Document:

T3 SPA and Invest Quest 2.9.04

Trinity3 Corporation 

a Delaware corporation 

SECURITIES PURCHASE AGREEMENT 

AND INVESTOR QUESTIONNAIRE 

1.   PURCHASE OF UNITS: The undersigned (the "Purchaser") hereby irrevocably offers to purchase Two Hundred Fifty (250) units (each a "Unit" and collectively the "Units") from Trinity3 Corporation, a Delaware corporation (the "Company"). Each Unit shall consist of (i) one (1) 10% Convertible Debenture in the face amount of $1,000, in form and substance substantially similar to Exhibit B attached hereto, (each a "Convertible Debenture" and collectively the "Convertible Debentures"), and (ii) warrants to purchase eight hundred (800) shares of Company common stock, in form and substance substantially similar to Exhibit C attached hereto (the "Warrants"). The Purchaser shall pay a purchase price equal to 100% of the face value of the Convertible Debentures, or $1,000.00 per Unit, for a total purchase price of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Purchase Price"), which amount, when and if accepted by the Company, will constitute the payment by the Purchaser of the purchase price for the Units. The Units, Convertible Debentures, Warrants, and the common stock underlying the conversion of the Convertible Debentures and the exercise of the Warrants may be referred to herein as the "Securities." 

2.   REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER: The Purchaser hereby represents, warrants and agrees as follows: 

(a)  The Securities are being purchased by the Purchaser and not by any other person, with the Purchaser’s own funds and not with the funds of any other person, and for the account of the Purchaser, not as a nominee or agent and not for the account of any other person. On acceptance of this Securities Purchase Agreement by the Company, no other person will have any interest, beneficial or otherwise, in the Securities. The Purchaser is not obligated to transfer the Securities to any other person nor does the Purchaser have any agreement or understanding to do so. The Purchaser is purchasing the Securities for investment for an indefinite period not with a view to the sale or distribution of any part or all thereof by public or private sale or other disposition. The Purchaser has no present intention of selling, granting any participation in, or otherwise distributing or disposing of any the Securities. The Purchaser does not intend to subdivide the Purchaser’s purchase of Securities with any person. 

(b)  The Purchaser has been advised that the Securities have not been registered under the Securities Act of 1933, as amended (the "Act"), or qualified under the securities law of any state, on the ground, among others, that no distribution or public offering of the Securities is to be effected and the Securities will be issued by the Company in connection with a transaction that does not involve any public offering within the meaning of section 4(2) of the Act and/or Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission under the Act, and under any applicable state blue sky authority. The Purchaser understands that the Company is relying in part on the Purchaser’s representations as set forth herein for purposes of claiming such exemptions and that the basis for such exemptions may not be present if, notwithstanding the Purchaser’s representations, the Purchaser has in mind merely acquiring Securities for resale on the occurrence or nonoccurrence of some predetermined event. The Purchaser has no such present intention. 

	 
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(c)  The Purchaser, either alone or with the Purchaser’s professional advisers (i) are unaffiliated with, have no equity interest in (other than as set forth in the Investor Questionnaire attached hereto), and are not compensated by, the Company or any affiliate or selling agent of the Company, directly or indirectly; (ii) has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of an investment in the Securities; and (iii) has the capacity to protect the Purchaser’s own interests in connection with the Purchaser’s proposed investment in the Securities. 

(d)  The Purchaser acknowledges that the Purchaser has been furnished with such financial and other information concerning the Company, the directors and officers of the Company, and the business and proposed business of the Company as the Purchaser considers necessary in connection with the Purchaser’s investment in the Securities. As a result, the Purchaser is thoroughly familiar with the proposed business, operations, properties and financial condition of the Company and has discussed with officers of the Company any questions the Purchaser may have had with respect thereto. The Purchaser understands: 

(i)           The risks involved in this investment, including the speculative nature of the investment; 

(ii)          The financial hazards involved in this investment, including the risk of losing the Purchaser’s entire investment; 

(iii)   The lack of liquidity and restrictions on transfers of the Securities; and 

(iv)   The tax consequences of this investment. 

