Filed by sedaredgar.com - Fox Petroleum, Inc. - Exhibit 10.4






THIS SECURED DEBENTURE (THE “SECURITIES”) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.

 

SENIOR SECURED CONVERTIBLE REDEEMABLE DEBENTURE 

FOX PETROLEUM, INC. 

October 31, 2008 

	No. FOXP - 4 	US$1,000,000 


          This
Senior Secured Convertible Redeemable Debenture (the “Debenture”) is
issued on October 31, 2008 (the “Closing Date”) by Fox Petroleum, Inc.
a Nevada corporation, with headquarters located at 64 Knightsbridge, London,
SW1X 7JF (the “Company”), to Trafalgar Capital Specialized Investment
Fund, Luxembourg (together with its permitted successors and assigns, the
“Holder”) pursuant to exemptions from registration under the Securities
Act of 1933, as amended. 

ARTICLE I. 

          Section
1.01                                   
Principal and Interest. For value received, the Company
hereby promises to pay to the order of the Holder by October 31, 2010 (the
“Maturity Date”) in lawful money of the United States of America and in
immediately available funds the unpaid principal sum of One Million U.S. Dollars
(US$1,000,000) together with interest on the unpaid principal of this
Debenture at the rate of: ten percent (10%) per annum compounded monthly
thereafter until paid. Interest shall be computed on the basis of a 360-day year
and the actual days elapsed and the Holder shall deduct the first interest
payment on the date hereof.

          Section
1.02                                   
Optional Conversion. The Holder is entitled, at its option,
subject to the limitations set forth herein, to convert, and sell on the same
day or at any subsequent time, at any time and from time to time, until payment
in full of the remaining outstanding principal balance of this Debenture,
plus any interest, all or any part of the principal amount of the Debenture,
plus accrued interest, into shares (the “Conversion Shares”) of 




Common Stock at the price per share equal to: the lesser of (a)
an amount equal to one hundred percent (100%) of the Volume Weighted Average
Price (“VWAP”) as quoted by Bloomberg L.P. on the date hereof (the “Fixed
Price”), or (b) an amount equal to eighty percent (80%) of the lowest daily
closing VWAP as quoted by Bloomberg L.P. during the five (5) trading days
immediately following the Conversion Date (as defined herein) (the
“Conversion Price”). 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.
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 converted and the date of such conversions. In no event shall
the Holder be entitled to convert this Debenture for a number of shares of
Common Stock in excess of that number of shares of Common Stock which, upon
giving effect to such conversion, would cause the aggregate number of shares of
Common Stock beneficially owned by the Holder and its affiliates to exceed 9.99%
of the outstanding shares of the Common Stock following such conversion without
the approval of the Company.

          Section
1.03                                   
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 file a preliminary proxy statement with the Securities and
Exchange Commission within ten (10) business day after such occurrence and shall
call and hold a special meeting of its stockholders as soon as practicable after
such occurrence for the sole purpose of increasing the number of authorized
shares of Common Stock. 

          Section
1.04                                   
Conversion Cap. In no event shall the Holder be entitled to
convert this Debenture for a number of shares of Common Stock in excess of that
number of shares of Common Stock which, upon giving effect to such conversion,
would cause the aggregate number of shares of Common Stock beneficially owned by
the Holder and its affiliates to exceed 9.99% of the outstanding shares of the
Common Stock following such conversion without the approval of the Company.

          Section
1.05                                   
Optional Redemption. The Company may, in its sole discretion, after
giving the Holder three days advance notice, redeem any or all of this Debenture
at any time, provided that the Common Stock is trading below the Fixed Price at
the time the Company gives the Holder the redemption notice, by paying the
unpaid principal and interest accrued to such date and a prepayment premium of
fifteen percent (15%) redemption premium on the amount redeemed. 

          Section
1.06                                   
Mandatory Redemption. The Company shall begin redeeming on this
Debenture monthly beginning on the three month anniversary following the 

2 




date hereof (each date, as well as the date of any Optional
Redemption pursuant to Section 1.04, a “Redemption Date”) by making equal
payments of principal over the term of this Debenture plus any outstanding
interest payments and a fifteen percent (15.0%) redemption premium on the
principal redeemed each month as set out in Exhibit B. 

