $3,000,000
Payment shall increase to fifty-five thousand
dollars ($55,000)
Article 3
Conversion
Section
3.1 Conversion
Privilege
(a) The Holder
of this Debenture, with written consent of the Company shall
have the right to convert it into shares of
Common Stock at any time following
the 144A Date and before the close of
business on the Maturity Date. The number
of shares of Common Stock issuable upon the conversion of
this Debenture is
determined pursuant to Section 3.2 and
rounding the result to the nearest whole
share.
(b) This Debenture may not be converted, whether in whole or in
part,
except in accordance with this Article 3.
(c) In the event all or any portion of
this Debenture remains outstanding
on the Maturity Date, the unconverted portion of such Debenture will
automatically be converted into shares of Common Stock on such date in
the
manner set forth in Section 3.2.
(d) The Company retains the right to make a cash
Payment, as outlined in
Article 2 above, to the Holder in lieu of a Conversion.
Section
3.2 Conversion
Procedure.
(a) Conversion Procedures. The Face Amount of this Debenture may be
converted by the Holder, in whole or in
part, any time following the 144A Date.
Such conversion shall be effectuated by surrendering to the Company this
Debenture to be converted together with a facsimile of the signed
Notice of
Conversion which evidences Holder's intention to convert the Debenture
indicated. The date on which the Notice of
Conversion is effective ("Conversion
Date") shall be deemed to be the date on which
the Holder has delivered to the
Company a facsimile of the signed Notice of Conversion.
(b) Common Stock to be Issued. Upon the conversion of
any Debenture and
upon receipt by the Company of a facsimile of Holder's signed Notice of
Conversion, the Company shall instruct its transfer agent to issue stock
certificates without restrictive legend or stop transfer instructions, if
at
that time Rule 144, Rule 144A or Rule 144K sales apply (or with proper
restrictive legend if the Registration Statement has not
as yet been declared
effective), in such denominations to be
specified at conversion representing the
number of shares of Common Stock issuable
upon such conversion, as applicable.
The Company shall act as Registrar and shall maintain an
appropriate ledger
containing the necessary information with
respect to each Debenture. The Company
warrants that no instructions, other than
these instructions, have been given or
will be given to the transfer agent and
that the Common Stock shall otherwise be
freely resold, except as may be set forth herein.
(c) Conversion Rate. Holder is
entitled to convert the Face Amount of this
Debenture, plus accrued interest, anytime
following the Closing Date, at 100% of
the closing bid price of the common stock
on the date of conversion ("Conversion
Price"). No fractional shares or scrip
representing fractions of shares will be
issued on conversion, but the number of
shares issuable shall be rounded up, as
the case may be, to the nearest whole share.
(d) Nothing contained in this Debenture shall be deemed to
establish or
require the payment of interest to the
Holder at a rate in excess of the maximum
rate permitted by governing law. In the
event that the rate of interest required
to be paid exceeds the maximum rate permitted by
governing law, the rate of
interest required to be paid thereunder shall be
automatically reduced to the
maximum rate permitted under the governing
law and such excess shall be returned
with reasonable promptness by the Holder to the Company.
(e) It shall be the Company's
responsibility to take all necessary actions
and to bear all such costs to issue the Common Stock as provided
herein,
excluding the responsibility and cost for
delivery of an opinion letter to the
transfer agent, if so required. The person in whose name the
certificate of
Common Stock is to be registered shall be
treated as a shareholder of record on
and after the conversion date.
(f) Within ten (10) business days after receipt of the documentation
referred to above in Section 3.2(a), the
Company shall deliver a certificate, in
accordance with Section 3.2(c) for the
number of shares of Common Stock issuable
upon the conversion.
(g) Prospectus and Other Documents. The Company shall
furnish to Holder
such number of prospectuses and other
documents incidental to the registration
of the shares of Common Stock underlying
the Debentures, including any amendment
of or supplements thereto. Any filings submitted via EDGAR will
constitute
fulfillment.
(h) Limitation
on Issuance of Shares. If the Company's Common Stock becomes
listed on the Nasdaq SmallCap Market after the
issuance of the De