The Purchaser has consulted with the Purchaser’s own legal, accounting, tax, investment and other advisers with respect to the tax treatment of an investment by the Purchaser in the Securities and the merits and risks of an investment in the Securities. 

(e)   Understanding that the investment in the Securities is highly speculative, the Purchaser is able to bear the economic risk of such investment. The Purchaser is an "Accredited Investor" because Purchaser either: 

(i)  has a net worth of at least $1,000,000 (including home and personal property), or 

(ii)          had an individual income of more than $200,000 in each of the two most recent calendar years, and reasonably expects to have an individual income in excess of $200,000 in the current calendar year; or along with Purchaser’s spouse had joint income in excess of $300,000 in each of the two most recent calendar years, and reasonably expects to have a joint income in excess of $300,000 in the current calendar year. 

	 
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For purposes of this Securities Purchase Agreement, "individual income" means "adjusted gross income" as reported for Federal income tax purposes, exclusive of any income attributable to a spouse or to property owned by a spouse: (i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended, (the "Code"), (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Sections 1202 of the Internal Revenue Code as it was in effect prior to enactment of the Tax Reform Act of 1986. 

For purposes of this Securities Purchase Agreement, "joint income" means, "adjusted gross income," as reported for Federal income tax purposes, including any income attributable to a spouse or to property owned by a spouse, and increased by the following amounts: (i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code as it was in effect prior to enactment of the Tax Reform Act of 1986. 

For the purposes of the Securities Purchase Agreement, "net worth" means (except as otherwise specifically defined) the excess of total assets at fair market value, including home and personal property, over total liabilities, including mortgages and income taxes on unrealized appreciation of assets. 

(f)   If the Purchaser is an individual, the Purchaser is over 21 years of age; and if the Purchaser is an unincorporated association, all of its members are of such age. 

(g)   If the Purchaser is a corporation, partnership, employee benefit plan or IRA, the Purchaser was either: 

(i)   not formed for the purpose of investing in the Securities, has or will have other substantial business or investments, and is (please check one): 

_____  an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, provided that the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, and the plan fiduciary is a bank, savings and loan association, insurance company or registered investment adviser; or 

	 
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_____  an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 that has total assets in excess of $5,000,000; or 

__X _  each of its shareholders, partners, or beneficiaries is an Accredited Investor; or 

_____  the plan is a self directed employee benefit plan and the investment decision is made solely by a person that is an Accredited Investor; or 

_____  a corporation, a partnership, or a Massachusetts or similar business trust with total assets in excess of $5,000,000. 

(ii)        formed for the specific purpose of investing in the Securities, and is an Accredited Investor because each of its shareholders or beneficiaries is an Accredited Investor. 

(h)   If the Purchaser is a Trust, the Purchaser was either: 

(i)   not formed for the specific purpose of investing in the Securities, and is an Accredited Investor because (please check one): 

_____  the trust has total assets in excess of $5,000,000 and the investment decision has been made by a "sophisticated person"; or 

_____  the trustee making the investment decision on its behalf is a bank (as defined in Section 3(a)(2) of the Act), a saving and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, acting in its fiduciary capacity; or 

_____  the undersigned trustee certifies that the trust is an Accredited Investor because the grantor(s) of the trust may revoke the trust at any time and regain title to the trust assets and has (have) retained sole investment control over the assets of the trust and the (each) grantor(s) is an Accredited Investor; or 

_____  the undersigned trustee certifies that the trust is an Accredited Investor because all of the beneficial owners of the trust are Accredited Investors 

	 
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(ii)  formed for the specific purpose of investing in the Securities, and the undersigned trustee certifies that the trust is an Accredited Investor because the grantor(s) of the trust may revoke the trust at any time and regain title to the trust assets and has (have) retained sole investment control over the assets of the trust and the (each) grantor(s) is an Accredited Investor. 

