Document:

exv4w02

 

Exhibit 4.02

Form of Convertible Debenture

THIS CONVERTIBLE DEBENTURE AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE COMPANY (AS DEFINED
BELOW) THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.

LIFEVANTAGE CORPORATION

CONVERTIBLE DEBENTURE

			
	$                     
	 	                    , 2007
	 
	 	Greenwood Village, Colorado

          For value received, LifeVantage Corporation, a Colorado corporation (the
“Company”), unconditionally promises to pay to                      or its assigns (the
“Holder”) the principal sum of $                      with interest on the outstanding principal
amount at the rate of eight percent (8%) per annum (subject to adjustment as set forth
below), or the maximum rate permissible by law, whichever is less, simple interest, and
calculated on the basis of a 360 day year for the actual number of days elapsed. Interest
shall commence with the date hereof and shall be due and payable on the dates and in the
manner set forth below. The principal balance of this Debenture, together with the accrued
interest thereon shall be due and payable on the dates and in the manner set forth below.

          This Debenture is one of the convertible debentures (collectively, the “Debentures”)
referred to in, and is executed and delivered in connection with, those certain Unit
Subscription Agreements, dated on or about                      ___, 2007 and executed by the Company and
the Holder, among others (as the same may from time to time be amended, modified or
supplemented or restated, the “Subscription Agreements”). Additional rights and
obligations of the Holder and the Company are set forth in the Subscription Agreement.
Capitalized terms not otherwise defined herein shall have the meanings set forth in the
Subscription Agreement.

     1. Interest; Maturity; Payments; Prepayment; Waiver of Presentment.

          (a) Interest. Interest shall commence with the date hereof and shall be due and payable on the
last day of each calendar quarter. Interest due hereunder shall be payable in shares of the
Company’s Common Stock valued at the Market Price (as defined below) on the last day of such
quarter provided, however, that interest may be paid in Common Stock only if the Equity Conditions
have been met on such quarter-end date or, upon the election of the Company in its discretion, in
lawful money of the United States of America to the Holder at the address set forth in the
Subscription Agreement. “Market Price” shall mean the ten (10) day average of (i) the last
reported closing sale price for the Common Stock as officially reported by the OTC Bulletin Board,
if the Common Stock is then traded on the OTC Bulletin Board; or (ii) the last reported closing
sale price on the Nasdaq SmallCap or National Market or a national securities exchange, if the
Common Stock is then traded on the Nasdaq SmallCap or National Market or a national securities
exchange, in each case as officially reported by the Nasdaq SmallCap or National Market or such
national securities exchange; or (iii) if the Common Stock is not then traded on the OTC Bulletin
Board, the Nasdaq SmallCap Market, the Nasdaq National Market or a national securities exchange,
but is then traded in the over-the-counter market, then the average of the last reported bid and
asked prices of the Common Stock reported by the National Quotation Bureau, Inc. or similar bureau
if the National Quotation Bureau, Inc. is no longer reporting such information.

     “Equity Conditions” means the following:

	 	•	 	The Company shall have converted to Common Stock all Debentures from Holders
thereof who have properly requested such conversion;
	 
	 	•	 	There will be an effective Registration Statement with respect to the Common
Stock underlying the Debentures and any warrants issued by the Company and any
Common Stock to be paid as interest hereunder;
	 
	 	•	 	The Common Stock is listed for trading on the American Stock Exchange, the New
York Stock Exchange, the NASDAQ National Market, the NASDAQ Small Cap Market or
the OTC Bulletin Board (a “Principal Market”);
	 
	 	•	 	The Company shall have a sufficient number of authorized but unissued and
otherwise unreserved Common Stock to satisfy all potential conversions of
Debentures to Common Stock; and

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	 	•	 	The payment of interest in Common Stock has been approved by the Company’s
shareholders, if required by the applicable rules of the Principal Market.

          (b) Maturity Date. At any time on or after ___, 2010 (the “Maturity Date”) and prior to
delivery of an Automatic Conversion Notice (as defined in Section 2(b) below), if this Debenture
has not been paid in full or converted in accordance with the terms of Section 2 below, the Holder
may demand payment of the entire outstanding principal balance and all unpaid accrued interest in
cash (a “Payment Demand”).

          (c) Payments. All payments of principal and interest shall be in shares of Common Stock as
provided herein or in lawful money of the United States of America and shall be payable at the
address of the Holder set forth in the Subscription Agreement, unless another place of payment
shall be specified in writing by the Holder. All payments shall be applied first to any fees or
expenses due to the Holder, then to accrued interest, including any interest that accrues after the
commencement of a proceeding by or against the Company under Title 11 of the United States Code,
and thereafter to the outstanding principal balance hereof. If any payments on this Debenture
become due on a Saturday, Sunday, or a public holiday under the laws of the State of Colorado, such
payment shall be made on the next succeeding business day and such extension of time shall be
included in computing interest in connection with such payment.

          (d) Prepayment. Subject to Section 2(c) below, at any time on or prior to the Maturity Date,
the Company may pay this Debenture, in whole or in part, by giving Holder and the holders of all
other Debentures then outstanding, at least fifteen (15) business days irrevocable written notice
prior to such prepayment (the “Prepayment Notice”), and the Company shall pay this Debenture and
all other Debentures, in whole or in part, (the “Prepayment Amount”) in accordance with the
Company’s notice.

          (e) Waiver. The Company hereby waives demand, notice, presentment, protest and notice of
dishonor.

     2. Conversion.

          (a) At Maturity Date by Company. At any time on or after the Maturity Date, if all principal
and interest outstanding under this Debenture has not been paid in full, then the Company may, in
its discretion, cause the conversion of the entire principal balance of this Debenture and all
unpaid interest hereon into shares of the Company’s Common Stock at a rate equal to the lower of
the 10 day average closing price for the 10 previous business days or $0.20 per share of Common
Stock (the “Conversion Price”), subject to adjustment as set forth herein. The Company shall notify
the Holder of such automatic conversion in writing at least five (5) days prior to such conversion
(an “Automatic Conversion Notice”).

