Document:

Unassociated Document

Exhibit 10.104

U.S. DEPARTMENT OF ENERGY

Reimbursable (Funds-in) Agreement No.      

	
 

1.  Sponsor's Name and Address

 

Save The World Air, Inc.

735 State Street, Suite 500

Santa Barbara, CA 93101

	
 

2.  Reimbursable (Funds-In) Agreement No.      

 

 

 

(x) New Award                     (o) Modification No.

	
 

3.  Agreement Title/Description:    Viscosity Reduction Testing & Demonstration

 

 

	
 

4.  Agreement Term: 1st of January 2012 through 31st of December 2016.

	
 

5.  Financial

 

Costs shall be determined on a Release by Release basis. Sponsor shall be responsible for 100% of Release costs, and submit checks payable to the Department of  Energy to:

 

U.S. Department of Energy

Naval Petroleum and Oil Shale Reserves-CUW

(NPR-3)

907 North Poplar, Suite 150

Casper, WY 82601

	
 

6.  NPR/RMOTC, DOE Program Officer

 

Doug Tunison 307-233-4836

	
 

7.  Issuing Agency

U. S. Department of Energy

Naval Petroleum and Oil Shale Reserves-

CUW (NPR-3)

907 North Poplar, Suite 150

Casper, WY 82601

	
 

8.  Agreement Terms and Conditions

This agreement consists of this form plus the following:

	
 

9.  Sponsor Type

 

	          a.	
Appendix A - General Terms & Conditions

	        o  State Government        	
o   Non-domestic Entity      

	          b.	Appendix B - Patents/Technical Data Clauses (short form)	        o  Local Government 	x  Commercial Firm
	          c.	Appendix C - Operations Specifications	        o  Educational Institution	o   Other
	
 

10.  Sponsor Acceptance

 

Cecil Kyte

Chairman and CEO

	
 

11.  Authorizing Official

 

Clarke D. Turner

Director, Naval Petroleum and Oil Shale Reserves-CUW

	
 

 

 

 

Signature     /s/ Cecil Kyte                                   Date  January 25, 2012

	
Signature     /s/ Clarke D. Turner                         Date  February 6, 2012

	
 

Phone No.  877-872-7892             FAX No. 805-845-4377

	
 

Phone No.  307-233-4800             FAX No. 307-233-4852

  

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APPENDIX A

General Terms and Conditions

1.      TERM. Performance of work under this Agreement may be terminated at any time by either party, without liability except as provided hereinafter, upon giving written notice to the other party. DOE shall terminate this Agreement only when DOE determines that such termination is in the best interest of the Government provided, that DOE shall have the right to terminate if the Sponsor shall have failed to advance the funds required by Paragraph 3 below within 90 days of DOE's execution of this Agreement. In the event of termination the Sponsor shall be responsible for DOE's costs through the effective date of termination, but in no event shall the Sponsor's cost responsibility exceed the total cost to the Sponsor as described in Paragraph 2 below.

2.      COSTING POLICY. DOE's costs shall be determined in accordance with DOE's policy for costing work it performs for others as set forth in 1-CPR Part 1009.

The total cost to the Sponsor for DOE's performance of work under each Release to this Agreement shall not, without the Sponsor's prior consent, exceed the estimated cost set forth in block 5 of each Release; provided however, DOE shall have no obligation to continue or complete performance of the work if the actual cost of such performance will exceed said estimated cost; and provided further, that said estimated cost shall not operate as a cost limitation of the obligations and liabilities assumed by the Sponsor under other provisions of this Agreement. DOE will provide notice as soon as reasonably practicable if the actual cost to complete performance will exceed the estimated cost so as to allow the Sponsor to elect to provide additional funding without an interruption in the performance of the work.

3.      FUNDING AND PAYMENT. The Sponsor shall provide sufficient funds in advance to reimburse DOE for costs incurred by DOE in causing its management to perform the work described in each Release to this Agreement, and DOE shall have no obligation to perform in the absence of adequate advance funds.

DOE will submit an invoice to the Sponsor for advance funding in the amount of the estimated cost of the work unless incremental funding is permitted. If the estimated period of performance exceeds 90 days and the estimated cost exceeds $25,000, the Sponsor may, with DOE's approval, advance funds incrementally. In such a case, DOE will initially invoice the Sponsor in an amount sufficient to permit the work to proceed for 90 days and thereafter invoice the Sponsor monthly so as to maintain a 90 day period that is funded in advance.