(i)   The Purchaser, if not an individual, is empowered and duly authorized to enter into this Securities Purchase Agreement under any governing document, partnership agreement, trust instrument, pension plan, charter, certificate of incorporation, bylaw provision or the like; this Securities Purchase Agreement constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms; and the person signing this Securities Purchase Agreement on behalf of the Purchaser is empowered and duly authorized to do so by the governing document or trust instrument, pension plan, charter, certificate of incorporation, bylaw provision, board of directors or stockholder resolution, or the like. 

(j)   The Social Security Number or taxpayer identification shown in this Securities Purchase Agreement is correct, and the Purchaser is not subject to backup withholding because (i) the Purchaser has not been notified that he or she is subject to backup withholding as a result of a failure to report all interest and dividends or (ii) the Internal Revenue Service has notified the Purchaser that he or she is no longer subject to backup withholding. 

(k)   The Purchaser hereby acknowledges and agrees that this Securities Purchase Agreement is an offer by the Purchaser to purchase the Securities, which offer may be accepted or declined by the Company. The Purchaser hereby further acknowledges that this Securities Purchase Agreement does not constitute an offer by the Company to sell securities or a solicitation of an offer to buy securities. 

(l)  The Purchaser has accurately completed the Investor Questionnaire attached hereto as Exhibit A and incorporated by reference herein. 

3.   AGREEMENT TO REFRAIN FROM RESALES: Without in any way limiting the representations and warranties herein, the Purchaser further agrees that the Purchaser shall in no event pledge, hypothecate, sell, transfer, assign or otherwise dispose of any of the Securities, nor shall the Purchaser receive any consideration for the Securities from any person, unless and until prior to any proposed pledge, hypothecation, sale, transfer, assignment or other disposition: 

(a)   A registration statement on Form S-1 under the Act (or any other form appropriate for the purpose under the Act or any form replacing such form) with respect to the Securities proposed to be so disposed of shall be then effective and such disposition shall have been appropriately qualified in accordance with applicable state law and any other applicable securities law; or 

	 
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(b)   (i) The Purchaser shall have furnished the Company with a detailed explanation of the proposed disposition, and (ii) the Purchaser shall have furnished the Company with an opinion of the Purchaser’s counsel in form and substance satisfactory to the Company to the effect that such disposition will not require registration of such Securities under the Act or qualification of such Securities any applicable blue sky law or any other securities law. 

4.   CERTIFICATES REPRESENTING SECURITIES TO BE LEGENDED: The Purchaser understands and agrees that any certificate representing the Securities or relating to the Securities may bear such legends as the Company may consider necessary or advisable to facilitate compliance with the Act, applicable state blue sky laws, and any other securities law, including without limitation legends stating that the Securities have not been registered under the Act or qualified under the Law and setting forth the limitations on dispositions imposed hereby. 

5.   SECURITIES WILL BE RESTRICTED SECURITIES: The Purchaser understands that the Securities will be "restricted securities" as that term is defined in Rule 144 under the Act and, accordingly, that the Securities be held indefinitely unless they are subsequently registered under the Act and qualified under applicable state blue sky law and any other applicable securities law or exemptions from such registration and qualification as are available. The Purchaser understands that, other than as set forth in this Securities Purchase Agreement, the Company is under no obligation to register the Securities under the Act, to qualify the Securities any securities law, or to comply with any exemption under the Act or any other law. The Purchaser understands that Rule 144 prevents the sale of any of the Securities for at least one year, and only then under certain specific circumstances. 

6.   COMPANY MAY REFUSE TO TRANSFER: Notwithstanding the foregoing, if, in the opinion of counsel for the Company, the Purchaser has acted in a manner inconsistent with the representations and warranties in this Securities Purchase Agreement, the Company may refuse to transfer the Purchaser’s Securities until such time as counsel for the Company is of the opinion that such transfer will not require registration of the Securities under the Act or qualification of the Securities under applicable blue sky law or any other securities law. The Purchaser understands and agrees that the Company may refuse to acknowledge or permit any disposition of the Securities that is not in all respects in compliance with this Securities Purchase Agreement and that the Company intends to make an appropriate notation in its records to that effect. 

