Exhibit 10.36


 


Dated: April 15, 2013


 


NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE
IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.


 


$2,139,235.47


IceWEB, INC.


 


Secured Convertible Debenture


 


Due April 15, 2015


 


This Convertible Debenture (the "Debenture")
is issued by ICEWEB, INC., a Delaware corporation (the "Obligor"), to Sand Hill Finance, LLC (the "Holder").


 


The Obligor and the Holder are parties to that certain Financing
Agreement dated as of December 19, 2005 pursuant to which the Holder has issued certain credit advances to the Obligor (the “Financing
Agreement”). The obligations of the Obligor under the Financing Agreement (the “Obligations”) are secured by
substantially all of the personal property of the Obligor. As of the date hereof, the Obligor owes the Holder $2,139,235.47 under
the Financing Agreement. At the request of the Obligor, the Holder has agreed to confirm Obligor’s obligation to repay Holder
in this Debenture.


 


FOR VALUE RECEIVED, the Obligor hereby
promises to pay to the Holder or its successors and assigns the principal sum of $2,139,235.47 together with accrued but unpaid
interest on or before April 15, 2015 (the "Maturity Date") in accordance with the following terms:


 


Interest. Interest shall accrue on the
outstanding principal balance hereof at an annual rate equal to 12%. Interest shall be calculated on the basis of a 360-day year
and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder will be paid to the Holder
or its assignee (as defined in Section 4) in whose name this Debenture is registered on the records of the Obligor regarding registration
and transfers of Debentures (the "Debenture Register"). Obligor shall pay Holder $15,000 per month on or before the 25th
calendar day of each month. Upon a successful closing an equity event with at least $3,000,000 in proceeds, this monthly payment
will increase to $25,000.


 






    	 



    	 	



    
 


Security Agreement. This Debenture is secured
by the Financing Agreement. For avoidance of doubt, to secure repayment of all amounts outstanding under this Debenture, the Obligor
grants the Holder a security interest in all of its personal property, now owned or hereafter acquired, including without limitation
all accounts, inventory, equipment, general intangibles, financial assets, securities, securities accounts, deposit accounts, and
all proceeds thereof. The financing statement filed in connection with the Financing Statement shall continue to perfect the security
interest granted in the Financing Agreement.


 


Rights of First Refusal. So long as any
portion of this Debenture is outstanding (including principal or accrued interest), if the Obligor intends to raise additional
capital by the issuance or sale of capital stock of the Obligor, including without limitation shares of any class of Common Stock,
any class of preferred stock, options, warrants or any other securities convertible or exercisable into shares of Common Stock
(whether the offering is conducted by the Obligor, underwriter, placement agent or any third party) the Obligor shall be obligated
to offer to the Holder such issuance or sale of capital stock, by providing in writing the principal amount of capital it intends
to raise and outline of the material terms of such capital raise, prior to the offering such issuance or sale of capital stock
to any third parties including, but not limited to, current or former officers or directors, current or former shareholders and/or
investors of the obligor, underwriters, brokers, agents or other third parties. The Holder shall have ten (10) business days from
receipt of such notice of the sale or issuance of capital stock to accept or reject all or a portion of such capital raising offer.


 


This Debenture is subject to the following
additional provisions:


 


Section 1.This Debenture is exchangeable
for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration of transfer or exchange.


 


Section 2.Events of Default.


 


(a) An "Event of Default", wherever
used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected
by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative
or governmental body):


 


(i)Any default in the payment of the
principal of, interest on or other charges in respect of this Debenture, free of any claim of subordination, as and when the same
shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise);


 


(ii)The Obligor shall fail to observe
or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of
this Debenture (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 4) which
is not cured with in the time prescribed; and


 


(iii)An Event of Default under the Financing Agreement.


 






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Section 3.Conversion.


 


(a)(i)Conversion at Option of Holder.


 


(A) This Debenture shall be convertible
into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original
Issue Date (as defined in Section 4) (subject to the limitations on conversion set forth in Section 3(a)(ii) hereof). The number
of shares of Common Stock issuable upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount
of this Debenture to be converted by (y) the Conversion Price (as defined in Section 3(c)(i)). Additionally, this Debenture shall
be convertible into shares of Series C Preferred Stock at the option of the Holder, in whole or in part at any time and from time
to time, after the Original Issue Date (as defined in Section 4) (subject to the limitations on conversion set forth in Section
3(a)(ii) hereof). The number of shares of Series C Preferred Stock issuable upon a conversion hereunder equals the quotient obtained
by dividing (x) the outstanding amount of this Debenture to be converted by (y) the Conversion Price (as defined in Section 3(c)(i)).
The Obligor shall deliver the Common Stock certificates to the Holder prior to the Fifth (5th) Trading Day after a Conversion Date,
such certificates to evidence unrestricted Common Stock that is freely tradable by the Holder. The Obligor shall deliver the Series
C Preferred Stock certificates to the Holder prior to the Fifth (5th) Trading Day after a Conversion Date, such certificates to
evidence Series C Preferred Stock which is exchangeable for Common Stock, per the stocks rights agreement of the Series C Preferred
Stock to be done at the option of the Holder.


 


(B)Notwithstanding anything to the
contrary contained herein, if on any Conversion Date: (1) the number of shares of Common Stock at the time authorized, unissued
and unreserved for all purposes, or held as treasury stock, is insufficient to pay principal and interest hereunder in shares of
Common Stock; (2) the Common Stock is not listed or quoted for trading on the OTC or on a Subsequent Market; (3) the Obligor has
failed to timely satisfy its conversion; or (4) the issuance of such shares of Common Stock would result in a violation of Section
3(a)(ii), then, at the option of the Holder, the Obligor, in lieu of delivering shares of Common Stock pursuant to Section 3(a)(i)(A),
shall deliver, within three (3) Trading Days of each applicable Conversion Date, an amount in cash equal to the product of the
outstanding principal amount to be converted plus any interest due therein divided by the Conversion Price and multiplied by the
highest closing price of the stock from date of the conversion notice till the date that such cash payment is made.


 


Further, if the Obligor shall not have
delivered any cash due in respect of conversion of this Debenture or as payment of interest thereon by the fifth (5th) Trading
Day after the Conversion Date, the Holder may, by notice to the Obligor, require the Obligor to issue shares of Common Stock pursuant
to Section 3(c). Any such shares will be subject to the provisions of this Section.


 


(C)The Holder shall effect conversions
by delivering to the Obligor a completed notice in the form attached hereto as Exhibit A (a "Conversion Notice"). The
date on which a Conversion Notice is delivered is the "Conversion Date." Unless the Holder is converting the entire principal
amount outstanding under this Debenture, the Holder is not required to physically surrender this Debenture to the Obligor in order
to effect conversions. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture
plus all accrued and unpaid interest thereon in an amount equal to the applicable conversion. The Holder and the Obligor shall
maintain records showing the principal amount converted and the date of such conversions. In the event of any dispute or discrepancy,
the records of the Holder shall be controlling and determinative in the absence of manifest error.


 






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(ii)Certain Conversion Restrictions.


 


(A)A Holder may not convert this Debenture
or receive shares of Common Stock as payment of interest hereunder to the extent such conversion or receipt of such interest payment
would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.9% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of interest on, this Debenture held by such Holder after
application of this Section. Since the Holder will not be obligated to report to the Obligor the number of shares of Common Stock
it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common
Stock in excess of 4.9% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially
owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction
contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of which portion of the principal amount of this Debenture is convertible
shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount
of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result
in the issuance in excess of the permitted amount hereunder, the Obligor shall notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance with the periods described
in Section 3(a)(i)(A) and, at the option of the Holder, either retain any principal amount tendered for conversion in excess of
the permitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to
the Obligor. Other Holders shall be unaffected by any such waiver.


 


 


(B) (i) At the Maturity Date, at the
Holder’s option, the entire principal amount and all accrued interest shall be either (a) paid to the Holder or (b) converted
in accordance with Section 3 herein.


 


(C)(i)The conversion price (the "Conversion Price")
in effect on any Conversion Date shall be equal to (A) $0.075 for any Common Stock and (B) $0.30 for any Series C Preferred Stock.


 






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(ii)In case of any reclassification
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash
or property, the Holder shall have the right thereafter to, at its option, (A) convert the then outstanding principal amount, together
with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture into the shares of
stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such
reclassification or share exchange, and the Holder of this Debenture shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount,
together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Debenture could have
been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor
to prepay the outstanding principal amount of this Debenture, plus all interest and other amounts due and payable thereon. The
entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.


 


(iii)All calculations under this Section
3 shall be rounded up to the nearest $0.001 of a share.


 


The Holder is entitled to convert this Debenture during the
20-day calendar period commencing the date of such notice to the effective date of the event triggering such notice.


 


(D)(i)Holder agrees each Notice of Conversion will be
for an amount equal to the lesser of Five Hundred Thousand Dollars or the balance of the Obligations due under the Financing Agreement.
Notwithstanding the foregoing, Holder and Obligor both acknowledge that Obligor has yet to approve the issuance of Series C Preferred
Stock. Until such time that Obligor is authorized to issue Series C Preferred Stock to Holder there is no minimum amount for each
Notice of Conversion.


 


(E)(i)Holder agrees to limit, without written approval
from Obligor which approval shall not be unreasonably withheld, the open market sale of Common Stock to no more than 500,000 shares
per week.


 


(F)Any notices, consents, waivers or
other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:


 


 


If to the Company, to:


ICEWEB, Inc.


22900 Shaw Road, Suite 111


Sterling, VA 20166


Telephone No.: (571) 287-2405


Facsimile No.: (571) 287-2396


 






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If to the Holder:


Sand Hill Finance LLC


12930 Saratoga Ave., Suite D1


Saratoga, CA 95070


Attn: Ron Ernst


 


 


or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written notice given to each other party three (3) business
days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent,
waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.


 


Section 4.Definitions. For the purposes
hereof, the following terms shall have the following meanings:


 


“Assignee” means any person
or entity to whom the Holder assigns all or any part of this Debenture.


 


"Business Day" means any day
except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions
are authorized or required by law or other government action to close.


 


"Change of Control Transaction"
means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or "group" (as described
in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of
capital stock of the Obligor, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Obligor
(except that the acquisition of voting securities by the Holder shall not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Obligor
which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those
individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved
by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale
of fifty percent (50%) or more of the assets of the Obligor or any subsidiary of the Obligor in one or a series of related transactions
with or into another entity, or (d) the execution by the Obligor of an agreement to which the Obligor is a party or by which it
is bound, providing for any of the events set forth above in (a), (b) or (c).


 






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"Commission" means the Securities
and Exchange Commission.


 


"Common Stock" means the common
stock, par value $0.001, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.


 


"Conversion Date" shall mean
the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Debenture into shares
of the Company's Common Stock as outlined herein.


 


"Exchange Act" means the Securities
Exchange Act of 1934, as amended.


 


"Original Issue Date" shall mean
the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments,
which may be issued to evidence such Debenture.


 


"Person" means a corporation,
an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental
agency.


 


“Series C Preferred Stock”
means the preferred stock of Obligor, issued from time to time with the consent of Holder after the date of this Debenture.


 


“Securities Act" means the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


"Trading Day" means a day on
which the shares of Common Stock are quoted on the OTC or quoted or traded on such Subsequent Market on which the shares of Common
Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading
Day shall mean a Business Day.


 


"Transaction Documents" means
the Financing Agreement and all related documents, agreements and instruments thereto.


 


"Underlying Shares" means the
shares of Common Stock issuable upon conversion of this Debenture or as payment of interest in accordance with the terms hereof.


 


"Underlying Shares Registration Statement"
means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things
the resale of the Underlying Shares and naming the Holder as a "selling stockholder" thereunder.


 


Section 5.Except as expressly provided
herein, no provision of this Debenture shall alter or impair the obligations of the Obligor, which are absolute and unconditional,
to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture is a direct obligation of the Obligor. This Debenture ranks senior to all other Debentures
and other evidences of indebtedness now or hereafter issued. As long as this Debenture is outstanding, the Obligor shall not and
shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase
or otherwise acquire shares of its Common Stock or other equity securities other than as to the Underlying Shares to the extent
permitted or required under the Transaction Documents; or (iii) enter into any agreement with respect to any of the foregoing.


 






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Section 6.This Debenture shall not
entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings
of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.


 


Section 7.If this Debenture is mutilated,
lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the
mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal
amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Obligor.


 


Section 8.No indebtedness of the Obligor
is senior to this Debenture in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or
otherwise. Without the Holder's consent, the Obligor will not and will not permit any of their subsidiaries to, directly or indirectly,
enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect
to the obligations of the Obligor under this Debenture.


 


Section 9.This Debenture shall be governed
by and construed in accordance with the laws of the State of California, without giving effect to conflicts of laws thereof. If
there is any dispute or controversy between the parties arising out of or relating to this Agreement, the parties agree that such
dispute or controversy will be arbitrated in accordance with proceedings under American Arbitration Association rules, and the
arbitration laws of the State of California. Such arbitration will be the exclusive dispute resolution method under this Agreement.
The decision and award determined by such arbitration will be final and binding upon both parties. All costs and expenses, including
reasonable attorney’s fees and expert’s fees, of all parties incurred in any dispute which is determined and/or settled
by arbitration pursuant to this Agreement will be borne by the party determined to be liable in respect of such dispute; provided,
however, that if complete liability is not assessed against only one party, the parties will share the total costs in proportion
to their respective amounts of liability so determined. Except where clearly prevented by the area in dispute, both parties agree
to continue performing their respective obligations under this Agreement until the dispute is resolved.


 






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Section 10.If the Obligor fails to
strictly comply with the terms of this Debenture, then the Obligor shall reimburse the Holder promptly for all fees, costs and
expenses, including, without limitation, attorneys' fees and expenses incurred by the Holder in any action in connection with this
Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with
the rendering of legal advice as to the Holder's rights, remedies and obligations, (ii) collecting any sums which become due to
the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection,
preservation or enforcement of any rights or remedies of the Holder.


 


Section 11.Any waiver by the Holder
of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence
to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.


 


Section 12.If any provision of this
Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable
to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate
of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants
(to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor
from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Obligor (to
the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will
not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer
and permit the execution of every such as though no such law has been enacted.


 


Section 13.Whenever any payment or
other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business
Day.


 


Section 14. The Holder may assign all or
any part of this Debenture to any person or entity upon notice to, but without the need for consent by, the Obligor.


 


IN WITNESS WHEREOF, the Obligor has caused this Secured Convertible
Debenture to be duly executed by a duly authorized officer as of the date set forth above.


 


	 	ICEWEB, INC.
	 	 	 	 	 
	 	By:	 	 
	 	 	Name:	Robert Howe	 
	 	 	Title:	Chief Executive Officer	 




 






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EXHIBIT "A"


_______


 


NOTICE OF CONVERSION


______________


 


(To be executed by the Holder in order
to convert the Debenture)


 


		TO:	IceWEB, Inc.



22900 Shaw Road, Suite 111


Sterling, VA 20166


 


The undersigned hereby irrevocably elects
to convert $_____________ of the principal amount of the above Debenture into Shares of Common Stock/Preferred Stock of Iceweb,
Inc., according to the conditions stated therein, as of the Conversion Date written below.


 


Conversion Date: ___________________________________________


 


Amount to be converted: $_________________________________________


 


Amount of Debenture unconverted: $________________________________


 


Signature: _______________________________________________________


 


Name: ____________________________________________________________


 


Address: _________________________________________________________


 


Common Stock/Preferred Conversion Price per share:_______________________________________


 


Number of shares of Common Stock/Preferred Stock to be issued:
__________________________________________________________


 


Please issue the shares of Common Stock/Preferred Stock in the
following name and to the


following address: _______________________________________________


 


Issue to:_________________________________________________________


 


Authorized Signature:_____________________________________________


 


Name:_____________________________________________________________


 


Title:____________________________________________________________


 


Phone Number:_____________________________________________________


 


Broker DTC Participant Code:______________________________________


 


Account Number:___________________________________________________


 






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