          Section
1.07                                   
Interest Payments. Holder shall deduct the first interest payment
on the date hereof. The second interest payment shall be due on the two month
anniversary following the date hereof. Upon the occurrence of an Event of
Default (as defined in Section 3.01 below) by the Company, the Holder has
the option to elect that the interest due and payable hereunder be paid in cash
(via wire transfer or certified funds) or in the form of Common Stock. If paid
in the form of Common Stock, that number of shares of Common Stock with a value
equal to the amount of interest due shall be issued. The amount of stock
to be issued will be calculated as follows: the value of the stock shall be
eighty-five percent of the lower of: (i) the VWAP as quoted by Bloomberg L.P. on
the date the interest payment is due; or (ii) if the interest payment is not
made when due, the VWAP as quoted by Bloomberg L.P. on the date the interest
payment is made. No fractional shares will be issued; therefore, in the event
that the value of the Common Stock per share does not equal the total interest
due, the Company will pay the balance in cash.

          Section
1.08                                   
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
1.09                                   
Secured Nature of Debenture. This Debenture is secured by all of
the assets and property of the Company and its subsidiaries as set forth on
Exhibit A to the Security Agreement dated as of October 31,, 2008 between the
Company and the Holder, (the “Security Agreement”). As set forth in the
Security Agreement, Holder’s security interest shall terminate upon the
occurrence of an Expiration Event as defined in the Security Agreement. 

          Section
1.09                                   
Currency Exchange Rate Protections. 

          
(a) “Closing Date Exchange Rate” means the Euro to US dollar spot exchange
rate as converted by the Holder’s Custodian on the date funds are transferred
into escrow. 

          (b)
“Repayment Exchange Rate” means in relation to each date of a Conversion
or Redemption, the Euro to US dollar spot exchange rate as quoted by
Bloomberg or Proquote on such date. 

          (c) If
on the date of any Conversion Notice, the Repayment Exchange Rate is more 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 Repayment Exchange
Rate by the relevant Closing Date Exchange Rate. By way of example, if the
number of Shares to be issued in respect of a particular Conversion Notice
would, but for this Section 1.08, be 1,000 and if the Closing Date Exchange Rate
is 1.75 and the relevant 

3 




Repayment Exchange Rate is 1.80, then
1,029 Shares will be issued in relation to that Conversion 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 Redemption Date, the Cash Payment Date Exchange Rate, as defined below is
more 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 Cash Payment Date Exchange Rate by the relevant
Closing Date Exchange Rate. “Cash Payment Date Exchange Rate” means
in relation to each Redemption Date the Euro to US dollar spot
exchange rate as quoted by Bloomberg or Proquote 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 $1,000 and if the Closing Date Exchange
Rate is 1.75 and the relevant Repayment Date Exchange Rate is 1.80 then the
amount of cash from the Cash Payment required to repay all amounts due on such
date will be $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)*$1000 =
$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 both the Holder and the Company.
Notwithstanding the above, without the consent of the Holder, the Debenture may
be amended to cure any ambiguity, defect or inconsistency, or to provide for
assumption of the Company obligations to 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, including any
installment payment of interest or principal redemption, and the balance due
upon the maturity of the Company’s obligations to pay all amounts in full,
within five (5) business days of the date such payment is due under this
Debenture, without notice or demand, (b) after the Registration Statement
required by the Registration Rights Agreement has been declared effective,
failure by the Company’s transfer agent to issue freely tradeable Common Stock
(including Common Stock tradeable under Rule 144) to the Holder within three (3)
days of the Company’s receipt of a Notice of Conversion or Notice of Exercise
from Holder; (c) failure by the Company for five (5) business days after notice
to it to comply with any of its other agreements in the Debenture; (d) events of
bankruptcy or insolvency or (e) a breach by the Company of any material
obligation under the Securities Purchase Agreement which is not cured by the
Company within five (5) business days after receipt of written notice thereof,
(f) a breach by the Company of any of the Covenants under the Securities
Purchase Agreement which is not cured within five (5) business days of the
Company’s receipt of written notice thereof. Upon the occurrence of an Event of
Default, the Holder may, in its sole discretion, accelerate full repayment of
all debentures 

4 




outstanding and accrued interest thereon notwithstanding any
limitations contained in this Debenture and/or the Securities Purchase Agreement
dated the date hereof between the Company and Trafalgar Capital Specialized
Investment Fund, Luxembourg (the “Securities Purchase
Agreement”).