Payment shall be made directly to DOE, and the Sponsor shall identify DOE's Funds-In Agreement No. on the wire transfer or check and mail all checks for advance payment to the address identified in block 5 of this Agreement. Upon termination or completion, any excess funds shall be refunded by DOE to the Sponsor.

4.      PROPERTY. Unless the parties hereto otherwise agree all equipment and test apparatus procured with funds provided by the Sponsor shall be disposed of as directed by the Sponsor.

5.      PUBLICATION MATTERS. No publicity release (including news releases and advertising) relating to this Agreement and the work hereunder shall be issued by either party without prior coordination with the other party. Any technical paper, article, publication or announcement of advances generated in connection with work done under this Agreement during the period of performance of the Agreement or in the future, shall give credit to the Sponsor as a Sponsor of the work and shall contain DOE's standard publication disclaimer statement (copy furnished upon request).

  

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6.      GENERAL DISCLAIMER. Neither the Government, DOE, the research center, nor persons acting on their behalf makes any warranty, express or implied, (i) with respect to the accuracy completeness or usefulness of any information or data to be furnished hereunder, (ii) that the use of any such information or data may not infringe privately owned rights, (iii) that services information or data to be furnished hereunder will not result in injury or damage when used for any purpose, and (iv) that services information or data to be furnished hereunder will accomplish intended results or are safe for any purpose. Neither the Government, DOE, the research center, nor persons acting on their behalf will be responsible to the Sponsor for any injury to or death of person or for damage to or destruction of property of the Sponsor resulting from the performance of services or furnishing of materials hereunder.

7.      INDEMNITY. The Sponsor agrees to indemnify and hold harmless the Government, DOE, the research center, and persons acting on their behalf from (1) all liability, including costs and expenses incurred, resulting from the Sponsor's use or disclosure of any information in whatever form, furnished hereunder; and (2) all liability to any person including the Sponsor for injury to or death of persons or other living things or damage to or destruction of property arising out of performance by the Government, the DOE, the research center, or persons acting on their behalf, and not directly resulting from the fault or negligence of the Government, the DOE, the research center, or persons acting on their behalf, or arising out of the use of the services performed, materials supplied, or information given hereunder by any person including the Sponsor. The foregoing provisions shall have no application to public liability for nuclear incident as defined and provided for in the Atomic Energy Act of 1954, as amended.

8.      NONINTERFERENCE. The use of a DOE facility and/or its management in support of this Agreement can only be authorized on a noninterference basis, i.e., the work performed under this Agreement shall not interfere with work related to the prime mission of the facility. Although DOE commitment to this effort is equal to DOE missions programs, DOE programs may, for reasons related to national security or exigency, preempt effort in support of this Agreement. Accordingly, neither the Government, DOE, the research center, nor persons acting on their behalf will be responsible, irrespective of causes, for failure to perform services or furnish information or data hereunder at any particular time or in any specific manner.

9.      REPORTING REQUIREMENTS. Reports on the work shall be submitted to the Sponsor as described within each Release.

10.    PATENTS and CONFIDENTIAL INFORMATION. Terms and conditions regarding patents and confidential information are set forth in Appendix B, attached hereto and incorporated herein. Reference therein to "research center" means the NAVAL PETROLEUM AND OIL SHALE RESERVES-CUW (NPR-3) ROCKY MOUNTAIN OILFIELD TESTING CENTER (RMOTC), where the work under this Agreement is to be performed.

11.    COORDINATION. Except as otherwise directed by DOE all technical liaison with respect to the work funded by the Sponsor will be directly between the Sponsor and the research center. All other matters shall be coordinated with DOE. The personnel that have been designated as coordination representatives by the parties are as follows:

  

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RMOTC Technical Contact:

	
RMOTC Administrative Contact:

	  	  
	
Jeanette Buelt*

	
Doug Tunison

	
U. S. Department of Energy

	
U. S. Department of Energy

	
907 North Poplar, Suite 150

	
907 North Poplar, Suite 150

	
Casper, WY 82601

	
Casper, WY 82601

	
Phone: 307-233-4954

	
Phone: 307-233-4836

	
Fax: 307-233-4852

	
Fax: 307-233-4852

	
E-mail: Jeanette.Buelt@rmotc.doe.gov

	
E-mail: doug.tunison@rmotc.doe.gov

 

 

*An employee of Navarro Research and Engineering, a support service contractor to the Department of Energy.

	
Sponsor’s Technical Contact

	
Sponsor’s Administrative Contact

	  	  
	
Bjorn Simundson

	
Cecil Kyte

	
Save The World Air, Inc.

	
Save The World Air, Inc.