7.   INDEMNIFICATION: The Purchaser hereby agrees to indemnify and defend the Company and its directors and officers and hold them harmless from and against any and all liability, damage, cost or expense incurred on account of or arising out of: 

(a)   Any breach of or inaccuracy in the Purchaser’s representations, warranties or agreements herein; or 

(b)   Any disposition of any Securities contrary to any of the Purchaser’s representations, warranties or agreements herein. 

	 
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8.   PIGGYBACK REGISTRATION RIGHTS: If the Company at any time proposes to conduct an offering of its securities so as to register any of its securities under the Securities Act of 1933 (the "Act"), including under an S-1 Registration Statement or otherwise, it will at such time give written notice to Purchaser, or its assigns, of its intention so to do. Upon the written request of Purchaser, or assigns, given within 10 days after receipt of any such notice, the Company will use its best efforts to cause the shares of common stock underlying the exercise of the Warrants to be registered under the Act (with the securities which the Company at the time proposes to register); provided, however, that the Company may, as a condition precedent to its effective such registration, require each Purchaser to agree with the Company and the managing underwriter or underwriters of the offering to be made by the Company in connection with such registration that such Purchaser will not sell any securities of the same class or convertible into the same class as those registered by the Company (including any class into which the securities registered by the Company are convertible) for such reasonable period after such registration becomes effective (not exceeding 90 days) as shall then be specified in writing by such underwriter or underwriters if in the opinion of such underwriter or underwriters the Company’s offering would be materially adversely affected in the absence of such an agreement. All expenses incurred by the Company in complying with this section, including without limitation all registration and filing fees, listing fees, printing expenses, fees and disbursements of all independent accountants, or counsel for the Company and the expense of any special audits incident to or required by any such registration and the expenses of complying with the securities or blue sky laws of any jurisdiction shall be paid by the Company. 

9.   MISCELLANEOUS: 

(a)   Successors. The representations, warranties and agreements contained in this Securities Purchase Agreement shall be binding on the Purchaser’s successors, assigns, heirs and legal representatives and shall inure to the benefit of the respective successors and assigns of the Company and its directors and officers. 

(b)   Entire Agreement. This Securities Purchase Agreement and the Exhibits hereto sets forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof. No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any party hereto which is not embodied in this Securities Purchase Agreement or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth. 

(c)   Notices. Any notice, request, instruction, or other document required by the terms of this Securities Purchase Agreement, or deemed by any of the parties hereto to be desirable, to be given to any other party hereto shall be in writing and shall be given by facsimile, personal delivery or overnight delivery, to the address of each party as set forth in this Securities Purchase Agreement. The persons and addresses set forth herein may be changed from time to time by a notice sent as aforesaid. If notice is given by facsimile, personal delivery, or overnight delivery in accordance with the provisions of this Section, said notice shall be conclusively deemed given at the time of such delivery. 

	 
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(d)   Waiver and Amendment. Any term, provision, covenant, representation, warranty or condition of this Securities Purchase Agreement may be waived, but only by a written instrument signed by the party entitled to the benefits thereof. The failure or delay of any party at any time or times to require performance of any provision hereof or to exercise its rights with respect to any provision hereof shall in no manner operate as a waiver of or affect such party's right at a later time to enforce the same. No waiver by any party of any condition, or of the breach of any term, provision, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or waiver of any other condition or of the breach of any other term, provision, covenant, representation or warranty. No modification or amendment of this Securities Purchase Agreement shall be valid and binding unless it be in writing and signed by all parties hereto. 

(e)   Choice of Law. This Securities Purchase Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of California including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. 

(f)   Jurisdiction. The parties submit to the jurisdiction of the Courts of the County of Orange, State of California or a Federal Court empaneled in the State of California for the resolution of all legal disputes arising under the terms of this Agreement, including, but not limited to, enforcement of any arbitration award. 