          Section
3.02                                   
Failure to Issue Unrestricted Common Stock. As indicated in
Article III Section 3.01, a breach by the Company of its obligations under the
Securities Purchase Agreement shall be deemed an Event of Default, which if not
cured within the periods specified in Section 3.01, shall entitle the Holder to
accelerate full repayment of the Debentures together with accrued interest
thereon or, notwithstanding any limitations contained in this Debenture and/or
the Securities Purchase Agreement, to convert all amounts outstanding under the
Debentures together with accrued interest thereon into shares of Common Stock
pursuant to Section 1.02 herein. The Company acknowledges that failure to honor
a Notice of Conversion except as set forth herein, shall cause irreparable harm
to the Holder.

          Section
  3.03                                   
  Re-issuance of Debenture. When the Holder elects to convert
  a part of the Debenture, upon the Holder’s request, the Company shall reissue
  a new Debenture in the same form as this Debenture to reflect the new principal
  amount. Upon Company’s request, Holder shall surrender this Debenture prior
  to the issuance of such new Debenture. 

ARTICLE IV. 

          Section
4.01                                   
[Reserved] 

ARTICLE V. 

          Section
5.01                                   
Anti-dilution. In the event that the Company shall at any
time subdivide the outstanding shares of Common Stock, or shall issue a stock
dividend on the outstanding Common Stock, the Conversion Price in effect
immediately prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Common Stock, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased,
effective at the close of business on the date of such subdivision, dividend or
combination as the case may be. 

          Section
5.02                                   
Consent of Holder to Sell Capital Stock, Incur Debt
or Grant Security Interests. Except for the Securities Purchase
Agreement dated the date hereof between the Company and Trafalgar Capital
Specialized Investment Fund, Luxembourg, so long as any of the principal of or
interest on this Debenture remains unpaid, the Company shall not, without the
prior consent of the Holder, (i) issue or sell shares of Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined immediately prior to its issuance
provided that upon such sale with Holder’s consent, the Fixed Price shall be
reset to an amount equal to eighty-five percent of such sales price (the “Reset
Price”) if such Reset Price would be lower than the then current Fixed Price,
(ii) issue or sell any warrant, option, right, contract, call, or other security
instrument granting the holder thereof, the right to acquire Common Stock
without consideration or for a 

5 




consideration less than such Common Stock’s bid price value
determined immediately prior to it’s issuance, (iii) enter into any security
instrument granting the holder 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 the Debentures are outstanding), (iv) permit any subsidiary of the
Company (whether now owned or acquired in the future while the Debentures are
outstanding) to enter into any security instrument granting the holder a
security interest in any and all assets of such subsidiary (v) file any
registration statement on Form S-8 or (vi) incur any additional debt or permit
any subsidiary of the Company to incur any additional debt without the Holder’s
prior written consent. 

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: 	Fox Petroleum, Inc. 
	  	64 Knightsbridge 
	 	London, SW1X7JF
  
	  	Attention: Mr. Richard Joseph
      Moore, CEO and Director 
	  	Telephone: 011-44-207-590-9630
  
	  	Facsimile: 011-44-207-590-9601
  
	  	
	With a copy to: 	As above 
	  	
	  	
	  	Attention: Alex Craven - Director
    
	 	Telephone: as above
    
	 	Facsimile: as above
    
	  	
	If to the Holder: 	Trafalgar Capital Specialized
      Investment Fund 
	  	8-10 Rue Mathias Hardt 
	  	BP 3023 
	 	L-1030 Luxembourg
    
	  	Attention:           
      Andrew Garai, Chairman of the Board of 
	  	Facsimile:             011-44-207-405-0161
      and 
	  	                              
      001-786-323-1651 
	  	
	With a copy to: 	James G. Dodrill II, P.A. 
	 	5800 Hamilton Way
    
	  	Boca Raton, FL 33496 
	  	Attention:          
       James Dodrill, Esq. 
	  	Telephone:          
      (561) 862-0529 
	  	Facsimile:             (561)
      892-7787 


6 




          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 Broward 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 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 on instrument. 