          (b) Optional Conversion by Holder. At any time from the date hereof through the date that
this Debenture is paid in full, including at any time after receiving a Prepayment Notice but
before receiving the Prepayment Amount, Holder shall have the right, in its sole discretion, to
convert the principal balance of this Debenture then outstanding plus accrued but unpaid interest,
in whole or in part, into shares of Common Stock at the Conversion Price by delivering to the
Company written notice of such conversion as set forth on Appendix A hereto (an “Optional
Conversion Notice”).

          (c) Conversion Procedures. Upon conversion of this Debenture pursuant to Section 2(a) or 2(b)
above, the Holder shall surrender this Debenture, duly endorsed, at the principal office of the
Company, and the Company shall, at its expense, following receipt of this Debenture, duly endorsed,
promptly deliver or cause to be delivered to the Holder a certificate or certificates (bearing such
legends as may be required) representing that number of fully paid and non-assessable shares of Common Stock into which this Debenture may be
converted. The conversion of this Debenture shall be deemed to have been made on the date of (i)
the Maturity Date pursuant to Section 2(a) above, or (ii) the date of the Optional Conversion
Notice pursuant to Section 2(b) above, as applicable, and the Holder shall be treated for all
purposes as the record holder of such shares of equity securities as of such applicable date.

          (d) Reservation of Shares. The Company covenants and agrees that the shares of Common Stock
that may be issued upon the exercise of the rights represented by this Debenture will, upon
issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further covenants and agrees
that the Company will at all times during the time that principal or interest is owed pursuant to
this Debenture, have authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the conversion rights set forth herein. If at any time
during the time that this Debenture is outstanding, the number of authorized but unissued shares of
Common Stock shall not be sufficient to permit conversion of amounts owed hereunder, the Company
will take such corporate action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for
such purposes.

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          (e) No Fractional Shares. Upon a conversion hereunder, the Company shall not be required to
issue stock certificates representing fractions of shares of Common Stock, and in lieu of any
fractional shares which would otherwise be issuable, the Company shall issue the next lowest whole
number of shares of Common Stock.

     3. Mandatory Redemption. If prior to conversion or payment of this Debenture, (i) the Company
fails to remain subject to the reporting requirement under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) for a period of at least 45 consecutive days, (ii) the Company fails
to materially comply with the reporting requirements under the Exchange Act for a period of 45
consecutive days, (iii) the Company’s Common Stock is no longer quoted on the OTC Bulletin Board or
listed or quoted on a securities exchange, or (iv) a Change of Control is consummated (each a
“Mandatory Redemption Event”), the Company will be required to redeem this Debenture in an amount
equal to 150% of principal amount hereof plus any accrued but unpaid interest hereon within fifteen
(15) days of such Mandatory Redemption Event. “Change of Control” means the existence or
occurrence of any of the following: (a) the sale, conveyance or disposition of all or substantially
all of the assets of the Company; (b) the effectuation of a transaction or series of related
transactions by the Company in which more than 50% of the voting power of the Company is disposed
of (other than as a direct result of the issuance of securities by the Company in a capital raising
transaction); (c) the consolidation, merger or other business combination of the Company with or
into any other entity, immediately following which the prior stockholders of the Company fail to
own, directly or indirectly, at least 50% of the voting equity of the surviving entity; (d) a
transaction or series of transactions in which any person or “group” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) acquires more than 50% of the voting equity of the
Company (other than the issuance of securities by the Company in a capital raising transaction); or
(e) a transaction or series of transactions that constitutes or results in a “going private
transaction” (as defined in Section 13(e) of the Exchange Act and the regulations thereunder).

     4. Adjustments of Conversion Price.

          (a) In the event of changes in the outstanding Common Stock of the Company by reason of stock
dividends, splits, recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the Conversion Price shall be
correspondingly adjusted to give the Holder of the Debenture, on exercise for the same aggregate
Conversion Price, the total number, class, and kind of shares as the Holder would have owned had
the Debenture been exercised prior to the event and had the Holder continued to hold such shares
until after the event requiring adjustment. The form of this Debenture need not be changed because
of any adjustment in the Conversion Price.

          (b) If during the time that principal or interest is owed pursuant to this Debenture, the
Company issues or sells Additional Shares of Common Stock (as defined below) other than pursuant to
4(a) above for a price (the “Effective Price”) less than the then effective Conversion Price, then
and in each such case, the then existing Conversion Price shall be reduced, as of the opening of
business on the date of such issue or sale, to a price equal to such Effective Price. “Additional
Shares of Common Stock” shall mean all shares of Common Stock, or options, warrants or other rights
to acquire Common Stock, issued by the Company, other than (i) options, warrants or shares of Common Stock issued to employees, directors and consultants as a part of an equity incentive
plan or agreement approved by the Company’s Board of Directors, (ii) shares of Common Stock issued
as a consideration for a merger, acquisition or other business combination approved by the
Company’s Board of Directors, (iii) options, warrants or shares issued pursuant to any equipment
loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or
similar financial institution approved by the Company’s Board of Directors; (iv) shares issued upon
the exercise of an option, warrant or other right to acquire Common Stock pursuant to which an
adjustment of the Conversion Price under this Section 4(b) has already been made; and (v) options,
warrants or shares issued with respect to which the holders of a majority of the outstanding
Debentures waive their antidilution rights under this Section 4(b).

     5. Default.

          (a) Each of the following events shall be an “Event of Default” hereunder:

               (i) the Company engages in any liquidation, dissolution or winding up of the Company;

               (ii) the Company files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or
hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate
action in furtherance of any of the foregoing;

               (iii) an involuntary petition is filed against the Company under any bankruptcy statute now or
hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or
other similar official) is appointed to take possession, custody or control of any property of the
Company;

               (iv) the Company executes an assignment with respect to a majority of its assets;

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               (v) the Company fails to pay, within ten (10) business days of the Maturity Date, any and all
unpaid principal, accrued interest and other amounts owing hereunder if not otherwise converted
into Common Stock pursuant to Section 2 hereof;

               (vi) the Company fails to pay, within ten (10) business days of an interest payment due date,
accrued interest due on such date if not otherwise converted into Common Stock pursuant to Section
1 hereof, and such failure is not cured within ten (10) business days of receipt of notice thereof;
or

               (vii) the Company fails to redeem the Debenture pursuant to Section 3 hereof within ten (10)
business days of a Mandatory Redemption Event.

