exhibi10-2.htm


     

     

    
      

    

    
      

    

    EXHIBIT 10.2

     

    

      THIS
SECURED CONVERTIBLE REDEEMABLE DEBENTURE AND THE SECURITIES INTO WHICH IT IS
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 REGISTERED UNDER THE ACT, OR
ELIGIBLE TO BE OFFERED OR SOLD 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.

       

       

      SECURED
CONVERTIBLE DEBENTURE

       

       

      NOVO
ENERGIES CORP.

       

       

      Effective
January 26, 2010

       

      


      
        	
                No.  1

              	
                US$500,000.00

              


      

      


      This
Secured Convertible Debenture (this “Debenture”) is issued
by Novo Energies Corp., a Florida corporation (the “Company”), to
Trafalgar Capital Specialized Investment Fund, FIS (together with its permitted
successors and assigns, the “Holder”) pursuant to
exemptions from registration under Section 4(2) and/or Regulation D as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended, in the amount of Five Hundred Thousand
United States Dollars (US$500,000) as follows:

       

      Section
1.01                      Principal
and Interest.  For value
received, the Company hereby promises to pay to the order of the Holder in
lawful money of the United States of America and in immediately available funds
the principal sum of Five Hundred Thousand United States
Dollars (US$500,000) together with interest on the unpaid principal of this
Debenture at ten percent (10%) per annum.  Commencing on January 31,
2010, monthly interest payments in the amount of Four Thousand One Hundred
Sixty-Six Dollars and 67/100 (US$4,166.67) shall be paid to the Holder on the
last day of each month from the date hereof until the Maturity
Date.  The Holder shall deduct the first two (2) interest payments
from the proceeds at the Closing (as defined in that certain Securities Purchase
Agreement, dated January 26, 2010, by and between the Company and the Holder
(the “Purchase
Agreement”)).  The entire principal amount outstanding and all
accrued but unpaid interest hereon and the associated ten percent (10%) premium
shall be paid to the Holder three-hundred sixty-five (365) days from the Closing
Date (the “Maturity
Date”).  Capitalized terms used but not defined in this
Debenture shall have the meaning ascribed to them in the Purchase
Agreement.

       


      
        
          
            MI-323695 v1

          

           


        

        
           


          
            

          

        

        
           


        

      


      


      


      Section
1.02                      Conversion
Upon Default.  Upon the earlier
of (i) one hundred twenty (120) days from the date hereof, or (ii) the
occurrence of an
Event of Default (defined below), the Holder is entitled to convert and sell on
the same day or at any subsequent time, all or any part of the principal amount
of the Debenture, plus accrued interest into shares (the “Conversion Shares”)
of common stock of the Company, par value $0.00001 per share (“Common
Stock”).  The number of shares of Common Stock issuable upon a
conversion hereunder shall equal the quotient obtained by dividing (a) the
outstanding amount of this Debenture to be converted by (y) the Conversion
Price.  The “Conversion Price”
shall mean the lower of (a) 100% of the Volume Weighted Average Price
(“VWAP”) of the
Common Stock as reported by Bloomberg, LP on the day prior to the Closing Date
(as defined in the Purchase Agreement) the (“Fixed Conversion
Price”) and (b) a fifteen percent (15%) discount to the lowest daily
closing VWAP of the Common Stock during the five (5) Trading Days (as defined in
the Purchase Agreement) prior to the Conversion Date (as defined
below).  No fraction of shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share.  To convert this Debenture, the
Holder hereof shall deliver written notice thereof, substantially in the form of
Exhibit A
to this Debenture, with appropriate insertions (the “Conversion Notice”),
to the Company at its address as set forth herein.  The date upon
which the conversion shall be effective (the “Conversion Date”)
shall be deemed to be the date set forth in the Conversion Notice.

       

      Section
1.03                      Limitations
on Conversion.

