EXHIBIT 4.17
FORM OF CONVERTIBLE SUBORDINATED
PROMISSORY DEBENTURE
___________, 2008
$_______
FOR VALUE RECEIVED, the undersigned, SPARE BACKUP, INC.
("Maker"),
having its principal business address at 72-757 Fred Waring Drive,
Palm Desert,
California 92260, hereby promises to pay to the order of
_____________ ("Payee"
or "Holder"), at the date of maturity set forth below, the
principal amount of
______________ dollars ($_______), together with interest on the
unpaid
principal amount at the rate of ten percent (10%) per annum, and
with the
principal balance and all accrued interest being due and payable
twelve (12)
months from the date of this Offering ("Offering") pursuant to
which this
Debenture is issued.
1. PAYMENTS OF INTEREST AND PRINCIPAL.
a. Interest. Maker shall pay interest to Payee on the unpaid
outstanding principal balance owed to Payee hereunder at the
rate of ten percent (10%) per annum to be paid quarterly
commencing the quarter ended September 30, 2008, payable
within thirty (30) days of the end of the quarter. Interest
may be paid in cash or common stock at the option of the
Company. Common stock will be calculated at twenty-five cents
($0.25) in the event there is no public market for the common
stock. In the event a market exists for the common stock, it
will be calculated at the average closing price for the common
stock for the five (5) trading days preceding the interest
payment
date. Interest not paid within thirty (30) days
following the end of each quarter shall cause the conversion
price of both the Debentures and the warrants to be issued in
connection herewith to be reduced by ten percent (10%) from
the current conversion price or exercise price per each such
occurrence;
b. Maturity. Maker shall have no duty or obligation to pay any
portion of the outstanding principal amount owed hereunder,
except as hereinafter provided, twelve (12) months from the
date of the Offering pursuant to which this Debenture is
issued ("Maturity"). At Maturity, all accrued interest and
outstanding principal shall be due and payable, and shall be
paid to Payee; and
c. Payments. All payments made hereunder shall be applied as
made first to the payment of interest then due, and the
balance of said payment shall be applied to the payment of the
principal sum.
2. PLACEMENT OF PAYMENT. So long as Payee shall hold this
Debenture,
all payments of principal and interest shall be made at the address
of Maker as
specified herein upon presentment of this Debenture.
3. PREPAYMENT. From and after the date hereof, Maker shall have
the
option to prepay all, but not in part, the principal balance,
together with
accrued interest on the principal amount, of this Debenture. There
is no
prepayment penalty.
4. REGISTRATION RIGHTS. Spare Backup, Inc. agrees to extend
registration rights for all of the shares of Common Stock received
as part of
this offering, and use its "best efforts" after the closing of this
offering and
any additional financings to file a registration statement. This
registration
statement shall cover the resale of the shares of all Common Stock
as well as
the underlying Investor Warrants. In the event that Spare Backup
completes the
raise of any additional monies prior to filing a registration
statement for the
securities in this offering with the Securities Exchange
Commission, Spare
Backup agrees to offer the same registration rights and securities
pricing to
the investor if either is more favorable to the investor.
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5. CONVERSION. The Payee may convert all or any amount of the
principal
amount and any accrued and unpaid interest on the Debenture into
the common
stock of the Maker at a conversion price of twenty-five cents
($0.25) per share
of common stock, subject to adjustment as hereinafter provided. In
the event the
outstanding common stock of the Maker is hereafter changed into or
exchanged for
a different number or kind of shares, or other securities of the
Maker, or of
another corporation, by reason of merger, consolidation, other
reorganization,
recapitalization, reclassification, combination of shares, stock
split-up,
reverse stock split, forward stock split, stock dividend, or
otherwise, the
aggregate number, price and kind of securities subject to the
conversion rights
of this Debenture shall be adjusted appropriately.
6. SUBORDINATION/REDEMPTION: The Debentures will be subordinated
in
right of payment to all indebtedness to banks and other financial
institutions.
In the event the Debenture is not converted or redeemed by the end
of the term
and the Maker raises new debt which is senior to the Debenture then
the Maker
will redeem the Debenture for 110% of Par plus accrued interest. If
the
Debenture is not converted or redeemed by the end of the Term, the
Issuer may
redeem the remaining principal of the Debenture for 110% of Par
plus accrued
interest.
7.
DEFAULT. The occurrence