	
735 State Street, Suite 500

	
735 State Street, Suite 500

	
Santa Barbara, CA 93101

	
Santa Barbara, CA 93101

	
Phone: 805-845-3581

	
Phone: 877-872-7892

	
Fax: 805-845-4377

	  
	
Mobile: 805-705-4472

	
Fax: 805-845-4377

	
E-mail: simundson@stwa.com

	
E-mail: kyte@stwa.com

 

12.     FAR 52-203-1 OFFICIALS NOT TO BENEFIT (APR 1984).

(a) The Sponsor warrants that no person or agency has been employed or retained to solicit or obtain this agreement or understanding for a contingent fee, except a bona fide employee or agency. For breach or violation of this warranty, the Government shall have the right to annul this agreement without liability or, in its discretion, to deduct from the contract price or consideration or otherwise recover the full amount of the contingent fee.

(b) "Bona fide agency", as used in this clause, means an established commercial or selling agency, maintained by a sponsor for the purpose of securing business, that neither exerts nor purposes to exert improper influence to solicit or obtain Government contracts nor holds itself out as being able to obtain any Government contract or contracts through improper influence.

"Bona fide employee", as used in this clause means a person employed by a Sponsor and subject to the Sponsor's supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts nor holds out as being able to obtain any Government contract or contracts through improper influences.

"Contingent fee", as used in this clause, means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a Government contract.

"Improper influence", as used in this clause means any influence that induces or tends to induce a Government employee or officer to give consideration or to act regarding a Government contract on any basis other than the merits of the matter.

13.     ALTERATIONS AND ADDITIONS. Alterations and additions, if any, as agreed to by the parties prior to execution of this Agreement are attached hereto and incorporated herein.

  

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APPENDIX B

PATENTS AND TECHNICAL DATA CLAUSES

(SHORT FORM)

Clause I - Patent and Copyright Indemnity - Limited

The Sponsor shall indemnify the Government and its officers, agents, and employees against liability, including costs, for infringement of any United States patent or copyright arising out of any acts required or directed by the Sponsor to be performed under the Agreement to the extent such acts are not normally performed at the facility. Further, the foregoing indemnity shall not apply unless the Sponsor shall have been informed in a reasonable time by the Government of the suit or action alleging such infringement and such indemnity shall not apply to a claimed infringement which is settled without the consent of the Sponsor unless required by a court of competent jurisdiction.

Clause II - Confidential Information

It is understood that Government employees are subject to the statutory provisions against disclosure of confidential information set forth in the Trade Secrets Act, 18 USC 1905.

 

 

 

 

 

 

 

 

 

 

 

  

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APPENDIX C

Operations Specifications

	
1.

	
Scope of Work

 

Work shall be performed in accordance with individual project specifications, utilizing the existing flow assurance infrastructure at RMOTC’s NPR-3 field site. This includes but is not limited to the East, South, and West loops, connected to create a continuous pipeline; storage tanks and pumping facilities; pigging equipment; earth moving equipment and other heavy machinery; and maintenance facilities.

 

	
2.

	
Environmental, Safety and Health

 

Participant shall comply with applicable Federal, State, and county environmental, safety and health laws, rules and regulations.

 

The Participant shall not dispose of any waste within the Naval Petroleum Reserve No. 3 (NPR-3) property.  Unless otherwise designated by the CRADA, all trash, refuse, debris, empty containers, and other waste shall be removed offsite and disposed in a manner approved by Federal, State, and County environmental requirements.

 

The Participant shall use work practices which prevent spills and minimize discharges and emissions to the environment.

 

The Participant shall be responsible for all cleanup and remediation, at his cost, of all material spills which occur as a result of his work practices or defective equipment.  The determination of when remediation has been satisfactorily completed shall be made by the DOE Contracting Officer, with input from the DOE Technical Assurance Director.

 

Participant shall request approval to bring chemicals and hazardous materials on site to Naval Petroleum Reserve No. 3 (NPR-3), using the RMOTC Chemical Approval Form from the RMOTC Chemical & Hazardous Material Management Plan.

 

Participant shall comply with all requirements for transportation / shipping of hazardous materials, as per 49 CFR Part 172.

 

While working at RMOTC, Participant shall exercise due diligence to 1) ensure Waste Minimization and Pollution Prevention, using industry best practices, 2) optimize Energy Efficiency and minimize Greenhouse Gases, and 3) conserve RMOTC’s Water Resources.

 

Every individual at RMOTC has Stop Work Authority to immediately stop work of any persons engaging in activity that place the safety or health of people or the environment in imminent danger.