          (b) Upon the occurrence of any Event of Default hereunder, all unpaid principal, accrued
interest and other amounts owing hereunder shall, at the option of the Holder, and, in the case of
an Event of Default pursuant to Section 5(a)(ii) or (iii) above, automatically, be immediately due,
payable and collectible by the Holder pursuant to applicable law.

          (c) In the event of any Event of Default hereunder, the Company shall pay all reasonable
attorneys’ fees and court costs incurred by the Holder in enforcing and collecting this Debenture.

     6. Miscellaneous.

          (a) Registration Rights. The Holder is entitled to certain registration rights with respect to
the Common Stock issuable upon conversion of this Debenture as set forth in the Subscription
Agreement.

          (b) Restrictions on Dividends. The Company further covenants and agrees that during the time
that principal or interest is owed pursuant to this Debenture the Company will not declare or pay
any dividends on its outstanding capital stock, provided that the Company may repurchase shares of
capital stock in connection with the termination of employment or consulting relationships pursuant
to such agreements as are approved by the Board of Directors.

          (c) Restrictions on Transfer. This Debenture and the rights granted hereunder are subject to
restrictions on transfer under Federal and state securities laws as further described in the
Subscription Agreement.

          (d) Successors and Assigns. Subject to applicable law, the terms and conditions of this
Debenture shall inure to the benefit of and be binding upon the respective successors and assigns
of the parties.

          (e) Acceptance. Receipt of this Debenture by the Holder shall constitute acceptance of and
agreement to all of the terms and conditions contained herein.

          (f) Governing Law. This Debenture shall be governed by and construed under the laws of the
State of Colorado as applied to agreements among Colorado residents, made and to be performed
entirely within the State of Colorado.

          (g) Titles and Subtitles. The titles and subtitles used in this Debenture are used for
convenience only and are not to be considered in construing or interpreting this Debenture.

          (h) Amendment and Waiver. This Debenture may be amended, together with all similar Debentures
purchased pursuant to the Subscription Agreements, as provided in Section O(4) of the Subscription
Agreements.

	 	 	 	 	 
	 	LifeVantage Corporation

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Convertible Debenture]

4exv10w20

 

EXHIBIT 10.20

Aspenwood Capital Investment Banking Division

Green Drake Capital Corp.

17 Battery Place, 11th Floor

New York, NY 10004

(212) 473-2409

(212) 473-2401 telecopy

May 24, 2007

Mr. Jim Krejci

LifeVantage Corporation

6400 South Fiddlers Green Circle

Suite 1970

Greenwood Village, CO 80111

Dear Jim:

     It is Aspenwood Capital’s (the “Placement Agent”) understanding that LifeVantage Corporation
(“LFVN”, “you,” or the “Company”) wishes to undertake a private offering of convertible debentures
and warrants in an effort to raise a maximum of $3,000,000 for the Company.

     Aspenwood Capital, the investment banking division of Green Drake Capital Corp. (Member
NASD/SIPC) (“we” or “Aspenwood”), is pleased to represent LFVN as its financial advisor and
placement agent in connection with the Company’s proposed
private placement. The terms of the
engagement are set forth below. We look forward to working with you.

     1. Offering.
The Company hereby engages Aspenwood to act as its financial
advisor and placement agent during the Term (as defined below) in connection with the sale of the Company’s
Convertible Debentures (the “Convertible Debentures”) in aggregate gross proceeds of $1,500,000
(“Minimum Amount”) and up to $3,000,000 (“Maximum Amount”) with attached warrants (“Warrants”),
provided that the Company may elect to sell an additional $500,000 in principal amount if there is
sufficient demand (the “Offering”). Such engagement shall be exclusive during the Term (as defined
below) and shall be nonexclusive thereafter. The proposed terms and conditions of the Offering are
set forth in the Summary of Financing Terms attached hereto as
Exhibit A and incorporated herein
by reference. The actual terms of the Offering will depend on market conditions, and will be
subject to negotiation between the Company, Aspenwood and prospective investors. Aspenwood will
conduct the Offering on a “best efforts” basis. In turn, during the Term, the Company agrees not
to discuss, solicit, entertain, agree or negotiate with any other third party, placement agent,
financial advisor or underwriter with respect to a private or public offering of the Company’s
debt or equity securities. Aspenwood shall be authorized to
arrange for other broker-dealers to participate in the Offering (“Participating Dealers”) with Aspenwood being responsible for the
payment of any agreed upon re-allowance to Participating Dealers out of the Commissions (as
defined below) paid to Aspenwood hereunder. This agreement does not constitute an agreement or
commitment (express or implied) on the part of the Company to enter into or consummate the
proposed Offering, and nothing in this agreement shall prevent the Company from abandoning or
otherwise electing not to proceed with the proposed Offering. The Company shall have final
authority to make all decisions with respect to the proposed Offering, including the right to
determine whether to proceed with such a transaction. This agreement does not create any agency

 

 

relationship between Company and Aspenwood, and Aspenwood accordingly has no power to enter into
any agreement or incur any obligation on behalf of the Company.

     2. Aspenwood
Obligations. Aspenwood will provide such financial and placement services
in connection with the Offering as are customary and appropriate in transactions of this type
and as the Company reasonably requests, including, but not limited to:

	 	•	 	Assisting the Company in reviewing and evaluating the Information (as defined below)
provided by the Company;
	 
	 	•	 	Assisting the Company in the management of the Offering process as directed by the Company;
	 
	 	•	 	Providing related financial advisory input with respect to the development of a
Private Placement Memorandum on the Company (the “PPM”) and other Uttering materials;
	 
	 	•	 	Marketing the Offering to potential investors as directed by the Company; and
	 
	 	•	 	Providing related financial advisory input with respect to valuation and Offering
structure.

     The Company hereby warrants and represents to, and covenants with, Aspenwood that there are
no existing agreements between the Company or any of its affiliates or subsidiaries and any other
investment banking firm, placement agent, financial advisor or other party to raise capital
(including additional debt) for the Company, and no other person or entity is entitled to a
finder’s fee or any type of brokerage commission in connection with the transactions contemplated
by this Agreement as a result of any agreement or understanding with the Company or any of its
affiliates or subsidiaries.

     3. Compensation;
Expenses. Concurrently with the closing of the Offering (“Closing”),
the Company shall pay Aspenwood a cash fee (“Commission”) equal to 10% of the gross proceeds
received from the sale of securities in the Offering to investors solicited by Aspenwood, including any
Officers, Directors and employees of the Company that may participate in the Offering. The Company also agrees to pay
to Aspenwood on a quarterly basis, as warrant solicitation agent for transactions involving the
exercise of any Warrants, which exercise is solicited by Aspenwood, a warrant solicitation fee of 2% of the
aggregate exercise price received during the applicable quarter (“Solicitation Fees”). The Solicitation Fees
shall be payable to Aspenwood for any investor Warrants related to this offering or investor warrants from
previous financings which may be repriced after me execution of this agreement. Such solicitation fees shall be
payable to Aspenwood for any such warrants notwithstanding the termination or expiration of this
Agreement. Aspenwood shall have the right to waive all or a portion of its Commission in exchange for
additional Agent Warrants (as defined below) in an amount equal to the quotient derived from dividing the
Commission waived by the Convertible Debenture Conversion Price.

     In addition, the Company shall issue, at the Closing, to Aspenwood or its designees warrants
to purchase shares of the Company’s common stock equal in number
to 10% of the shares of the
Company’s common stock underlying the Convertible Debentures sold in the Offering (“Agent
Warrants”). Each Agent Warrant shall entitle the holder thereof to purchase one share
of the Company’s common stock. The Agent Warrants shall not be redeemable by the Company and shall
be exercisable at any time after the Closing at a price equal to the Convertible Debenture
Conversion Price issued to investors, on a net-issuance or cashless basis. In addition to the
exercise price, Aspenwood shall pay a “warrant cost” of $0.001 (one-tenth of a cent) per share to
the Company upon issuance of the Agent Warrants. The Company hereby grants the same registration
rights to Aspenwood and its designees with respect to the shares of the Company’s common stock
underlying the Agent Warrants as are granted to investors with respect to the shares of the
Company’s common stock underlying the Convertible Debentures and Warrants issued to investors in
the Offering. Except as otherwise set forth in this paragraph, the Agent Warrants shall be in the
same form as the Warrants and will expire five years from the date of the Closing of the Offering.
The Company agrees that Aspenwood shall be afforded the indemnification protections granted to the
investors in the Offering as part of the

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agreement governing the registration of the securities sold to investors in the Offering, as a
third party beneficiary to such provisions.

     The Company shall pay all costs and expenses related to the Offering and/or the performance
of the Company’s obligations under this Agreement, including preparation of the offering
materials, any memoranda, preparation of related documentation, Company accounting fees, Company
legal fees, Company experts’ fees, Company consultants’ fees, escrow fees, filing fees with the
SEC and applicable states, any costs and expenses to qualify the securities for sale in any state
and any and all Company costs and expenses for investor or road show presentations. The Company
agrees to engage legal counsel selected by the Company to qualify the securities for sale in any
state, to file Form D and to otherwise assure compliance with the securities laws of any state in
connection with this Offering.

     Notwithstanding the foregoing, the Company shall not be responsible for any expenses of
Aspenwood and Participating Dealers incurred in connection wife fee Offering, including operating
expenses, and other incidental expenses incurred by Aspenwood and Participating Dealers; provided,
however, whether or not fee Offering is completed, the Company shall reimburse Aspenwood upon
request for its reasonable and documented actual out-of-pocket expenses incurred in connection
with this Offering, including but not limited to, its due diligence investigation, attendance at
road show and investor presentations, travel costs related to the foregoing and Aspenwood’s costs
for its legal counsel fees and disbursements. Aspenwood shall be reimbursed for investor road show
presentation expenses and such expenses are due 15 days following receipt of an invoice from
Aspenwood. Aspenwood’s road show expenses shall not exceed $10,000. Total expenses of Aspenwood
paid by the Company in connection with this Offering shall be in an amount not exceeding $30,000
without the Company’s prior written consent (the “Expense Cap”). Upon execution of this Agreement,
Company shall pay Aspenwood a non-refundable deposit of $15,000 to be applied to legal fees
related to this offering. Such fees shall be applied toward the Expense Cap.

     Aspenwood shall not be entitled to the payment of Commission, Solicitation Fees or Agent
Warrants if Aspenwood shall have abandoned, prematurely terminated or otherwise failed to complete
its engagement under this Agreement.

     No fee payable to any other person, whether payable by the Company or any other party, in
connection with the Offering shall reduce or otherwise affect any fee payable hereunder.

     Notwithstanding anything contained herein to the contrary, Aspenwood has no power to enter
into any agreement in connection with the Offering or any other transaction on behalf of the
Company, and the Company has no obligation to engage Aspenwood for other financing transactions or
representation apart from the obligations contemplated in this Agreement.

     4. Term. The term of this Agreement shall be six months from the date of delivery
by the Company to Aspenwood of a completed Private Placement Memorandum (“Term”); provided, however,
that either party may terminate this Agreement by providing five days prior written notice to the
other party. The Company’s engagement of Aspenwood shall be exclusive during the Term of this
Agreement Upon termination, Aspenwood shall be entitled to collect all Commissions and Warrants
earned and all reasonable and documented out-of-pocket expenses incurred through the date of
termination, subject to the Expense Cap. If this Offering is not consummated during the Term
hereof for any reason other than the willful misconduct or gross negligence of Aspenwood, and
during fee twelve months following termination or expiration of this Agreement, the Company
completes an offering of its securities, the Company shall pay Aspenwood upon such closing the
Commissions and Warrants set forth in Section 3 above for any securities sold by Company to any
person which Aspenwood introduced to the Company or directly contacted regarding this Offering
(“Protected Investors”). Aspenwood shall provide in writing to fee Company, within five
business days following

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termination or expiration of this Agreement, a proposed list of Protected Investors, which list
shall become binding unless the Company objects to such list within five business days following
its receipt of such list. Any dispute involving the list of Protected Investors shall be resolved
in accordance with Section 11.L hereof. Further, in the case of a merger, acquisition, joint
venture or other strategic transaction with a Protected Investor during the Term hereof or the
twelve months following the termination or expiration of this Agreement, the cash fee payable to
Aspenwood will be equal to 2% of the aggregate consideration received by the Company’s equity
holders in the transaction. Notwithstanding anything contained herein to the contrary, the
provisions of Sections 3, 4, 7, 8 and 11 shall survive the termination or expiration of this
Agreement and the Closing of the Offering.

     5. Representations, Warranties and Covenants by Company. The Company agrees that, in
connection with the Offering, the Company shall enter into subscription, registration rights
and other customary agreements, and that the Company’s counsel shall supply an opinion letter on the
transaction addressed to Aspenwood and the investors, all of which will be in form and substance
reasonably acceptable to Aspenwood and the investors. The Company further agrees that Aspenwood may rely upon, and is
a third party beneficiary of, the representations and warranties, indemnities and applicable
covenants, set forth in any agreements with investors in the Offering. The Company acknowledges and agrees that any
advice given by Aspenwood to the Company is solely for benefit and use of the Board of Directors of the
Company and may not be used, reproduced, disseminated, quoted or referred to, without Aspenwood’s prior
written consent. The Company represents and warrants to Aspenwood that the Company has not engaged in any public
or private offering of securities or taken or failed to take any action that would cause the Offering
not to qualify for an exemption from registration under the Securities Act of 1933, as amended (“Securities Act”).
Further, the Company agrees not to engage in any general solicitation or general advertising with respect
to the Offering or take any action which might jeopardize the availability of any exemption under the Securities
Act.

     6. Diligence; Information. The Company shall furnish Aspenwood with all financial
and other information reasonably required by Aspenwood in connection with this Agreement and shall be
responsible for the accuracy of the offering materials, any memoranda and related documentation used in
connection with the Offering, including but not limited to a PPM (all such information so furnished by the
Company, whether furnished before or after the date of this Agreement, being referred to herein as the
“Information”). The Company also agrees to use commercially
reasonable efforts to make available to Aspenwood
such representatives of the Company, including, among others, directors, officers, employees,
outside counsel and independent certified public accountants, as Aspenwood may reasonably request upon reasonable
prior notice to the Company. The Company will promptly advise Aspenwood of any material changes in the
Company’s business or finances. The Company represents and warrants that the Information included in
the PPM and other Offering materials is and shall be complete and true in all material respects and will
not contain any untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements thereof not misleading in any material respect in light of the circumstances under which such
statements are made. The Company further represents and warrants that any financial guidance provided to
Aspenwood by the Company will have been prepared in good faith and will be based upon assumptions that, in
light of the circumstances under which they are made, are reasonable. The Company acknowledges and agrees
that: (i) in rendering its services hereunder, Aspenwood will be using and relying on the Information and
information available from generally recognized public sources, (ii) Aspenwood does not assume
responsibility for the accuracy of the Information or such other
information, and (iii) Aspenwood will not make any
investigation, verification or appraisal of the Information or any assets or liabilities owned or controlled
by the Company or its market competitors.

     7. Right
of First Refusal. In the event that the Closing of the Offering occurs
during the Term, the Company hereby grants Aspenwood a right of first refusal, during the one year period following
the Closing (the “Right of First Refusal Period”), to act as the managing underwriter or exclusive
placement agent

4

 

for any proposed public or private sale exclusively for capital raising purposes of equity
securities or securities convertible into equity securities (excluding sales to employees, sales in
connection with a merger or acquisition, sales in connection with a strategic transaction and the
like) of the Company, any subsidiary or successor of the Company. If Aspenwood fails to accept in
writing any such proposal for such public or private sale of securities within 10 days after
receipt of a written notice from the Company containing such proposal, then Aspenwood shall have no
claim or right with respect to any such public or private sale contained in any such notice. If,
thereafter, such proposal is modified in any material respect during the Right of First Refusal
Period, the Company shall adopt the same procedure as with
respect to the original proposed public
or private sale. Except for Aspenwood’s right to be re-offered a proposal that changes in its
material terms during the Right of First Refusal Period, once Aspenwood fails to accept a proposal
and the Company engages another person on the terms of the rejected proposal, Aspenwood shall have
no further rights under this Section 7.

     8. After Market Support Services. Upon the Closing of the Offering, the Company shall
engage a firm or firms to provide investor relations and after market support services to the
Company for a period of one year following the Closing under such terms and conditions as
mutually agreed to by the Company, Aspenwood and such firm or firms.

     9. Indemnification; Contribution.

     A. The Company agrees to indemnify and hold harmless Aspenwood, Green Drake Capital Corp. (“Green Drake”), the Participating Dealers and their respective affiliates, and their
respective officers, directors, shareholders, members, partners, employees, agents, consultants, advisors and
affiliates and control persons of any of the above (each an “Aspenwood Indemnified Person” and collectively, the
“Aspenwood Indemnified Persons”) from and against all actions (including, but not limited to, any legal
or administrative action, suit, proceeding, investigation or inquiry, regardless of legal theory or the
allegations made in connection therewith), claims, liabilities, losses, damages, costs and expenses (including,
but not limited to, attorneys’ fees, disbursements and court costs, and costs of any investigation or
preparation) arising from a third party claim in connection with, arising out of or based upon: (i) actions taken or
omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company in
connection with the Offering, (ii) the breach of any warranty, representation or covenant by the Company
under this Agreement, (iii) any Information, whether written or verbal, referred to herein or provided
to Aspenwood, investors or others, (iv) any filings made by or on behalf of any party with any government
agency in connection with the Offering, or (v) actions taken or omitted to be taken by an Aspenwood
Indemnified Person with the prior consent of or in conformity with the actions or omissions of the Company, in
each case except to the extent that such claim, loss, damage, liability, cost or expense arises from the
negligence, intentional misconduct or securities law violation of an Aspenwood Indemnified Person, and the Company
will pay promptly such amounts as they are incurred by the Aspenwood
Indemnified Person.

     B. Aspenwood
and Green Drake (together with the Company, each an “Indemnifying Person”) agrees to indemnify and hold harmless the Company and its affiliates, officers, directors,
shareholders, employees, agents, consultants, advisors and affiliates and control persons (each a “Company
Indemnified Person” and collectively, the “Company Indemnified Persons” and together with the Aspenwood
Indemnified Persons, the “Indemnified Person(s), as applicable) from and against all actions (including,
but not limited to, any legal or administrative action, suit, proceeding, investigation or inquiry, regardless
of legal theory or the allegations made in connection therewith), claims, liabilities, losses, damages, costs and
expenses (including, but not limited to, attorneys’ fees, disbursements and court costs, and costs of any
investigation or preparation) arising from a third party claim in connection with, arising out of or based
upon Aspenwood’s negligence, intentional misconduct or violation of applicable federal or state securities
laws.

5

 

     C. If
for any reason the foregoing indemnification is determined to be unavailable to any Indemnified Person or insufficient to fully indemnify any such person, then the Indemnifying
Person shall contribute to the amount paid or payable by such person as a result of any such loss, claim,
damage, liability, cost or expense, in such proportion as is appropriate to reflect not only the relationship
between Aspenwood’s fee on the one hand and the aggregate value of the Offering on the other hand, but also the
relative fault of the Indemnified Person, as well as other relevant equitable considerations.

     D. The
Indemnifying Persons’ indemnification obligations under this section are conditioned upon receipt of prompt notification in writing by an Indemnified Person of any complaint or
the assertion or institution of any claim with respect to which indemnification is being sought hereunder, but
failure to so notify an Indemnifying Person will not in any event relieve it from any other obligation or
liability it may otherwise have to any Indemnified Person under this Agreement. If an Indemnifying Person so
elects or is requested by such Indemnified Person, it will assume the defense of such claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and
expenses of such counsel. Any Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the employment thereof has been specifically authorized by the
Indemnifying Person in writing, (ii) the Indemnifying Person has
failed to assume such defense and to
employ counsel, or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Indemnifying Person and the position of such
Indemnified Person. In any claim in which the Indemnifying Person assumes the defense, the Indemnified Person shall
have the right to participate in such defense and to retain its own counsel therefor at its own expense.

     E. Each Indemnifying Person agrees that it will not settle, compromise or discharge any suit, claim, litigation, threatened litigation or threatened claim arising out of, based upon, or
in any way related to this Agreement or the Offering that involves an Indemnified Person, unless the Indemnifying
Person has obtained a written agreement, approved by the Indemnified Person (which shall not be
unreasonably withheld) and executed by each party to such proposed settlement, compromise or discharge, releasing
each Indemnified Person from any and all liability.

     F. The Indemnifying Persons’ indemnity, contribution and reimbursement obligations under this Section 9 shall be in addition, and shall in no way limit or otherwise adversely affect any
rights that an Indemnified Person may have at law or in equity, and shall be binding upon, and inure to the
benefit of and be enforceable by the heirs, personal representatives, successors and assigns of each
Indemnified Person. The provisions of this Section 9 shall continue to apply and shall remain in full force and
effect regardless of any modification, termination, or expiration of this Agreement, the completion of Aspenwood’s
services hereunder or the Closing of the Offering.

     10. Conditions to Closing. The closing of the Offering shall be subject to the
following:

     A. Subscriptions for the Offering shall be received in an escrow account established by the

Placement Agent and must meet the Minimum Amount.

     B. The Company’s Board of Directors shall provide written documentation of its approval of
the Offering.

     C. The Placement Agent shall complete its due diligence investigation to its satisfaction, including but not limited to a background check of the current officers and directors of
LifeVantage Corporation, the cost of which shall be the responsibility of the Company subject to the
Expense Cap.

6

 

     D. The Company shall be current with all of its filings under the Securities Exchange Act of 1934, as amended (“Exchange Act”).

     E. Certain officers and directors shall deliver lock-up agreements as reasonably requested by the Placement Agent and Investors. Lock-up agreements will be for a period of six months from the effective date of the resale registration statement of the securities underlying the Convertible Debentures and the Warrants.

     F. Assuming a closing of the Maximum Amount, Company shall agree to implement an investor relations and aftermarket support program with an investor relations firm or firms mutually
acceptable to the Company and Aspenwood with a minimum budget of $100,000 (payable in cash, equity or any combination thereof) over a twelve month period.

     G. The Company anticipates that it will use the Offering proceeds for marketing, science and operating capital.

11. Miscellaneous

     A. Before the Company releases any information referring to Aspenwood’s role as the Company’s financial advisor under this Agreement or uses Aspenwood’s name in a manner which
may result in public dissemination thereof, the Company shall furnish drafts of all documents or
prepared oral statements to Aspenwood for comments, and shall not release any information relating thereto without the
prior written consent of Aspenwood. Nothing herein shall prevent the Company from releasing any information
to the extent that such release is required by law. Except as required by law, Aspenwood shall not
make any announcement regarding this Agreement or its relationship with the Company without the
Company’s prior written consent. Aspenwood agrees that it will not disclose to any other person or entity any
non-public information provided by the Company or otherwise received by Aspenwood in connection with
this Agreement, except as required by law or as directed by the Company. Upon the expiration or termination
of this Agreement, Aspenwood will return all copies of any written non-public information provided to
it by the Company or otherwise received by Aspenwood in connection with this Agreement.

     B. Following the Term, nothing in this Agreement shall be construed to limit the ability of Aspenwood or its affiliates to pursue, investigate, analyze, invest in, or engage in
investment banking, financial advisory or any other business relationship with entities other than the Company,
notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of
the Company; provided that Aspenwood complies with the confidentiality obligations set forth in this
Agreement. Aspenwood’s engagement under this Agreement following the Term shall not be exclusive.
Accordingly, subject to Aspenwood’s right to compensation under Section 3, nothing contained in this
Agreement shall prevent the Company from engaging any other advisor at any time following the Term in
connection with any of the matters referred to in this Agreement.

     C. The Company agrees that, following the consummation of the Offering, Aspenwood shall have the right to place advertisements in financial and other newspapers and journals,
describing its services to the Company hereunder, provided that Aspenwood will submit a copy of any such advertisements
to the Company for its prior approval, which approval shall not be unreasonably withheld.

     D. The Company represents and warrants that this Agreement has been duly authorized and represents the legal, valid, binding and enforceable obligation of the Company and that
neither this Agreement nor the consummation of any transactions contemplated hereby requires the approval or
consent of any governmental or regulatory agency or violates or conflicts with any law, regulation,
contract or order binding the Company.

7

 

     E. The terms, provision and conditions of this Agreement are solely for the benefit of the Company and Aspenwood and the other Indemnified Persons and their respective heirs, successors
and permitted assigns and no other person or entity shall acquire or have a right by virtue of
this Agreement. This Agreement may not be assigned by either party without prior written consent of the other
party.

     F. This Agreement contains the entire understanding and agreement between the parties hereto with respect to Aspenwood’s engagement hereunder, and all prior writings and discussions are
hereby merged into this Agreement. This Agreement supersedes and replaces any and all prior agreements to
which Aspenwood and the Company are parries regarding the subject
hereof.

     G. The parties hereby agree to hold confidential the terms and conditions of this Agreement. The parties each hereby consent to the granting of an injunction against it by any court ofompetent jurisdiction to enjoin it from violating the foregoing confidentiality provisions. The parties each hereby
agree that it will not have an adequate remedy at law in the event of a breach of the confidentiality provisions contained herein, and it will suffer irreparable damage and injury as a result of any such breach.

     H. No provision of this Agreement may be waived or amended except in a writing signed by both parties. A waiver or amendment of any term or provision of this Agreement shall not be construed
as a waiver or amendment of any other term or provision.

     I. Each party represents and warrants that it will comply with all applicable securities and other laws, rules and regulations relating hereto and that it shall not circumvent or frustrate the intent of this Agreement.

     J. This Agreement may be executed by facsimile or electronic signatures and in multiple counterparts, each of which shall be deemed an original. It shall not be necessary that each party
executes each counterpart, or that any one counterpart be executed by more than one party so long as each party executes at least one counterpart. In the event this Agreement is executed in more
than one language, the English language version of this Agreement shall be controlling in all cases.

     K. This Agreement shall be governed by and constructed under the laws of the State of Colorado, U.S.A without regard to such state’s conflicts of law principles, and may be amended, modified or supplemented only by written instrument executed by parties hereto.

     L. All disputes, controversies or claims (“Disputes”) arising out of or relating to this
Agreement shall in the first instance be the subject of a meeting between a representative of each party
who has decision making authority with respect to the matter in question. Should the meeting
either not take place or not result in a resolution of the Dispute within 20 business days
following notice of the Dispute to the other party, then the Dispute shall be resolved in a
binding arbitration proceeding to be held in Denver, Colorado, U.S.A. in accordance with the
international rules of the American Arbitration Association. The arbitrators may award attorneys’
fees and other related arbitration expenses, as well as pre- and post-judgment interest on any
award of damages, to the prevailing party, in their sole discretion. The parties agree that a
panel of three arbitrators shall be required, all of whom shall be fluent in the English
language, and that the arbitration proceeding shall be conducted entirely in the English
language. Any award of the arbitrators shall be deemed confidential information, except to the
extent public disclosure of such information is required by applicable securities laws or
regulations.

[Remainder of this page intentionally left blank.]

8

 

     If the forgoing correctly sets forth the entire understanding and agreement between the
Company and Aspenwood, please so indicate by executing this Agreement
as indicated below and returning an executed copy to Aspenwood, whereupon this Agreement shall constitute a binding agreement as of the date first
above written.

	 	 	 	 	 
	 	Very truly yours,

Green Drake Capital Corp.

For Aspenwood Capital, its Investment Banking Division

 	 
	 	By:  	/s/ Barry E. Silbert
 	 
	 	 	Barry E. Silbert, Chief Executive Officer                                      	 
	 	 	 	 
	 

	 	 	 	 	 
	ACCEPTED AND AGREED TO:

LifeVantage Corporation

 	 	 
	By:  	/s/ James J. Krejci
 	 	 
	 	James J. Krejci, Chief Executive Officer 	 	 
	 	 	 	 
	 

Date: 6/1/07

9

 

EXHIBIT A

LifeVantage Corporation

Summary of Financing Terms

	 	 	 
	Securities:

	 	Three-Year 8% Convertible Debenture
(“Convertible Debentures”) with
detachable Warrants to purchase
common stock of the Company (“Common
Stock”).
	 
	 	 
	Amount:

	 	Gross proceeds from the sale of the
Convertible Debentures in this
offering (“Offering”) of $1,500,000
minimum (the “Minimum Amount”) and
up to $3,000,000 maximum (the
“Maximum Amount”), provided that the
Company may elect to sell up to an
additional $500,000 in its
discretion.
	 
	 	 
	Investors:

	 	The Convertible Debentures will
only be offered and sold to
accredited investors in the United
States and persons who are not “U.S.
persons” as defined in Regulation S
under the Securities Act of 1933, as
amended (“Securities Act”). The
securities under this Offering
will be sold pursuant to
certain exemptions from
registration under the Securities
Act including the exemptions
afforded by Regulation D and
Regulation S promulgated under the
Securities Act.
	 
	 	 
	Closing Date:

	 	The first closing, for an amount at
least equal to the Minimum Amount,
will be held immediately after
satisfaction of all conditions of
closing and the receipt of
subscription agreements for the
Minimum Amount. Additional
closings may be held following the
first closing up to the Maximum
Amount.
	 
	 	 
	Maturity Date:

	 	Three years from the Closing Date
(“Maturity Date”). Upon the
Maturity Date, all principal and
interest shall be paid in full or
converted into Common Stock of the
Company at the Conversion Price in
the discretion of the Company.
	 
	 	 
	Interest:

	 	Interest shall be paid (in stock or
cash at the option of the Company)
on the Convertible Debentures
quarterly at the rate of 8% per
annum until the Maturity Date.
	 
	 	 
	Conversion:

	 	The Investors may elect to convert
the Convertible Debentures into
Common Stock of the Company (the
“Conversion Shares”) at the
Conversion Price at any time
following the Closing Date.
	 
	 	 
	Conversion Price:

	 	The Conversion Price shall be $0.20
(based on a $4,423,607 fully
diluted pre-money valuation and
22,118,034 shares of common stock
outstanding).

10

 

	 	 	 
	Mandatory Redemption:

	 	If during the term of the
Convertible Debentures, (i) the
Company fails to remain subject to
the reporting requirement under the
Exchange Act for a period of at
least 45 days, (ii) the Company
fails to materially comply with the
reporting requirements under the
Exchange Act for a period of 45
days, (iii) the Company’s Common
Stock is no longer quoted on the
OTCBB or listed or quoted on a
securities exchange, or (iv) a
Change of Control is consummated,
the Company will be required to
redeem the Convertible Debentures in
an amount equal to 150% of Face
Amount of the Convertible Debenture.
“Change of Control” means the
existence or occurrence of any of
the following: (a) the sale,
conveyance or disposition of all or
substantially all of the assets of
the Company; (b) the effectuation of
a transaction or series of related
transactions by the Company in which
more than 50% of the voting power of
the Company is disposed of (other
than as a direct result of the
issuance of securities by the
Company in a capital raising
transaction); (c) the
consolidation, merger or other
business combination of the Company
with or into any other entity,
immediately following which the
prior stockholders of the Company
fail to own, directly or indirectly,
at least 50% of the voting equity of
the surviving entity; (d) a
transaction or series of
transactions in which any person or
“group” (as such term is used in
Sections 13(d) and 14(d) of the
Exchange Act) acquires more than 50%
of the voting equity of the Company
(other than the issuance of
securities by the Company in a
capital raising transaction); or (e)
a transaction or series of
transactions that constitutes or
results in a “going private
transaction” (as defined in Section
13(e) of the Exchange Act and the
regulations thereunder).
	 
	 	 
	Warrants:

	 	100% total Warrant Coverage based on
the number of shares issuable upon
conversion of the Convertible
Debentures at the initial Conversion
Price. Warrant Coverage shall be
comprised of two warrants with
each warrant representing 50% of
the Warrant Coverage. The exercise
price of the first Warrant shall be
equal to 150% of the Conversion
Price (“Exercise Price”)- The
exercise price of the second Warrant
shall be equal to equal to 200% of
the Conversion Price (“Exercise
Price”). The Warrants shall have a
five-year term and may be exercised
at any time following the issuance
thereof. The Exercise Price
applicable to any unexercised
Warrants shall be subject to
standard adjustments for stock
splits and other customary changes
in capital structure. The Warrants
may be exercised on a cashless basis
during such time, beginning one year
after the Closing Date, that the
Company fails to have a current
prospectus available for immediate
resale of the Conversion Shares and
the Common Stock underlying the
Warrants. Subject to 30 business
days’ prior notice to the holders of
the Warrants, and provided an
effective registration statement is
in effect covering the Common Stock
underlying the Warrants, all, but
not less than all, of the Warrants
will be callable by the Company at
$0.01 per share at any time after
the closing price of the Company’s
Common Stock exceeds 250% of the
Conversion Price for any 20
consecutive trading

11

 

	 	 	 
	 

	 	days and average daily volume during the same
period exceeds 150,000 shares per
day.
	 
	 	 
	Registration Rights:

	 	The Company will prepare and file a
registration statement on Form SB-2
or such other form as may be
required or available (the
“Registration Statement”)
covering 100% of the Conversion
Shares and the shares of Common
Stock underlying the Warrants and
Agent Warrants for resale (the
“Underlying Securities”) within 45
days of the final closing of the
Offering (“Closing”). The Company
will use its best efforts to have
the Registration Statement declared
effective by the SEC within 210 days
of the final Closing. In the event
that the Registration Statement is
not filed within 45 days after the
Closing or declared effective prior
to 210 days after the Closing, or if
at any time after the effectiveness,
the Registration Statement is
suspended (except during such
periods as the Company has filed a
post-effective amendment and is
awaiting SEC clearance of same), the
holders will be entitled to receive
additional shares of Common Stock
equal to 1.0% of the Stated Value of
their Convertible Debentures for
each 30 day period following the
applicable filing and registration
deadlines until such filing or
effectiveness is achieved or
resumed, subject to a maximum of
nine months. No other shares of
Common Stock of the Company may be
included on such Registration
Statement (other than the shares of
Common Stock underlying the Agent
Warrants). The Company shall pay
all costs of registration.
	 
	 	 
	Conditions to Closing:

	 	The closing of the Offering shall be
subject to subscriptions for the
Minimum Amount being received in an
escrow account established by the
Placement Agent. There may be more
than one closing. Each closing of
the Offering shall be subject to
satisfaction of the following
conditions, among others: (i) the
approval of the Offering by the
Company’s board of directors; (ii)
the satisfactory completion of due
diligence by the Placement Agent;
(iii) the Company is current with
all of its filings under the
Exchange Act; (iv) the delivery of
certain lock-up agreements from the
executive officers and directors of
the Company holding more than 1% of
the outstanding securities of the
Company as reasonably requested by
the Placement Agent and Investors,
for a period of six months from the
effective date of the resale
registration statement of the
securities underlying the
Convertible Debentures and the
Warrants; and (v) the company
agreeing to implement an investor
relations and aftermarket support
program with an investor relations
firm or firms mutually acceptable to
Aspenwood and Company with a budget
of at least $100,000 (payable in
cash or equity) over a twelve month
period.
	 
	 	 
	Sufficient Authorized Shares:

	 	At ail times throughout the life of
the Convertible Debentures and the
Warrants, the Company shall have
sufficient amount of authorized and
unissued common stock available in
order to satisfy full conversion
of the Convertible Debentures and
Warrants. In case

12

 

	 	 	 
	 

	 	such amount of Common Stock is reasonably
considered potentially insufficient,
the Company shall call and hold a
special proxy meeting to increase
the number of authorized common
stock. Management of the Company
shall recommend to shareholders to
vote in favor of increasing the
number of authorized common stock.
Management shall also vote all of
its shares in favor of increasing
the number of common shares
authorized.
	 
	 	 
	Protective Provisions:

	 	The Convertible Debentures shall
include a provision which states
that for so long as the Convertible
Debentures are outstanding the
Company shall not declare or pay any
cash dividends.

13

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