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EXHIBIT 10.13
THIS NOTE AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "
SECURITIES ACT "), OR ANY STATE SECURITIES LAWS AND MAY NOT
BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED OR DISPOSED OF
UNLESS AND UNTIL THIS NOTE AND/OR SUCH SECURITIES ARE REGISTERED
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
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$400,000
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December 23 , 2005
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FOR VALUE RECEIVED, the undersigned, GABRIEL
TECHNOLOGIES CORPORATION, a Delaware corporation (" Maker
"), promises to pay to the order of CTSL INVESTMENT, LLC, an Iowa
limited liability company (" Payee "), the principal sum of
Four Hundred Thousand Dollars ($400,000) (the " Principal
"), plus an amount equal to 150% of the principal sum (the "
Note Obligation "). All amounts due under this Note shall be
payable as and at such time or times as are set forth in Paragraph
1 hereof. All payments on this Note shall be due and payable in
lawful money of the United States of America at 675 South Fork
Drive, Des Moines, Iowa 50263 (or such other place as Payee may from time to time designate
in writing).
1. Payments . The Principal and the Note Obligation shall
become due and payable on December 31, 2006. Payment hereunder
shall terminate the right to convert this Note. This Note shall be
prepayable by the Maker as set forth in Paragraph 3 hereof.
2. Events of
Default and Remedies . In the event Maker fails to pay any
amount due under this Note within ten Business Days (as hereafter
defined) after such amount is due, the holder of this Note may (i)
offset against this Note any sum or sums owed by the holder hereof
to Maker, or (ii) proceed to protect and enforce his rights either
by suit in equity and/or by action at law, or by other appropriate
proceedings, whether for the specific performance of any covenant
or agreement contained in this Note or to enforce any other legal
or equitable right of the holder of this Note. As used herein, a
" Business Day " is any day other than a Saturday, Sunday or a
legal holiday for financial institutions in Omaha, Nebraska.
3. Prepayments . The Principal and Note Obligation on this
Note may be voluntarily prepaid in whole or in part at any time
prior to conversion of this Note in accordance with Section 4
hereof. At any time prior to payment of the Principal and Note
Obligation on this Note, the holder hereof shall have the option of
exercising its Optional Conversion rights under Section 4(a), and
Maker shall have the option of exercising its Mandatory Conversion
rights under Section 4(c).
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4. Conversion .
(a) Conversion by Payee.
Unpaid Principal and Note Obligation on this Note
shall be convertible at the option of Payee or other holder hereof
(the " Optional Conversion "), at any time, in whole or in
part, in lieu of and in satisfaction of such unpaid Principal and
unpaid Note Obligation. This Note shall be convertible into that
number of fully paid and nonassessable shares of Common Stock (as
defined in Section 5) as is equal to the quotient of the unpaid
Principal plus the unpaid Note Obligation divided by the applicable
Conversion Price (as defined in Section 5)
in effect from time to time. Upon any Optional
Conversion, the outstanding Principal and unpaid Note Obligation
due under this Note shall be reduced in full by an amount equal to
the number of shares of Common Stock issued upon such conversion
multiplied by the applicable Conversion Price.
(b) Conversion Procedures.
If Payee desires to convert this Note into Common
Stock, it shall surrender this Note to Maker at its principal
executive offices, accompanied by proper instruments of transfer to
Maker or in blank, accompanied by irrevocable written notice
("Optional Conversion Notice") to Maker that Payee elects so to
convert this Note and the name or names (with address) in which a
certificate or certificates for Common Stock are to be issued.
Maker shall, as soon as practicable after such written notice and
compliance with any other conditions herein contained, deliver at
such office to Payee, certificates for the number of full shares of
Common Stock to which it shall be entitled. Such conversion shall
be deemed to have been made as of the date of such surrender of
this Note, and the person or persons entitled to receive Common
Stock or other securities deliverable upon conversion shall be
treated for all purposes as the record holder or holders thereof on
such date.
(c) Conversion by Maker.
Notwithstanding anything to the contrary in this
Note, up to the entire amount of the unpaid Principal and Note
Obligation on the Note may be converted at the Maker’s
election ("Mandatory Conversion") provided: (i) no event of default
has occurred and is continuing; (ii) the closing sales price of the
Common Stock on its principal trading market for ten consecutive
trading days (the "Trading Period") is greater than 150% of the
Maximum Conversion Price on each trading day during the Trading
Period; [and (iii) the Common Stock issuable upon
conversion of the then-outstanding principal and unpaid Note
Obligation are included for unrestricted resale in a registration
statement effective as of the date notice is given by the Maker to
the holder of its election to convert the Note pursuant to this
Section 4(c) ("Mandatory Conversion Notice") and through the date
the shares issuable upon Mandatory Conversion of the Note are
delivered to such holder.] The Mandatory
Conversion Notice must be given no later than the third trading day
following the Trading Period. This Note shall be convertible into
that number of fully paid and nonassessable shares of Common Stock
(as defined in Section 5) as
is equal to the quotient of the unpaid Principal plus the unpaid
Note Obligation divided by the applicable Conversion Price (as
defined in Section 5) in
effect from time to time. Upon any Mandatory Conversion, the
outstanding Principal and unpaid Note Obligation due under this
Note shall be reduced in full by an amount equal to the number of
shares of Common Stock issued upon such conversion multiplied by
the applicable Conversion Price. If Maker desires to effect a
Mandatory Conversion of all or part of this Note into Common Stock,
it shall provide the Mandatory Conversion Notice to the holder of
this Note. Maker shall, within five Business Days thereafter,
deliver to the holder of this Note (in exchange therefor)
certificates for the number of full shares of Common Stock to which
it shall be entitled. Such conversion shall be deemed to have been
made as of the date of the Mandatory Conversion Notice, and the
person or persons entitled to receive Common Stock or other
securities deliverable upon conversion shall be treated for all
purposes as the record holder or holders thereof on such
date.
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(d) Certain Adjustments.
The applicable Conversion Price and the number of
securities issuable upon conversion of this Note shall be subject
to adjustment from time to time as follows:
(i) In case Maker
shall at any time after the date hereof (1) pay a dividend or make
a distribution on its capital stock that is paid or made in shares
of stock of Maker, (2) subdivide its outstanding shares of Common
Stock into a greater number of shares or (3) combine its
outstanding shares of Common Stock into a smaller number of shares,
then in each such case the applicable Conversion Price in effect
immediately prior thereto and the securities issuable shall be
adjusted retroactively as provided below so that Payee thereafter
shall be entitled to receive the number of shares of Common Stock
of Maker and other shares and rights to purchase stock or other
securities which Payee would have owned or have been entitled to
receive after the happening of any of the events described above
had this Note been converted immediately prior to the happening of
such event or any record date with respect thereto. In the event of
the redemption of any shares referred to in clause (1), Payee shall
have the right to receive, in lieu of any such shares or rights,
any cash, property or securities paid in respect of such
redemption. An adjustment made pursuant to this subparagraph (i)
shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision
or combination.
(ii) Whenever the
Conversion Price is adjusted as provided above, Maker shall compute
the adjusted Conversion Price in accordance herewith and mail to
Payee a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price.
(iii) In the event
that at any time, as a result of any adjustment made pursuant to
this Section, Payee shall become entitled t
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