(g)   Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 

 

(h)   Attorneys' Fees. Except as otherwise provided herein, if a dispute should arise between the parties including, but not limited to arbitration, the prevailing party shall be reimbursed by the non-prevailing party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall be a premium for result or for risk of loss under a contingency fee arrangement. 

(i)   Taxes. Any income taxes required to be paid in connection with the payments due hereunder, shall be borne by the party required to make such payment. Any withholding taxes in the nature of a tax on income shall be deducted from payments due, and the party required to withhold such tax shall furnish to the party receiving such payment all documentation necessary to prove the proper amount to withhold of such taxes and to prove payment to the tax authority of such required withholding. 

[remainder of page intentionally left blank] 

	 
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Number of Units Purchased:                        250                             

Amount of Enclosed Check:             $         250,000.00           (No. of Units x $1,000 per Unit) 

	
Please make check payable 
	
Trinity3 Corporation 

	
and deliver to: 
	
1920 Main Street, Suite 980 

	
 
	
Irvine, CA 92614 

	
 
	
Phone: (949) 910-2383 

	
 
	
Fax: (949) 955-1937 

	
 
	
Attn: Steven D. Hargreaves, President 

TYPE OF OWNERSHIP (Check One): 

	
 

____ INDIVIDUAL OWNERSHIP

 
	
 
	
 

_X_  PARTNERSHIP 
	
 

	
(One signature required) 
	
 
	
(Please include a copy of the Statement of Partnership of Partnership Agreement authorizing signature) 

 
	
 

	
 

____ COMMUNITY PROPERTY 

 
	
 
	
 

____ CORPORATION

 
	
 

	
(One signature required) 
	
 
	
(Please include Articles of Incorporation and Certified Corporate Resolution authorizing signature) 

 
	
 

	
 

____ TENANTS IN COMMON

 
	
 
	
 

____ TRUST

 
	
 

	
(Both parties must sign) 

 

 

 
	
 
	
(Please include name of trust, name of trustee, and date trust was formed and include copy of the Trust Agreement or other authorization) 
	
 

	
____ JOINT TENANTS 

 
	
 
	
 
	
 

	
(Both parties must sign) 
	
 
	
 
	
 

	 
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I, the undersigned, hereby certify under penalty of perjury under the laws of the State of California, that the information contained herein is complete and accurate and may be relied on by the Company. I will notify the Company promptly of any material change in any of such information. 

 

	
Investor : 
	
 
	
Co-investor : 

	

		

	
Bumper Fund, L.P. 
	
 
	
 

	

		

	
Print or type name 
	
 
	
Print or type name 

	
 
	
 
	
 

	
  /s/ Daniel E. Kern
	
 
	
 

	

		

	
Signature 
	
 
	
Signature 

	
 
	
 
	
 

	
Dated: February 9, 2004 
	
 
	
Dated: 

	

		

	
 
	
 
	
 

	
General Partner Bumper Fund LP
	
 
	
 

	 	 	 
	

	 	

	
Name and title of person signing 
	
 
	
Relation, if any, to Investor 

	
on behalf of investor, if applicable 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	

		

	
Soc. Security or Tax ID Number 
	
 
	
Soc. Security or Tax ID Number 

	
 
	
 
	
 

	
Address: 
	
 
	
Address: 

	
 
	
 
	
 

	
160 Newport Center Drive, Suite 135 
	
 
	
 

	

		

	
Newport Beach, CA 92660 
	
 
	
 

	

		

	
 
	
 
	
 

This Stock Purchase Agreement is accepted by the Company when executed and dated below. 