       

      (1)      The
Holder shall not have the right to convert more than Fifty Thousand United
States Dollars (US$50,000) of the principal amount of the Debenture plus accrued
interest per week unless (i) the foregoing restriction is waived by the Company,
and (ii) the shares of Common Stock of the Company are trading above 100% of the
VWAP of the Common Stock on the day prior to the Closing Date.

       

      (2)      The
Company shall not effect any conversions of this Debenture and the Holder shall
not have the right to convert any portion of this Debenture or receive shares of
Common Stock as payment of interest hereunder to the extent that after giving
effect to such conversion or receipt of such interest payment, the Holder
together with any affiliate thereof, would beneficially own (as determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder) in excess of 4.99% of the number
of shares of Common Stock outstanding immediately after giving effect to such
conversion or receipt of shares as payment of interest unless the Company is in
default.  Since the Holder will not be obligated to report to the
Company 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 4.99% 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 an outstanding 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 Company 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 terms of this Debenture and, any principal amount tendered for
conversion in excess of the permitted amount hereunder shall remain outstanding
under this Debenture.  The provisions in this Section 1.03(2) may be
waived by a Holder (but only as to itself and not to any other Holder) upon not
less than sixty-six (66) days prior notice to the Company.  Other
Holders shall be unaffected by such waiver.

       

      Section
1.04                      Reservation
of Common Stock.  The Company shall
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of this Debenture,
such number of shares of Common Stock as shall from time to time be sufficient
to effect such conversion, based upon the Conversion Price.  If at any
time the Company does not have a sufficient number of Conversion Shares
authorized and available, then the Company shall take any and all actions
required by Section 4(e) of the Purchase Agreement.

       

      Section
1.05                      Optional
Redemption; Premium. The Company may redeem
this Debenture, in whole or in part, at any time after the Closing Date by
providing the Holder with three (3) days advance notice (the “Redemption Notice”)
and by paying unpaid principal and interest accrued to the date of such
redemption and a ten percent (10%) premium on the principal amount
redeemed.  On the Maturity Date, the Company shall pay a premium of
ten percent (10%) of the then outstanding principal amount of the Debenture in
addition to the outstanding principal and accrued but unpaid interest due
hereunder. The date upon which a redemption or payment of principal and/or
interest is made shall be referred to as a “Repayment
Date”.

       

      Section
1.06                      Paying
Agent and Registrar.  Initially, the Company will act as paying
agent and registrar.  The Company may change any paying agent,
registrar, or Company-registrar by giving the Holder not less than ten (10)
business days’ written notice of its election to do so, specifying the name,
address, telephone number and facsimile number of the paying agent or
registrar.  The Company may act in any such capacity.

       

      Section
1.07                      Secured
Nature of Debenture.  This Debenture is secured by those
certain Security Instruments (as defined in the Purchase
Agreement).

       

      Section
1.08                      Currency
Exchange Rate Protections.

       

      
        (a)           “Closing Date Exchange
Rate” means the Euro to US dollar spot exchange rate as determined by the
Holder’s custodian bank on the date of funds transfer to the Escrow Agent’s
account .

         

        (b)           “Repayment Exchange
Rate” means
in relation to each date of a Conversion Notice or date of a Redemption Notice,
the Euro to US
dollar spot exchange rate as quoted by the Holder’s custodian bank on such date
or other such similar source.

      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      (c)           If
on the date of any Conversion Notice or Redemption Notice, the Repayment
Exchange Rate is less than the Closing Date Exchange Rate then the number of
Shares to be issued shall be increased by the same percentage as results from
dividing the Closing Date Exchange Rate by the relevant Repayment Exchange
Rate.  By way of example, if the number of Shares to be issued in
respect of a particular Conversion Notice or Redemption Notice would, but for
this Section 1.08, be 1,000 and if the Closing Date Exchange Rate is 1.80 and
the relevant Repayment Exchange Rate is 1.75, then 1,029 shares of Common Stock
will be issued in relation to that Conversion Notice or Redemption Notice, as
the case may be.  For the avoidance of doubt, the formula for such
calculation, by way of example for this Section, equals ((1.80 /1.75)-1)*1000 =
29 additional shares.