 

Participant shall immediately notify DOE / RMOTC of any spills / releases or other environmental issues.

 

	
3.

	
Hazardous Material Identification and Material Safety Data

 

(a) "Hazardous material" is a substance or material that the Secretary of Transportation has determined is capable of posing an unreasonable risk to health, safety, and property when transported in commerce and has designated as hazardous under section 5103 of Federal hazardous materials transportation law (49 U.S.C. 5103).

 

  

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(b) The offeror must list any hazardous material, as defined in paragraph (a) of this clause, to be delivered under each Release to this Agreement. The hazardous material shall be properly identified and include any applicable identification number, such as National Stock Number or Special Item Number, within the Joint Work Statement of each Release to this Agreement. This information shall also be included on the Material Safety Data Sheet submitted under each Release to this Agreement. 

 

 (c) This list must be updated during performance of the Agreement whenever the Contractor determines that any other material to be delivered under this contract is hazardous. 

 

(d) The successful offeror agrees to submit, for each item as required prior to award, a Material Safety Data Sheet, meeting the requirements of 29 CFR 1910.1200(g), for all hazardous material identified in paragraph (b) of this clause. Failure to submit the Material Safety Data Sheet prior to award may result in the successful offeror being considered non responsible and ineligible for award. 

 

(e) If, after award, there is a change in the composition of the item(s), the Contractor shall promptly notify the Contracting Officer and resubmit the data.

 

(f) Neither the requirements of this clause nor any act or failure to act by the Government shall relieve the Contractor of any responsibility or liability for the safety of Government, Contractor, or subcontractor personnel or property.

 

(g) Nothing contained in this clause shall relieve the Contractor from complying with applicable Federal, State, and local laws, codes, ordinances, and regulations (including the obtaining of licenses and permits) in connection with hazardous material.

 

(h) The Government's rights in data furnished under this contract with respect to hazardous material are as follows:

 

(1) To use, duplicate and disclose any data to which this clause is applicable. The purposes of this right are to

 

(i) Apprise personnel of the hazards to which they may be exposed in using, handling, packaging, transporting, or disposing of hazardous materials;

(ii) Obtain medical treatment for those affected by the material; and

(iii) Have others use, duplicate, and disclose the data for the Government for these purposes.

 

(2) To use, duplicate, and disclose data furnished under this clause, in accordance with paragraph (h)(1) of this clause, in precedence over any other clause of this contract providing for rights in data.

 

(3) The Government is not precluded from using similar or identical data acquired from other sources.

 

 (i) Except as provided in paragraph (i)(2), the Contractor shall prepare and submit a sufficient number of Material Safety Data Sheets (MSDS's), meeting the requirements of , for all hazardous materials identified in paragraph (b) of this clause.

 

(1) For items shipped to consignees, the Contractor shall include a copy of the MSDS's with the packing list or other suitable shipping document which accompanies each shipment. Alternatively, the Contractor is permitted to transmit MSDS's to consignees in advance of receipt of shipments by consignees, if authorized in writing by the Contracting Officer.

 

  

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(2) For items shipped to consignees identified by mailing address as agency depots, distribution centers or customer supply centers, the Contractor shall provide one copy of the MSDS's in or on each shipping container. If affixed to the outside of each container, the MSDS's must be placed in a weather resistant envelope.

 

	
4.

	
Safety and Accident Prevention

 

In performing work under this AGREEMENT the partner shall:

 

	
  

	
A.

	
Conform to the specific safety requirements established by this AGREEMENT;

	
  

	
B.

	
Comply with the safety rules of the Government installation that concern related activities not directly addressed in this AGREEMENT;

	
  

	
C.

	
Take all reasonable steps and precautions to prevent accidents and preserve the life and health of Partner personnel, government personnel and government contractor personnel performing or in any way coming in contact with the performance of this AGREEMENT;

	
  

	
D.

	
Take such additional immediate precautions as the government may reasonably require for safety and accident prevention purposes;

	
  

	
E.

	
Attend the pre-work safety orientation and all required safety meetings, and

	
  

	
F.

	
All AGREEMENT Partner personnel shall sign in and out of the field daily.

 

	
5.

	
Accident Report Procedures

 

In the event of an accident involving personnel or property, the Partner shall immediately report the incident to the RMOTC contact and follow up in writing, as required.

 

	
6.

	
Shut-down of Work for Safety/Health/Environmental Reasons

 

All RMOTC field personnel, both DOE and DOE Contractor, are required to attend a weekly safety meeting from 6:30 a.m. – 7:30 a.m. each Wednesday morning. RMOTC personnel will suspend their participation in the project at this time to attend the weekly meetings.

 

All DOE and DOE Contractor personnel have the authority to shutdown work for safety, health and/or environmental reasons.

 

	
7.

	
Safety Statistics Reporting

 

The Partner shall provide the following statistics to the to the RMOTC contact on a monthly basis during the time the Partner is on NPR-3:

 

	
  

	
A.

	
Total man-hours worked

	
  

	
B.

	
Total miles driven on NPR-3

	
  

	
C.

	
All accidents

	
  

	
D.

	
Number of vehicles used

	
  

	
E.

	
Days lost time due to an accident

	
  

	
F.

	
Property damage

	
  

	
G.

	
First aid cases

	
  

	
H.

	
Number of lost time accidents

	
  

	
I.

	
Vehicle accidents

 

  

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8.

	
Foreign Visitor Approvals

 

RMOTC must comply with DOE O 142.3, Unclassified Foreign Visits and Assignments Program.

 

For the purposes of RMOTC, a foreign visitor is a person who was born outside the jurisdiction of the United States, is a citizen of a foreign government, and has not been naturalized under U.S. law.

 

Sufficient documentation of immigrant or nonimmigrant status, identity, and citizenship is required for all foreign visitors to RMOTC.  To that end, RMOTC requires any one of the following documents - Passport, Visa, or Green Card.

 

To reduce the possibility of delays, please submit a Passport, Visa, or Green Card for each foreign visitor a minimum of 30 days prior to their arrival at RMOTC.

 

Other NPR-3 RMOTC Site Restrictions Affecting Foreign Visitors.

 

	
  

	
§

	
Visitors must receive safety orientation.

	
  

	
§

	
Visitors must have valid identification (government issued) to show upon request and before receiving orientation card.

	
  

	
§

	
Visitors must sign-in/sign-out.

	
  

	
§

	
Visitors must be accompanied by a DOE employee or representative at all times unless otherwise noted in their site specific security plan.

	
  

	
§

	
Visitors may not at any time visit or work alone at NPR-3 unless otherwise noted in their site specific security plan.

	
  

	
§

	
Visitors may not have access to DOE computers or network during site visit unless pre-authorized by DOE management.

 

	
9.

	
Required Insurance

 

The Participant shall procure and maintain during the entire period of the AGREEMENT the following minimum insurance. Prior to commencement of work under this AGREEMENT the Participant shall furnish to the Contracting Officer a certificate or written statement of the required insurance. The policies evidencing required insurance shall contain an endorsement to the effect that cancellation or any material change in the policies adversely affecting the interests of the Government in such insurance shall not be effective for such period as may be prescribed by the laws of the State in which this AGREEMENT is to be performed and in no event less than thirty (30) days after written notice thereof to the Contracting Officer.

 

	
TYPE

	
AMOUNT

	
Workers Compensation & Occupational Disease

	
Statutory

	
Employer’s Liability Insurance

	
$100,000

	
Comprehensive General Liability

	
Bodily Injury

$500,000 per occurrence

	
Automotive Liability

	
$200,000 per person

$500,000 per occurrence for bodily injury

$20,000 per occurrence for property damage

 

 

  

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10.

	
Downtime

 

Projects may experience downtime. Costs for downtime caused by project related activities will be shared by RMOTC and the participant. For downtime due to RMOTC equipment, costs will be part of RMOTC’s costs. If downtime or other costs are incurred for work directed by the participant that is outside the AGREEMENT, then the participant shall be responsible for all associated costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10night_10k-ex1002.htm

 

Exhibit 10.2

 

Neither this Convertible Debenture nor the securities issuable upon conversion hereof have been registered under the Securities Act of 1933 (the “Securities Act”) or the securities laws of any applicable state or other jurisdiction.  Neither this Convertible Debenture nor any interest therein may be offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or an exemption from registration.  If relying upon such an exemption, the Payee may be required to submit to the Company a favorable opinion of counsel satisfactory to the Company, or any such other evidence as may be satisfactory to the Company, to the effect that the transaction is exempt from, or not subject to, the registration requirements of the Securities Act of 1933 or of any other applicable jurisdiction.

This Convertible Debenture was issued in exchange for a convertible debenture of like tenure originally issued by Night Culture, Inc., a Texas corporation (the “Subsidiary”), and assumed by the Company pursuant that certain Assignment and Assumption Agreement executed as of February 27, 2012 by the Company and the Subsidiary.  The issuance of this Convertible Debenture was exempt from registration pursuant Section 3(a)(9) of the Securities Act.

2011 5% CONVERTIBLE DEBENTURE

	
NUMBER NC 2011- __________

	
 $10,000.00

UNITED STATES OF AMERICA

STATE OF NEVADA

NIGHTCULTURE, INC., a Nevada corporation, (hereinafter called the "Company"), for value received, hereby promises to pay to

 

NAME: ______________________________________________

 

Street Address: _______________________________________

____________________________________________________

 

City:____________________     State: ____________________

 

Zip/Postal Code:__________     Country:__________

(hereinafter referred to as the "Payee" or the “holder”)

or registered assigns, in legal tender of the United States of America, the principal sum of Ten Thousand Dollars ($10,000.00), together with interest thereon accrued at the rate of five per cent (5%) per annum, on _________ ___, 20___ (the “Maturity Date”).  Interest shall accrue only on the outstanding principal hereof.

  

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The principal sum, and all accrued but unpaid interest thereon, shall be due and payable in full on and as of the Maturity Date.  Such payment shall be paid to the registered owner of this 2011 5% Convertible Debenture (hereinafter referred to as this "Convertible Debenture") as of the close of business on the Maturity Date.

This Convertible Debenture is one of a series of duly authorized issue of 2011 5% Convertible Debentures of the Company for a minimum aggregate principal amount (except as provided with respect to mutilated, destroyed, lost or stolen Convertible Debentures) of at least $250,000, all of like tenor except as to issuance date and maturity date, and each such Convertible Debenture that has been issued or will be issued as a Unit with a warrant excercisable to purchase 500,000 shares of the Company’s common stock, $0.001 par value (the “Common Stock”), at an exercise price equal to seventy percent (70%) of the average closing price of the Company’s Common Stock for the twenty (20) trading days up to and including the date of exercise (the “Warrant”).  This Convertible Debenture and the rights of the Company and any holder shall be governed by the law of Nevada.

If an Event of Default (as defined below) occurs and is continuing, the holder of this Convertible Debenture may make all sums of principal, interest and other fees then remaining unpaid under this Convertible Debenture and all other amounts payable hereunder immediately due and payable, all without demand, presentment or notice, or grace period, all of which hereby are expressly waived.  So long as an Event of Default occurs and is continuing, this Convertible Debenture shall bear interest at the rate equal to the lesser of (i) 18% per annum and (ii) the maximum lawful non-usurious contract rate of interest allowed by applicable law, until such time as the Event of Default is cured or outstanding principal and all accrued but unpaid interest on this Convertible Debenture and any other amounts due there under are paid in full.

The occurrence of any of the following events is an Event of Default ("Event of Default"):

A.           Failure to Pay Principal, Interest or other Fees.  The Company fails to pay when due the principal, interest or other fees on this Convertible Debenture and such failure continues for a period of ten (10) days after the due date.

B.           Breach of Covenant.  The Company breaches any material covenant or other term or condition of this Convertible Debenture or the Warrant in any material respect and such breach, if subject to cure, continues for a period of ten (10) days after written notice to the Company from the holder of this Convertible Debenture.

C.           Receiver or Trustee.  The Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

  

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D.           Judgments.  Any money judgment, writ or similar final process shall be entered or filed against the Company or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of ninety (90) days.

E.           Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company.

This Convertible Debenture is not subject to any call and redemption by the Company.

All or any portion of the unpaid principal of this Convertible Debenture and/or any accrued but unpaid interest thereon may be prepaid by the Company prior to the Maturity Date, at any time, and from time to time, in whole or in part.  Notwithstanding the foregoing, the Company shall not be permitted to use the proceeds from any debt financing, including, but not limited to, any equity line of credit provided by Calm Seas Capital, LLC, to repay the principal of this Convertible Debenture and/or any accrued but unpaid interest thereon.

Subject to the provisions of this Convertible Debenture, at any time prior to the date on which the principal of this Convertible Debenture and any accrued but unpaid interest thereon has been paid in full (the “Conversion Period”), the principal of this Convertible Debenture and all accrued but unpaid interest thereon may be converted, at the option of the holder, into shares of Common Stock at a conversion price equal to seventy percent (70%) of the Market Price (as defined below) (the “Conversion Price”) by and upon submitting a notice of conversion in the form annexed to this Convertible Debenture as Exhibit A (“Notice of Conversion”); provided, however, that in no event shall the holder be entitled to convert any portion of this Convertible Debenture in excess of that portion of this Convertible Debenture upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Convertible Debentures, the Warrants or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the exercise of this Convertible Debenture with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso.  Upon delivery to the Company of a Notice of Conversion (the date of giving such Notice of Conversion being a “Conversion Date”), the Company shall issue and deliver to the holder of this Convertible Debenture within three business days from the Conversion Date that number of shares of Common Stock for the portion of this Convertible Debenture converted as set forth in the Notice of Conversion.  The number of shares of Common Stock to be issued upon each conversion of this Convertible Debenture shall be determined by dividing (i) that portion of the principal of this Convertible Debenture(s) to be converted together with the accrued but unpaid interest thereon, by (ii) the Conversion Price as of the Conversion Date.   For the purpose of this Convertible Debenture, “Market Price” shall mean for the Common Stock (or its successor security) (i) if the Common Stock is traded on a securities exchange or through the Nasdaq Markets (such as Global or Global Select or Capital Market) (“Nasdaq Market”), the average closing sales price of the Common Stock on the Nasdaq Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. over the twenty (20) consecutive trading day period ending on the Conversion Date; (ii) if the Common Stock is quoted for trading on the OTC Bulletin Board, the average closing sale price of the Common Stock as so reported by the OTC Bulletin Board over the twenty (20) consecutive trading day period ending on the Conversion Date; and (iii) if prices for the Common Stock are then reported in any of the OTC Markets (such as the OTCQX, OTCQB and OTC Pink but excluding the Grey Market) published by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the average of the last accepted bid price per share of Common Stock as so reported over the twenty (20) consecutive trading day period ending on the Conversion Date.  If the Common Stock is not listed for trading eligible for quotation on any of the foregoing exchanges or public markets, then this Convertible Debenture shall not be convertible unless and until the Common Stock is so listed or eligible for quotation.

  

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The Conversion Price and number and kind of Common Stock or other securities to be issued upon conversion of this Convertible Debenture shall be subject to adjustment from time to time upon the happening of certain events during the Conversion Period, as follows:

(i)           Merger, Sale of Assets, etc.  If the Company at any time shall consolidate with or merge into or sell or convey all or substantially all its assets to any other corporation, this Convertible Debenture, as to the unpaid principal portion thereof and accrued but unpaid interest thereon, shall thereafter be deemed to evidence the right to purchase such number and kind of shares or other securities and property as would have been issuable or distributable on account of such consolidation, merger, sale or conveyance, upon or with respect to the number of shares of Common Stock the holder of this Convertible Debenture could have acquired immediately prior to such consolidation, merger, sale or conveyance based on the Conversion Price as of the closing date thereof.  The foregoing provision shall similarly apply to successive transactions of a similar nature by any such successor or purchaser.

  

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(ii)           Reclassification, etc.  If the Company at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Convertible Debenture, as to the unpaid principal portion thereof together with the accrued but unpaid interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the number of shares of Common Stock into which this Convertible Debenture would have been convertible immediately prior to such reclassification or other change at the Conversion Price as of the effective date for such reclassification or change.

(iii)           Stock Splits, Combinations and Dividends.  If the outstanding shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the shares of Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

  

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(iv)           Share Issuance.  If the Company at any time shall issue any shares of Common Stock prior to the conversion of the entire principal amount of this Convertible Debenture for a consideration less than the Conversion Price that is in effect at the time of such issue (other than pursuant to any of the Exiting Stock Obligations (as defined below)), then, and thereafter successively upon each such issue, the Conversion Price shall be reduced to a quotient determined as follows:  (1) the sum of (X) number of shares of Common Stock outstanding immediately prior to such issuance shall be multiplied by the Conversion Price in effect at the time of such issuance plus (Y) the aggregate consideration, if any, received by the Company upon such issuance of additional shares of Common Stock, divided by (2) the number of shares of Common Stock outstanding immediately after such issue.  Except for the Existing Option Obligations (as defined below), for purposes of this adjustment, the issuance of any security of the Company carrying the right to convert such security into shares of Common Stock or of any warrant, right or option to purchase shares of Common Stock shall result in an adjustment to the Conversion Price upon the issuance of the shares of Common Stock upon exercise of such conversion or purchase rights.  “Existing Stock Obligations” shall mean shares of Common Stock issued pursuant to (i) the conversion of other 2011 5% Convertible Debentures issued with the Units; (ii) the exercise of the Warrants issued with the Units; (iii) warrants or options that may be granted in the future under any option plan of the Company, or any employment agreement, joint venture, credit, leasing or other financing agreement or any joint venture or other strategic arrangement, in each case  now or hereinafter entered into by the Company; (iv) any agreement entered into by the Company or any of its subsidiaries for the acquisition of another business (whether by stock purchase or asset purchase, merger or otherwise); or (v) other obligations to issue securities of the Company outstanding on the date hereof.

During the period the conversion right exists under this Convertible Debenture, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of shares of Common Stock upon the full conversion of the principal of this Convertible Debenture and all accrued but unpaid interest thereon based on the then applicable Conversion Price as of any specific date.  The Company represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.  The Company agrees that its issuance of this Convertible Debenture shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for Common Stock upon the conversion of this Convertible Debenture.

  

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This Convertible Debenture may be converted by the holder in whole or in part as described herein.  Upon partial conversion of this Convertible Debenture, a new Convertible Debenture containing the same date and provisions of such Convertible Debenture shall, at the request of the holder, be issued by the Company to holder for the principal balance of this Convertible Debenture and accrued but unpaid interest (provided, however, such unpaid interest shall not bear interest) which shall not have been converted.

The holder of this Convertible Debenture acknowledges and understands that the shares of Common Stock issued upon the conversion of this Convertible Debenture will be restricted securities under the Securities Act of 1933 (the “Securities Act”), and the certificate(s) representing such Common Stock shall bear the following legend:

"THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS”

Prior to the conversion of this Convertible Debenture, the Payee shall not have or exercise any rights as a shareholder of the Company by virtue of its ownership of this Convertible Debenture.

This Convertible Debenture has not been registered under the Securities Act and may not be sold, transferred, pledged, hypothecated or otherwise disposed of unless there is an effective registration statement with respect to it or there is an exemption from such registration available under the circumstances.

Subject to the foregoing restriction on transfer, this Debenture is transferable on the books of the Company, to be kept at the office of the Company in Houston, Texas, by the registered owner hereof in person, or by an attorney duly authorized in writing, upon surrender and cancellation of this Convertible Debenture.  Upon any such transfer, a new Convertible Debenture or Debentures of the same issue and for the same aggregate original face amount shall be issued to the transferee in exchange therefor; provided, nevertheless, that the actual liability of the Company shall be limited to the actual unpaid principal amount outstanding as of the date of transfer, together with any accrued but unpaid interest thereon.  The Company may deem or treat the person in whose name this Convertible Debenture shall at the time be registered as the absolute owner hereof for the purposes of transfer and receiving payment of principal and/or interest as well as for all other purposes whatsoever and the Company shall not be affected by any notice to the contrary.

  

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IN WITNESS WHEREOF, NightCulture, Inc. has caused this Convertible Debenture to be signed by its Chief Executive Officer and attested by its Secretary, or an Assistant Secretary, and this Debenture to be dated as of February    , 20__.

	  	
NIGHTCULTURE, INC.

	  	  
	  	  
	
ATTEST:

	  
	  	  
	  	
By:_________________________________

	
 

	
      Chief Executive Officer

	  	  
	
______________________________

	  

Secretary

  

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ASSIGNMENT

 

 

For value received, the undersigned hereby sells, assigns and transfers to:

all his/hers/their interest represented by the within Convertible Debenture and does hereby authorize, empower, and appoint                                                        , attorney to make the necessary transfer on the books of the Company, with full power of substitution in the premises.

 

DATED:                            , 20____

WITNESS:

	
____________________

	
_____________________________(L.S.)

	
 

	
                               (Registered Owner)

	  	  
	
____________________

	
_____________________________(L.S.)

	
 

	
                              (Registered Co-Owner)

  

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EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder

in order to Convert the Convertible Debentures)

The undersigned hereby irrevocably elects to convert ______________principal amount of the Convertible Debenture (defined below) into shares of Common Stock, par value $0.001 ("Common Stock"), of NightCulture, Inc., a Nevada corporation (the "Company"), according to the conditions of the 2011 5% convertible debentures of the Company (the "Convertible Debentures"), as of the date written below.  If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates.  No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.  A copy of each Convertible Debenture is attached hereto (or evidence of loss, theft or destruction thereof).

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable to the undersigned upon conversion of the Convertible Debentures shall be made pursuant to registration of the securities under the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from registration under the Act.

Date of Conversion: __________________________________________

 

Applicable Conversion Price: ___________________________________

 

Number of Shares of Common Stock to be Issued Pursuant to

Conversion of the Convertible Debentures: __________________

 

Signature: _________________________________________________

 

Name: _____________________________________________

 

Address: ____________________________________________

 

MAIL THE STOCK CERTIFICATE TO THE ADDRESS BELOW:

 

 

 

 

 

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