ex1006.htm


    Exhibit
10.06

    


    THESE
SECURITIES HAVE NOT 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION
OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

    


    Original
Issue Date: December 30,
2008

    


    $740,000

    


    


    14%
DEBENTURE

    DUE
AUGUST 31, 2009

    


    THIS
DEBENTURE of Amber Alert Safety Centers, Inc., a Nevada corporation, having a
principal place of business at 101 Roundhill Drive, 2nd Floor, Rockaway, NJ
07866 (the “Company”), designated
as its 14% Debenture, due August 31, 2009 (the “Debenture”).

    


    FOR VALUE
RECEIVED, the Company promises to pay to John Thomas Bridge & Opportunity
Fund, L.P. or its registered assigns (the “Holder”), the
principal sum of $740,000 on the earlier of (i) August 31, 2009 or (ii) upon the
New Financing Date, as defined in Section 11 (the “Maturity Date”), and
to pay accrued interest to the Holder monthly on the then outstanding principal
amount of this Debenture at the rate of 14% per annum, payable in
cash.

    


    This Debenture is subject to the terms and conditions set forth in
the Purchase Agreement, as well as 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.                       This
Debenture has been issued subject to certain investment representations of the
original Holder set forth in the Purchase Agreement and may be transferred
or exchanged only in compliance with the Purchase Agreement and applicable
federal and state securities laws and regulations.  Prior to due
presentment to the Company for transfer of this Debenture, the Company and any
agent of the Company may treat the Person in whose name this Debenture is duly
registered on the Debenture register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Section
3.                      Events of
Default.

    


    (a)           “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 amount of this Debenture when the same
shall become due and payable, either at Maturity or by acceleration or
otherwise; or

    


    (ii) default
shall be made in the payment of interest on this Debenture when the same becomes
due and payable and the default continues for a period of five
(5)  business days; or

    


    (iii)           any
representation or warranty made by the Company in the Purchase Agreement or any
other Transaction Documents was incorrect in any material respect on or as of
the date made; or

    


    (iv)           the
Company shall fail to observe or perform any other covenant or agreement
contained in this Debenture or any of the other Transaction Documents which
failure is not cured, if possible to cure, within 10 calendar days after written
notice of such default is sent by the Holder or by any other holder to the
Company; or

    


    (v)           the
Company shall commence, or there shall be commenced against the Company a case
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or the Company  commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or there
is commenced against the Company any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 60 days; or the Company is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the
Company  suffers any appointment of any custodian or the like for it
or any substantial part of its property which continues undischarged or unstayed
for a period of 60 days; or the Company makes a general assignment for the
benefit of creditors; or the Company shall fail to pay, or shall state that it
is unable to pay, or shall be unable to pay, its debts generally as they become
due; or the Company; or any corporate or other action is taken by the Company or
any subsidiary thereof for the purpose of effecting any of the foregoing;
or

    


    (vi) default
shall occur with respect to any indebtedness, excluding Excluded Indebtedness,
for borrowed money of the Company or under any agreement to which the Company is
a party and such default shall exceed $75,000; or

    


    (vii) default
with respect to any contractual obligation of the Company under or pursuant to
any contract, lease, or other agreement to which the Company is a party and such
default shall continue for more than the period of grace, if any, therein
specified, if the aggregate amount of the Company’s contractual liability
arising out of such default exceeds or is reasonably estimated to exceed
$75,000; or

    


    (viii)           final
judgment for the payment of money in excess of $75,000 shall be rendered against
the Company and the same shall remain undischarged for a period of 60 days
during which execution shall not be effectively stayed; or

    


    (ix)           any
failure to pay non-executive employee wages.

    


    (b)           If
any Event of Default occurs, the full principal amount of this Debenture,
together with interest and other amounts owing in respect thereof, to the date
of acceleration shall become immediately due and payable in cash; provided,
however, that the Holder shall have the right to convert all or a portion of
such principal of the Debenture into shares of Common Stock pursuant to the
terms set forth in Section 4 below (and to receive cash on the (i) accrued
interest and (ii) principal amount Holder elects not to
convert).  Commencing upon an Event of Default that results in the
eventual acceleration of this Debenture, the interest rate on this Debenture
shall accrue at the rate of 18% per annum, or such lower maximum amount of
interest permitted to be charged under applicable law.  The Holder
need not provide and the Company hereby waives any presentment, demand, protest
or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law.  Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
shall have been received by it.  No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent
thereon.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    Section
4.                          
Conversion Upon Event
of Default.

    


    (a)           The
Holder, if elected pursuant to Section 3(b) above, shall convert all or a
portion of the principal of this Debenture into shares of Common Stock, the
Holder shall effect such conversion by delivering to the Company a notice of
conversion (a “Notice
of Default
Conversion”),
specifying therein the principal amount of the Debenture to be converted and the
date on which such conversion is to be effected (a “Default Conversion
Date”).

    


    (b)           If
the Holder elects to convert all of the principal of this Debenture into shares
of Common Stock, then the number of shares of Common Stock issuable upon such
conversion shall be an amount of Common Stock equal to 51% of the Fully Diluted
Shares Outstanding, after giving effect to the default conversion, determined by
quotient of (x) the Fully Diluted Shares Outstanding at the Default Conversion
Date and (y) 49%. If the Holder elects to convert a portion of the
principal of this Debenture into shares of Common Stock, then the number of
shares of Common Stock issuable upon such conversion shall be determined on a
pro rata basis.

    
      	
               
      

            	 


    

               Section 5.      This Debenture is a
direct obligation of the Company, and the obligation of the Company to repay
this Debenture is absolute and unconditional, but is expressly subordinated to
all currently outstanding secured indebtedness of the Company outstanding on the
date hereof. The repayment terms hereof and the separate consideration described
in the Purchase Agreement agreed to be paid to Holder for making the loan
evidenced by this Debenture reflect the substantial risks Holder is assuming by
virtue of such subordination and Holder’s further agreement evidenced hereby
that no recourse shall be had for the payment of the principal of, or interest
on the Debenture, or for any claim based hereon, or otherwise in respect hereof,
against any shareholder, officer or director, as such, past, present or future,
of the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the express terms hereof and
as part of the consideration for the repayment terms here or hereof, expressly
waived and released.

    


               Section 6.          Interest on the
amount advanced will accrue on this Debenture until the Maturity Date. at the
rate of fourteen percent (14% per annum), and be payable on the first day of
each month, beginning February 1, 2009, and continuing until Maturity Date. If
any portion of this Debenture is outstanding on the Maturity Date, interest at
the rate of eighteen percent (18%) per annum or the highest rate allowed by law,
whichever is lower, shall accrue on the outstanding principal of this Debenture
from the Maturity Date to and including the date of payment by the
Company.  All past due interest shall accrue on a daily basis and
shall be payable in cash. The Holder may demand payment of all or any part of
this Debenture, together with accrued interest, if any, and any other amounts
due hereunder, as of the Maturity Date or any date thereafter.

     

       Section 7.          Security
Interest.  This Debenture shall be secured by the assets of the
Company, as set forth in the Security Agreement.

    


               Section 8.         Any payment
made by the Company to the Investor, on account of this Debenture shall be
applied in the following order of priority: (i) first, to any amounts other than
principal and accrued interest, if any, hereunder, (ii) second, to accrued
interest, if any, through and including the date of payment, and (iv) then, to
principal of the Debenture.

    


               Section 9.          The
outstanding principal of the loan evidenced by this Debenture may not be
prepaid, except as set forth in Section 12 hereof.

    


               Section
10.               
The term "Maturity Date" means the earliest of (i) August 31, 2009, (the "Stated
Maturity Date"), (ii) the New Financing Date (as defined below) or (iii) the
accelerated Maturity Date applicable in the case of any uncured Event of Default
prior to Maturity.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    Section
11.                      
The term "New Financing Date" means the third business day after the date on
which the Company closes any equity, equity equivalent, or debt financing (“New
Financing”) in which the Company receives gross proceeds of at least One Million
Dollars ($1,000,000) or more or the last of any such equity, equity equivalent,
or debt financing which in the aggregate equal gross proceeds of $1,000,000 or
more to the Company. All such gross proceeds are determined before deduction of
any fees or other expenses or disbursements of any kind in connection with the
relevant transaction, offering or placement of securities.

     

    Section
12.                        
Upon the closing of one or more equity, equity equivalent, or debt financings in
which the Company receives gross proceeds of less than One Million Dollars
($1,000,000) per financing and in the aggregate, the Company shall pay an amount
equal to 50% of the proceeds of such financing to reduce the principal amount of
this Debenture.

     

    Section 13.                        
In the event of a Change of Control taking place otherwise than in connection
with the New Financing, Holder, at its option, will have the right (a)
immediately prior to the Change in Control, to convert the Debenture into
securities of the Company of the same class as those held by the persons
acquiring control of the Company, or (b) to require the Company, upon the Change
in Control, to purchase the Debenture at a purchase price of 125% of the price,
plus accrued interest.  The Company shall give Holder 20 days notice
prior to the event of a Change of Control.

    


    Section 14.       This Debenture shall
be governed by and interpreted in accordance with the laws of the State of Texas
for contracts to be wholly performed in such state and without giving effect to
the principles thereof regarding the conflict of laws. Each of the parties
consents to the exclusive jurisdiction of the state courts of the State of Texas
located in Harris County and and the United States District Court for the
Southern District of Texas in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non convenes, to the bringing
of any such proceeding in such jurisdictions. To the extent determined by such
court, the Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under this Debenture. The Company and the Holder hereby waive a trial
by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other in respect of any matter arising out of or in
connection with this Agreement or the Debenture

    


               
Section 15.       The Company covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock solely for the purpose of issuance upon Default Conversion of the Debenture, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder, not less than such number of shares of the Common Stock
as shall be issuable upon the conversion of the outstanding principal amount of
the Debenture.  The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly and validly authorized,
issued and fully paid and nonassessable.

    


               
Section
16.                       
Upon a Default Conversion hereunder the
Company shall not be required to issue stock certificates representing fractions
of shares of the Common Stock, but may if otherwise permitted, make a cash
payment in respect of any final fraction of a share.  If the Company
elects not, or is unable, to make such a cash payment, the Holder shall be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.

    


                Section 17.       Issuance of
certificates for shares of the Common Stock on Default Conversion of the
Debentures shall be made without charge to the Holder thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate.

    


    Section 18.        Any and all notices
or other communications or deliveries to be provided by the Holder hereunder,
including, without limitation, any notice of conversion, shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above,
facsimile number (973) 532 - 0794, Attn: Kai Patterson or such other address or
facsimile number as the Company may specify for such purposes by notice to the
Holder delivered in accordance with this Section.  Any and all notices
or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile
telephone number or address of Holder appearing on the books of the Company, or
if no such facsimile telephone number or address appears, at the principal place
of business of the Holder.  Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. Houston, Texas time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (Houston, Texas
time) on any date and earlier than 11:59 p.m. (Texas time) on such date, (iii)
the second Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. 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 19.       This Debenture shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a 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 Company.

    


    Section 20.       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 violates applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company 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 Company 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 Company (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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    Section
21.                         
Definitions.  For
the purposes hereof, in addition to the terms defined elsewhere in this
Debenture: (a) capitalized terms not otherwise defined herein have the meanings
given to such terms in the Purchase Agreement, and (b) the following terms shall
have the following meanings:

    


    “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 in the State
of Texas are authorized or required by law or other government action to
close.

    


    “Change of Control” as
used herein shall mean the occurrence of the following events:

    


    (i)           A
sale, transfer, or other disposition by the Company through a single transaction
or a series of transactions occurring within a 90-day period of securities of
the Company representing Beneficial Ownership (as defined below) of fifty (50%)
percent or more of the combined voting power of the Company then outstanding
securities to any “Unrelated Person” or “Unrelated Persons” acting in concert
with one another.  For purposes of this definition, the term “Person”
shall mean and include any individual, partnership, joint venture, association,
trust corporation, or other entity [including a “group” as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“1934
Act”)].  For purposes of this definition, the term “Unrelated Person”
shall mean and include any Person other than the Company, a wholly-owned
subsidiary of the Company, an existing shareholder, or an employee benefit plan
of the Company; provided however, a sale of the Company’s securities in a
capital raising transaction shall not be a Change of Control.

    


    (ii)           A
sale, transfer, or other disposition through a single transaction or a series of
transactions occurring within a 90-day period of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.

    


    (iii)           A
change in the ownership of the Company through a single transaction or a series
of transactions occurring within a 90-day period such that any Unrelated Person
or Unrelated Persons acting in concert with one another become the “Beneficial
Owner,” directly or indirectly, of securities of the Company representing at
least fifty-one (51%) percent of the combined voting power of the Company then
outstanding securities.  For purposes of this Agreement, the term
“Beneficial Owner” shall have the same meaning as given to that term in Rule
13d-3 promulgated under the 1934 Act, provided that any pledgee of voting
securities is not deemed to be the Beneficial Owner of the securities prior to
its acquisition of voting rights with respect to the securities.

    


    (iv)           Any
consolidation or merger of the Company with or into an Unrelated Person, unless
immediately after the consolidation or merger the holders of the Common Stock of
the Company immediately prior to the consolidation or merger are the beneficial
owners of securities of the surviving corporation representing at least
fifty-one (51%) percent of the combined voting power of the surviving
corporation’s then outstanding securities.

    


    “Excluded Indebtedness
” means the Company’s preexisting debt obligations (principal and
interest) to clients of John Thomas Financial (the “Prior Notes”), in the
principal amount of approximately $2,053,419.

    


    “Fully Diluted Shares
Outstanding” means the sum of (i) the shares of Common Stock issued and
outstanding and (ii) shares of Common Stock issuable upon exercise or conversion
of outstanding Company derivative securities.

    


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

    


    “Purchase Agreement”
means the Purchase Agreement, dated as of the date hereof, to which the Company
and the original Holder are parties, as amended, modified or supplemented from
time to time in accordance with its terms.

    


    “Transaction
Documents” shall have the meaning set forth in the Purchase
Agreement.

    


    *********************

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a
duly authorized officer as of the date first above indicated.

     

    
      
        	 	
                AMBER
      ALERT SAFETY CENTERS, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


      

    

     

    
       

    

    


    


    6