       

      (d)           If
on any Repayment Date, the Cash Payment Date Exchange Rate, as defined below is
less than the Closing Date Exchange Rate then the amount of cash required to
satisfy the amounts due at such time shall be increased by the same percentage
as results from dividing the Closing Date Exchange Rate by the relevant Cash
Payment Date Exchange Rate. “Cash Payment Date Exchange
Rate” means in relation to each
Repayment Date the Euro to US dollar spot
exchange rate as quoted in the London edition of the Financial Times on such
date.  By way of example, if the amount of cash required to repay all
amounts due on such date would, but for this Section 1.08, be US$1,000 and if
the Closing Date Exchange Rate is 1.80 and the relevant Repayment Exchange Rate
is 1.75 then the amount of cash from the cash payment required to repay all
amounts due on such date will be US$1,028.57. For the avoidance of doubt, the
formula for such calculation, by way of example for this Section, equals
((1.80/1.75)-1)*US$1000 = US$28.57 additional dollars.

       

       

      ARTICLE
II.

       

      Section
2.01                      Amendments
and Waiver of Default.  The Debenture may
not be amended without the written consent of the Holder.

       

       

      ARTICLE
III.

       

      Section
3.01                      Events of
Default.  An “Event of Default” is
defined as follows: (a) failure by the Company to pay amounts due hereunder
within two (2) calendar days of the required payment date; (b) failure by
the Company’s transfer agent to issue Common Stock (which shall be freely
tradable, if permitted by applicable laws) to the Holder within five (5)
calendar days from the Conversion Date; (c) failure by the Company for ten (10)
calendar days after notice to it to comply with any of its other agreements in
this Debenture; (d) events of bankruptcy or insolvency of the Company; and
(e) a breach by the Company of its obligations under any of the Transaction
Documents (as such term is defined in the Purchase Agreement) if such breach is
not cured by the Company within fifteen (15) calendar days after receipt of
written notice thereof.  Upon the occurrence of an Event of Default,
all interest accrued as of the Closing Date shall be accrued at fifteen percent
(15%) per annum (the “Default Rate”) and
the Company shall be liable to the Holder for a five percent (5%) redemption
premium on any

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      outstanding
principal.  In addition, the Holder may, in its sole discretion,
accelerate full repayment of all debentures (including, without limitation, this
Debenture) outstanding and accrued interest thereon (at the Default Rate) or
may, notwithstanding any limitations contained in this Debenture, the Purchase
Agreement or any other Transaction Document, convert all debentures (including,
without limitation, this Debenture) outstanding and accrued interest thereon
into shares of Common Stock pursuant to Section 1.02 herein.

      


       

      Section
3.02                      Failure
to Issue Common Stock.
The Company acknowledges that failure to honor a Notice of Conversion
shall cause irreparable harm to the Holder.

       

       

      ARTICLE
IV.

       

      Section
4.01                      Re-issuance
of Debenture.  When the Holder
elects to convert a part of the Debenture or the Company redeems a part of the
Debenture, then the Company shall reissue a new Debenture in the same form as
this Debenture to reflect the new principal amount.

       

       

      ARTICLE
V.

       

      Section
5.01 Restriction
on Issuance of the Capital Stock, Incurring Debt or Granting of Security
Interests. So long as any of the
principal of or interest on any debentures (including, without limitation, this
Debenture) remain unpaid, the Company shall  (i) not enter into any
security instrument granting a third party a security interest in any and all
assets of the Company or any subsidiary of the Company (whether now owned or
acquired in the future while any debentures (including, without limitation, this
Debenture) are outstanding without the prior written consent of the Holder),
(ii) not permit any subsidiary of the Company (whether now owned or acquired in
the future while any debentures (including, without limitation, this Debenture)
to enter into any security instrument granting a third party a security interest
in any and all assets of such subsidiary without the prior written consent of
the Holder or (iii) not incur any additional debt or permit any subsidiary of
the Company to incur any additional debt without the prior written consent of
the Holder.

       

       

      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, to:

              	
                Novo
      Energies Corp.