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

FOX PETROLEUM, INC. 

By: /s/  Richard Joseph Moore

  Name: 
Mr. Richard Joseph Moore 

Title:    CEO and
Director 

7 




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 Fox Petroleum, Inc.,
  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: 	  


A-1 




EXHIBIT B 


	Payment 	Interest 	Principal 	Redemption 	Premium 	  	Balance 
	No. 	Payment 	Payment 	Premium 	Payable 	Total Payable 	Outstanding 
	  	  	  	  	  	(1,000,000.00) 	1,000,000.00 
	1 	8,333.33 	       
                         
       - 	       
                     15% 	- 	8,333.33 	1,000,000.00 
	 	 	 	 	 	 	 
	2 	8,333.33 	       
                         
       - 	       
                     15% 	- 	8,333.33 	1,000,000.00 
	 	 	 	 	 	 	 
	3 	8,333.33 	45,454.55 	       
                     15% 	6,818.18 	60,606.06 	954,545.45 
	 	 	 	 	 	 	 
	4 	7,954.55 	45,454.55 	       
                     15% 	6,818.18 	60,227.27 	909,090.91 
	 	 	 	 	 	 	 
	5 	7,575.76 	45,454.55 	       
                     15% 	6,818.18 	59,848.48 	863,636.36 
	 	 	 	 	 	 	 
	6 	7,196.97 	45,454.55 	       
                     15% 	6,818.18 	59,469.70 	818,181.82 
	 	 	 	 	 	 	 
	7 	6,818.18 	45,454.55 	       
                     15% 	6,818.18 	59,090.91 	772,727.27 
	 	 	 	 	 	 	 
	8 	6,439.39 	45,454.55 	       
                     15% 	6,818.18 	58,712.12 	727,272.73 
	 	 	 	 	 	 	 
	9 	6,060.61 	45,454.55 	       
                     15% 	6,818.18 	58,333.33 	681,818.18 
	 	 	 	 	 	 	 
	10 	5,681.82 	45,454.55 	       
                     15% 	6,818.18 	57,954.55 	636,363.64 
	 	 	 	 	 	 	 
	11 	5,303.03 	45,454.55 	       
                     15% 	6,818.18 	57,575.76 	590,909.09 
	 	 	 	 	 	 	 
	12 	4,924.24 	45,454.55 	       
                     15% 	6,818.18 	57,196.97 	545,454.55 
	 	 	 	 	 	 	 
	13 	4,545.45 	45,454.55 	       
                     15% 	6,818.18 	56,818.18 	500,000.00 
	 	 	 	 	 	 	 
	14 	4,166.67 	45,454.55 	       
                     15% 	6,818.18 	56,439.39 	454,545.45 
	 	 	 	 	 	 	 
	15 	3,787.88 	45,454.55 	       
                     15% 	6,818.18 	56,060.61 	409,090.91 
	 	 	 	 	 	 	 
	16 	3,409.09 	45,454.55 	       
                     15% 	6,818.18 	55,681.82 	363,636.36 
	 	 	 	 	 	 	 
	17 	3,030.30 	45,454.55 	       
                     15% 	6,818.18 	55,303.03 	318,181.82 
	 	 	 	 	 	 	 
	18 	2,651.52 	45,454.55 	       
                     15% 	6,818.18 	54,924.24 	272,727.27 
	 	 	 	 	 	 	 
	19 	2,272.73 	45,454.55 	       
                     15% 	6,818.18 	54,545.45 	227,272.73 
	 	 	 	 	 	 	 
	20 	1,893.94 	45,454.55 	       
                     15% 	6,818.18 	54,166.67 	181,818.18 
	 	 	 	 	 	 	 
	21 	1,515.15 	45,454.55 	       
                     15% 	6,818.18 	53,787.88 	136,363.64 
	 	 	 	 	 	 	 
	22 	1,136.36 	45,454.55 	       
                     15% 	6,818.18 	53,409.09 	90,909.09 
	 	 	 	 	 	 	 
	23 	757.58 	45,454.55 	       
                     15% 	6,818.18 	53,030.30 	45,454.55 
	 	 	 	 	 	 	 
	24 	378.79 	45,454.55 	       
                     15% 	6,818.18 	52,651.52 	       
                     0.00




2