Trinity3 Corporation, 

a Delaware corporation 

__/s/ Steven D. Hargreaves_________                Dated: _2-10-04___________ 

By:   Steven D. Hargreaves 

Its:   President 

__/s/ Shannon T. Squyres__________                Dated: _2-10-04___________ 

By:   Shannon T. Squyres 

Its:   Chief Executive Officer 

 

 

	 
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Exhibit A 

Investor Questionnaire 

 

 

	 
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Exhibit B 

Form of Convertible Debenture 

 

	 
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Exhibit C 

Form of Warrant 

 

	 
	 	Page 15 of 15T3 10% Conv Deb 2.9.04

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 

                               

	 No. 1   	
 $250,000.00 

 

TRINITY3 CORPORATION 

10% Convertible Debenture due 2005 

TRINITY3 CORPORATION, a Delaware corporation (together with its successors, the "Company"), for value received hereby promises to pay to Bumper Fund, L.P. (the "Holder") or its registered assigns, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00) or, if less, the principal amount of this Convertible Debenture then outstanding, on the Maturity Date to the Holder in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on (each an "Interest Payment Date") (i) the Maturity Date, (ii) each Conversion Date, as hereafter defined, and (iii) the date the principal amount of the Convertible Debenture shall be declared to be or shall automatically become due and payable, on the principal sum hereof outstanding in like coin or currency, at the rates per annum set forth below. The Maturity Date shall be March 1, 2005; however, notwithstanding the foregoing, if before March 1, 2005 the Company closes one or more rounds of equity or debt financing in conjunction with the acquisition of an ongoing business, then the Company shall provide notice to Holder at least five (5) days before the closing of the acquisition, and Holder shall have the option, during the five (5) day period following receipt of notice from the Company and upon delivery of notice to the Company, to declare the Maturity Date to be any date prior to March 1, 2005, as long as the Company has at leave five (5) days advance notice. 

The interest rate shall be ten percent (10%) per annum (the "Interest Rate") or, if less, the maximum rate permitted by applicable law. Interest on this Convertible Debenture will be calculated on the basis of a 360-day year of twelve (12) months. All payments of principal and interest hereunder shall be made for the benefit of the Holder. Except as otherwise provided in this Convertible Debenture, the interest payable on each Interest Payment Date shall be added to the outstanding principal amount of this Convertible Debenture on such date and thereafter be considered part of the outstanding principal amount. The Company may elect to pay the interest payable on any Interest Payment Date in cash, provided it gives the registered holder written notice of such election at least five (5) Business Days prior to the applicable Interest Payment Date and pays the same by such date. On each Conversion Date, interest shall be paid in shares of Common Stock on the portion of the principal balance of the Convertible Debenture then being converted. The number of shares of Common Stock issued as interest shall be determined by dividing the dollar amount of interest due on the applicable Interest Payment Date by the Conversion Price then in effect. 

	 
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This Convertible Debenture (this "Convertible Debenture") is a duly authorized issuance of $250,000.00 original aggregate principal amount of Convertible Debentures of the Company referred to in that certain Securities Purchase Agreement dated as of the date hereof between the Company and the Purchasers named therein (the "Agreement"). This Convertible Debenture is transferable and assignable to one or more Persons, in accordance with the limitations set forth in the Agreement. 

The Company shall keep a register (the "Register") in which shall be entered the names and addresses of the registered holder of this Convertible Debenture and particulars of this Convertible Debenture held by such holder and of all transfers of this Convertible Debenture. References to the Holder or "Holders" shall mean the Person listed in the Register as the registered holder of such Convertible Debentures. The ownership of this Convertible Debenture shall be proven by the Register. 

1.   Certain Terms Defined. All terms defined in the Agreement and not otherwise defined herein shall have for purposes hereof the meanings provided for in the Agreement. 

 

2.   Payment of Principal. The Company shall repay the remaining unpaid balance on this Convertible Debenture on the Maturity Date. The Company may, at its option, at any time and from time to time, prepay all or any part of the principal balance of this Convertible Debenture, without penalty or premium, provided that concurrently with each such prepayment the Company shall pay accrued interest on the principal so prepaid to the date of such prepayment. 

3.   Conversion of Convertible Debenture. 

3.1   Conversion Rights; Conversion Date; Conversion Price. The Holder shall have the right, at its option, at any time from and after the date of the Agreement, to convert the principal amount of this Convertible Debenture, or any portion of such principal amount, into that number of fully paid and nonassessable shares of Common Stock (as such shares shall then be constituted) determined pursuant to this Section 3.1. The number of shares of Common Stock to be issued upon each conversion of this Convertible Debenture shall be determined by dividing the Conversion Amount (as defined below) by the Conversion Price in effect on the date (the "Conversion Date") a Notice of Conversion is delivered to the Company by the Holder by facsimile or other reasonable means of communication dispatched prior to 5:00 p.m., California Time. The term "Conversion Amount" means, with respect to any conversion of this Convertible Debenture, the sum of (1) the principal amount of this Convertible Debenture to be converted in such conversion plus (2) accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Convertible Debenture to the Conversion Date; the term "Conversion Price" means Two Dollars ($2.00). 

Notwithstanding the foregoing, if an Event of Default (as defined in Section 4) occurs and remains uncured for a period of at least sixty (60) days after notice of the default is delivered by Holder to the Company, then the Holder has the option, but not the obligation, to convert the outstanding principal and accrued interest under this Convertible Debenture into common stock of the Company at a conversion price of $0.01 per share. 

	 
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3.2       Method of Conversion. 

(a)   Notwithstanding anything to the contrary set forth herein, upon conversion of this Convertible Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Convertible Debenture to the Company unless the entire unpaid principal amount of this Convertible Debenture is so converted. Rather, records showing the principal amount converted (or otherwise repaid) and the date of such conversion or repayment shall be maintained on a ledger substantially in the form of Annex I attached hereto (a copy of which shall be delivered to the Company with each Notice of Conversion). It is specifically contemplated that the Company hereof shall act as the calculation agent for conversions and repayments. In the event of any dispute or discrepancies, such records maintained by the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Convertible Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following a conversion of a portion of this Convertible Debenture, the principal amount represented by this Convertible Debenture will be the amount indicated on Annex I attached hereto (which may be less than the amount stated on the face hereof).

 

(b)   The Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock or other securities or property on conversion of this Convertible Debenture in a name other than that of the Holder (or in street name), and the Company shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that such tax has been paid. 

(c)  Upon receipt by the Company of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Convertible Debenture shall be reduced to reflect such conversion, and, unless the Company defaults on its obligations under this Article 3, all rights with respect to the portion of this Convertible Debenture being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Company’s obligation to issue and deliver the certificates for shares of Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action by the Holder to enforce the same, any failure or delay in the enforcement of any other obligation of the Company to the Holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such conversion. The date of receipt (including receipt via telecopy) of such Notice of Conversion shall be the Conversion Date so long as it is received before 5:00 p.m., California Time, on such date. 

 

	 
	 	Page 3 of 7	 
	

	 

 

4.   DEFAULT. The occurrence of any one of the following events shall constitute an Event of Default: 

 

(a)   The non-payment, when due, of any principal or interest pursuant to this Convertible Debenture; 

(b)   The material breach of any representation or warranty in this Convertible Debenture. In the event the Holder becomes aware of a breach of this Section 4(b), the Holder shall notify the Company in writing of such breach and the Company shall have five business days after notice to cure such breach; 

(c)   The breach of any covenant or undertaking, not otherwise provided for in this Section 4; 

(d)   The commencement by the Company of any voluntary proceeding under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, receivership, dissolution, or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or the adjudication of the Company as insolvent or bankrupt by a decree of a court of competent jurisdiction; or the petition or application by the Company for, acquiescence in, or consent by the Company to, the appointment of any receiver or trustee for the Company or for all or a substantial part of the property of the Company; or the assignment by the Company for the benefit of creditors; or the written admission of the Company of its inability to pay its debts as they mature; or 

 

(e)   The commencement against the Company of any proceeding relating to the Company under any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, receivership, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, provided, however, that the commencement of such a proceeding shall not constitute an Event of Default unless the Company consents to the same or admits in writing the material allegations of same, or said proceeding shall remain undismissed for 20 days; or the issuance of any order, judgment or decree for the appointment of a receiver or trustee for the Company or for all or a substantial part of the property of the Company, which order, judgment or decree remains undismissed for 20 days; or a warrant of attachment, execution, or similar process shall be issued against any substantial part of the property of the Company. 