              
	 
      	
                Europa
      Place D’Armes 750 Cote de Place d’Armes Suite 64

              
	 
      	
                Montreal,
      QC H2Y 2X8, Canada

              
	 
      	
                Attention:  Antonio
      Treminio, CEO

              
	 
      	
                Facsimile:  (917)
      591-8886

              
	 
      	 
      
	
                With
      a copy to:

              	
                Sanders
      Ortoli Vaughn-Flam Rosenstadt LLP

              
	 
      	
                501
      Madison Avenue, 14th
      Floor

              
	 
      	
                New
      York, NY 10022

              
	 
      	
                Attention:
      William S. Rosenstadt, Esq.

              
	 
      	
                Telephone:
      (212) 588-0022

              
	 
      	
                Facsimile:
      (212) 826-9307

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      
        	 
      	 
      
	
                If
      to the Holder:

              	
                Trafalgar
      Capital Specialized Investment Fund, FIS

              
	 
      	
                The
      Dickens, Kirk Street

                16
      Northington Street

                London
      WC1N 2DG

              
	 
      	
                Attention:
      Andrew Garai, Chairman of the Board of

              
	 
      	
                Trafalgar
      Capital Sarl, General Partner

              
	 
      	
                Facsimile:
      011-44-207-405-0161 and 001-786-323-1651

              
	 
      	 
      
	
                With
      a copy to:

              	
                K&L
      Gates LLP

              
	 
      	
                200
      South Biscayne Blvd., Suite 3900

              
	 
      	
                Miami,
      FL 33131

              
	 
      	
                Attention:  Clayton
      Parker, Esq.

              
	 
      	
                Telephone:
      305-539-3306

              
	 
      	
                Facsimile:
      305-358-7095

              
	 
      	 
      


      

      


      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 Florida without giving effect to the principals of conflict
of laws thereof.  Each of the parties consents to the jurisdiction of
the U.S. District Court sitting in the Southern District of the State of
Florida or the state courts of the State of Florida sitting in Miami-Dade
County, Florida 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
and the other Transaction Documents represent 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 on instrument.

       

      Section
6.06                      Usury
Laws.  If, under any circumstances, it shall be found that any
interest or other amount deemed interest hereunder or in connection with any
other agreement pertaining to this Debenture, 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
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, resort to
any such law, hinder, delay or impede the execution of any power herein granted
to the Holder, but will suffer and permit its execution as though no such law
had been enacted.  This provision shall control every other provision
of all agreements between the Company and the Holder.

      


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

       

      
        	 
      	
                NOVO
      ENERGIES CORP.

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:                _________________

              
	 
      	
                Name:           Antonio
      Treminio

              
	 
      	
                Title:            
      Chief Executive Officer

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


       

      EXHIBIT
A

       

       

      NOTICE OF
CONVERSION

       

       

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

       

      


      
        	
                TO:

              	 
      


      

      


      The
undersigned hereby irrevocably elects to convert US$_____________ of the
principal amount of the above Debenture into Shares of Common Stock of Novo
Energies Corp., according to the conditions stated therein, as of the Conversion
Date written below.

       

      
        	
                Conversion
      Date:

              	 
      
	
                Applicable
      Conversion Price:

              	 
      
	
                Signature:

              	 
      
	
                Name:

              	 
      
	
                Address:

              	 
      
	
                Amount
      to be converted:

              	
                US$                                                                                      

              
	
                Amount
      of Debenture unconverted:

              	
                US$                                                                                      

              
	
                Conversion
      Price per share:

              	
                US$                                                                                      

              
	
                Number
      of shares of Common Stock to be issued:

              	 
      
	
                Please
      issue the shares of Common Stock in the following name and to the
      following address:

              	 
      
	
                Issue
      to:

              	 
      
	
                Authorized
      Signature:

              	 
      
	
                Name:

              	 
      
	
                Title:

              	 
      
	
                Phone
      Number:

              	 
      
	
                Broker
      DTC Participant Code:

              	 
      
	
                Account
      Number: