THIS DEBENTURE AND ATTACHED WARRANTS, AND THE SECURITIES INTO WHICH THE WARRANTS
ARE CONVERTIBLE (COLLECTIVELY, THE “SECURITIES”), HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE.  THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE
HARBOR FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”).  THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE
OFFERED OR SOLD UNLESS THE SECURITIES ARE REIGSTERED UNDER THE ACT, PURSUANT TO
REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

CONVERTIBLE DEBENTURE AGREEMENT

10% Debenture

Dated February 14, 2011

$100,000.00

This Convertible Debenture Agreement is issued by SEFE Inc. a Nevada corporation
(the “Company”), to Westpac Communications, Inc., a Nevada corporation (together
with their permitted successors and assigns, collectively referred to herein as
the “Holders”) pursuant to exemptions from registration under the Securities Act
of 1933, as amended.

ARTICLE I

Section 1.01                      Principal and Interest.  For value received,
on February 14, 2012 (the “Due Date”), the Company hereby promises to pay to the
order of the Holders, in lawful money of the United States of America and in
immediately available funds, the principal sum of US $100,000.00 (the “Principal
Amount”), together with interest on the unpaid principal of this Debenture at
the rate of ten percent (10%) per year (computer on the basis of a 365-day year
and the actual days elapsed) from the date of this Debenture until paid.  The
Company shall have the option to repay the entire principal amount and all
accrued interest at any time on or before the Due Date.

Section 1.02                      Automatic Prepay.  At the closing of a private
placement offering that nets the Company a minimum of Two Million Dollars (US
$2,000,000.00) (the “Financing”) by the Company (the closing of the Financing
shall be referred to herein as a “Triggering Event”) (the term “closing” shall
mean the date the Company receives at least $2,000,000.00 from the Financing),
all of the Principal Amount of this Debenture and all accrued by unpaid interest
on that principal (the “Repayment Amount”) shall automatically, and without
further action by the Company or Holders, be due and payable to Holders by the
Company.  Upon the occurrence of a Triggering Event, the Company shall, within
one (1) business day, deliver to Holders the Repayment Amount.

Section 1.03                      Interest Payments.  All accrued interest shall
be due and payable on the Due Date and not before.  However, the Company in its
sole and absolute discretion, may make interest payments in cash (via wire
transfer or certified funds) in advance of the Due Date.  Such payments shall be
made to the person in whose name this Debenture is registered.

Section 1.04                      Prepayment.  The Company may prepay this
Debenture in whole or in part on any date without premium or penalty; provided,
however, any partial prepayment, when made, shall be credited first to interest
then due and payable.  The remainder of each such payment shall be then credited
to the unpaid principal indebtedness evidenced by the provisions of this
Debenture, and interest thereupon shall cease to accrue on any amounts so
credited to such unpaid principal.  No partial prepayment shall extend or
postpone the due date of any subsequent payment, unless Holders shall otherwise
first agree in writing.  Holders shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments to any portion of the
indebtedness evidenced by the provisions of this Debenture.
 
 

 
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ARTICLE II

Section 2.01                      Conversion.  At any time after February 14,
2011 (the “Issue Date”), until this Debenture is no longer outstanding, this
Debenture shall be convertible, in whole or in part, into shares of Common Stock
at the sole discretion of the Company, at any time prior to the Due Date.  The
Company shall effect conversions by delivering to the Holder a written notice of
conversion (“Notice of Conversion”), specifying therein the principal amount of
this Debenture to be converted and the date on which such conversion shall be
effected (such date, the “Conversion Date”).  If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date that such
Notice of Conversion is deemed delivered hereunder.  To effect conversions
hereunder, the Holder shall not be required to physically surrender this
Debenture to the Company unless the entire principal amount of this Debenture,
plus all accrued and unpaid interest thereon, has been so
converted.  Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Debenture in an amount equal to the
applicable conversion.  The Holder and the Company shall maintain records
showing the principal amount(s) converted and the date of such
conversion(s).  The Holder, and any assignee by acceptance of this Debenture,
acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Debenture, the unpaid and unconverted
principal amount of this Debenture may be less than the amount stated on the
face hereof.

Section 2.02                      Conversion Price.  The conversion price in
effect on any Conversion Date shall be equal to $0.50, subject to adjustment
herein (the “Conversion Price”).

Section 2.03                      Conversion Procedure.  The number of issuable
upon a conversion (“Conversion Shares”) hereunder shall be determined by the
quotient obtained by dividing (x) the outstanding principal amount of this
Debenture to be converted by (y) the Conversion Price.

Section 2.04                      Delivery of Certificate Upon Conversion.  Not
later than three (3) Trading Days after each Conversion Date (the “Delivery
Date”), the Company shall deliver to the Holder, by express courier, a
certificate or certificates, which shall represent the number of shares of
Common Stock being acquired upon the conversion of this Debenture.  If in the
case of any Notice of Conversion such certificate or certificates are not
delivered to, or as directed by the Holder, by the Delivery Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return this Debenture
tendered for conversion, whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the delivery of such
notice of revocation, except that any amounts described in Section 1.01 shall be
payable through the date notice of rescission is given to the Company.

Section 2.05                      Reservation of Shares Issuable Upon
Conversion.  The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock for the sole
purpose of issuance upon conversion of this Debenture and payment of interest on
this Debenture, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of Persons other than the Holder (and
the other holders of the Debentures), not less than such aggregate number of
shares of the Common Stock as shall (subject to the terms and conditions set
forth in the Purchase Agreement) be issuable upon the conversion of the
outstanding principal amount of this Debenture and payment of interest
hereunder.  The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable and, if a Registration Statement is then effective under the
Securities Act, shall be registered for public sale in accordance with such
Registration Statement.

Section  2.06                      Fractional Shares.  No fractional shares or
scrip representing fractional shares shall be issued upon the conversion of this
Debenture.  As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such conversion, the Company shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round up to the
next whole share.

 

 

 
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Section 2.07                      Transfer Taxes.  The issuance of certificates
for shares of the Common Stock on conversion of this Debenture shall be made
without charge to the Holder hereof for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such certificates,
provided that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificate upon conversion in a name other than that of the Holder of this
Debenture and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

Section 2.08                      Adjustments.  If the Company, at any time
while this Debenture is outstanding: (A) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
conversion of, or payment of interest on, the Debentures); (B) subdivides
outstanding shares of Common Stock into a larger number of shares; (C) combines
(including by way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares; or (D) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Company) outstanding immediately before such event and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

ARTICLE III

Section 3.01                      Amendments and Waiver of Default.  This
Debenture may not be amended without the consent of the
Holders.  Notwithstanding the above, without the consent of the Holders, the
Debenture may be amended by the Company to cure any ambiguity, defect or
inconsistency, to provide assumption of the Company’s obligations to the Holders
or to make any change that does not adversely affect the rights of the Holders.

ARTICLE IV

Section 4.01                      Events of Default.  An Event of Default is
defined as follows: (a) failure by the Company to pay amounts due hereunder
within thirty (30) days of the date of maturity of this Debenture; (b) failure
by the Company for fifteen (15) days after notice to it to comply with any of
its other agreements in the Debenture; (c) events of bankruptcy or
insolvency.  Upon the occurrence of an Event of Default, Holders is required to
provide the Company with written notice of its belief an Event of Default has
occurred.  The Company shall have thirty (30) days from such notice to cure any
default.  If the Event of Default is not cured within the cure period, the
Holders may, in its sole discretion, accelerate full repayment of this Debenture
and all accrued interest or may, notwithstanding any limitations contained in
this Debenture, including the restrictions set forth in Section 1.02 hereof,
convert this Debenture and all accrued interest hereon into shares of Common
Stock pursuant to Section 1.02.

ARTICLE V

Section 5.01                      Re-issuance of Debenture.  When the Holders
elects to convert a part of this Debenture, then the Company shall reissue a new
Debenture in the same for as this Debenture to reflect the new principal amount.

 

 

 
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ARTICLE VI

Section 6.01                      Notice.  Notices regarding this Debenture
shall be sent to the parties at the following addresses, unless a party notifies
the other parties, in writing, of a change of address:

If to the Company:
SEFE  INC.
 
1900 University Dr.
 
Tempe, Arizona 85281
   
If to the Holders:
Westpac Communications Inc.
 
3812 N. Gallatin St.
 
Mesa, Arizona 85215

Section 6.02                      Governing Law.  This Debenture shall be deemed
to be made under and shall be construed in accordance with the laws of the State
of Nevada without giving effect to the principals of conflict of laws
thereof.  Each of the parties consents to the jurisdiction of the appropriate
court sitting in the State of Nevada, County of Clark, in connection with any
dispute arising under this Debenture and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens to the bringing of any such proceeding in such jurisdictions.

Section 6.03                      Severability.  The invalidity of any of the
provisions of this Debenture shall not invalidate or otherwise affect any of the
other provisions of this Debenture, which shall remain in full force and effect.

Section 6.04                      Entire Agreement and Amendments.  This
Debenture represents the entire agreement between the parties hereto with
respect to the subject matter hereof and there are no representations,
warranties or commitments, except as set forth herein.  This Debenture may be
amended only by an instrument in writing executed by the parties hereto.

Section 6.05                      Counterparts.  This Debenture may be executed
in multiple counterparts, each of which shall be an original, but all of which
shall be deemed to constitute one instrument.

[Signature on following page]

 
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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company has
executed this Debenture as of the date first written above.

 
SEFE, INC.
       
Signed:
/s/ Wayne Rod
       
Name:
Wayne Rod
       
Title:
President / Secretary / Treasurer

 
 
 
 
 
 
 
 
 
 

 

 
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