Upon the occurrence of any Default or Event of Default, the Holder, may, by written notice to the Company, declare all or any portion of the unpaid principal amount due to Holder, together with all accrued interest thereon, immediately due and payable, in which event it shall immediately be and become due and payable, provided that upon the occurrence of an Event of Default as set forth in paragraph (d) or paragraph (e) hereof, all or any portion of the unpaid principal amount due to Holder, together with all accrued interest thereon, shall immediately become due and payable without any such notice. 

5.   Security. This Convertible Debenture is secured by and entitled to the benefits of a certain Company Security and Pledge Agreement (the "Security Agreement") dated as of even date herewith, among the Company, Holder, and majority shareholders of the Company. 

	 
	 	Page 4 of 7	 
	

	 

 

6.   Miscellaneous. This Convertible Debenture shall be deemed to be a contract made under the laws of the State of California, and for all purposes shall be governed by and construed in accordance with the laws of said State. The parties hereto hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Convertible Debenture, except as specifically provided herein, and assent to extensions of the time of payment, or forbearance or other indulgence without notice. The Company and Holder hereby submit to the exclusive jurisdiction of the United States District Court for the State of California and of any state court in the State of California, County of Orange, for purposes of all legal proceedings arising out of or relating to this Convertible Debenture. The Holder irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Company hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Convertible Debenture. 

 

The Holder of this Convertible Debenture by acceptance of this Convertible Debenture agrees to be bound by the provisions of this Convertible Debenture which are expressly binding on such Holder. 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed as of this 9th day of February, 2004. 

 

	
 
	
TRINITY3 CORPORATION, 

	
 
	
a Delaware corporation 

	
 
	
 

	
 
	
 

	
 
	
_/s/ Steven D. Hargreaves_____________________ 

	
 
	
By: Steven D. Hargreaves 

	
 
	
Its: President 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
_/s/ Shannon T. Squyres_______________________ 

	
 
	
By: Shannon T. Squyres 

	
 
	
Its: Chief Executive Office 

 

	 
	 	Page 5 of 7	 
	

	 

 

ANNEX I 

CONVERSION AND REPAYMENT LEDGER 

	
Date 
	
Principal Balance 
	
Interest

 Converted or 

Paid 
	
Principal 

Converted or 

Paid 
	
New Principal Balance 
	
Issuer Initials 
	
Holder Initials 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
							
							
							

 

	 
	 	Page 6 of 7	 
	

	 

 

EXHIBIT I 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the Convertible Debenture) 

The undersigned hereby irrevocably elects to convert $______________ of the above Convertible Debenture into shares of Common Stock of Trinity3 Corporation, a Delaware corporation (the "Company") according to the conditions set forth in such Convertible Debenture, as of the date written below. 

If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto. 

Date of Conversion: ____________________________________________ 

Applicable Conversion Price: _____________________________________ 

Signature: ____________________________________________________ 

[Print Name of Holder and Title of Signer] 

Address: ____________________________________________________ 

 

  ____________________________________________________

 

SSN or EIN: _________________________________________________ 

Shares are to be registered in the following name: 

Name: ________________________________________________ 

Address: ______________________________________________ 

Tel: __________________________________________________ 

Fax: __________________________________________________ 

SSN or EIN: ___________________________________________ 

Shares are to be sent or delivered to the following account: 

Account Name: ________________________________________ 

Address: _____________________________________________ 

Tel: _________________________________________________ 

Fax: _________________________________________________ 

SSN or EIN: __________________________________________ 

	 
	 	Page 7 of 7

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