THIS CONVERTIBLE PROMISSORY NOTE AND THE
SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. AS AMENDED
(THE “ACT”), OR ANY STATE SECURITIES LAW, NEITHER THIS
NOTE NOR SUCH SHARES OF COMMON STOCK NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, MORTGAGED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS,
AND WITH THE TERMS AND CONDITIONS HEREOF.
TARA MINERALS CORP.
CONVERTIBLE PROMISSORY NOTE
$1,695,000
Date: June 30, 2009
TARA MINERALS CORP.
(the “Company”), for value
received, hereby promises to pay Tara Gold Resources Corp., or
order, (the "Holder”), in legal tender of the United States
of America, the principal sum of $1,695,000 on June 30, 2011 (the
“Maturity Date”), and to pay interest thereon at the
rate of prime plus 3.25% per year. The prime rate will be the
prime lending rate published from time to time by the Wall Street
Journal. Interest shall be computed on the basis of a 365-day
year and the number of actual days elapsed. Interest will be
paid quarterly with the first interest payment due on October 15,
2009.
Section 1. Time and Place of
Payment. This
Note shall be paid at 2162 Acorn Court Wheaton, IL 60187, or such
other address as may be received by the Holder in writing to the
Company.
Section 2 Prepayments.
The Company shall have the right to
prepay this Note, in whole or in part, at any time upon five (5)
days prior written notice to the Holder.
Section 3. Conversion.
a)
The Holder shall have the right, at its
option, to convert all or any part of the principal amount of this
Note, together with all accrued interest thereon in accordance with
the provisions of and upon satisfaction of the conditions contained
in this Note, into fully paid and non-assessable shares of the
Company’s common stock as is determined by dividing (x) by
that portion of the outstanding principal balance and accrued
interest under this Note as of such date that the Holder
elects to convert by (y) the Conversion Price. The initial
Conversion Price is $0.20.
b)
No fractional shares of common stock
shall be issued upon conversion of this Note, and in lieu thereof
the number of shares of common stock to be issued upon each
conversion shall be rounded up to the nearest whole number of
shares of common stock.
c)
The Holder’s conversion right set
forth in this Section may be exercised at any time and from time to
time but prior to payment in full of the principal and accrued
interest on this Note.
d)
The Holder may exercise the right to
convert all or any portion of this Note only by delivery of a
properly completed conversion notice on a Business Day to the
Company’s principal executive offices. Such conversion
shall be deemed to have been made immediately prior to the close of
business on the Business Day of such delivery of the conversion
notice (the “Conversion Date”), and the Holder shall be
treated for all purposed as the record holder of the shares of
common stock into which this Note is converted as of such
date.
e)
As promptly as practicable after the
Conversion Date, the Company as its expense shall issue and deliver
to the Holder of this Note a stock certificate or certificates
representing the number of shares of common stock into which this
Note has been converted.
f)
Upon the full conversion of this Note the
Company shall be forever released from all of its obligations and
liabilities under this Note.
g)
Holder acknowledges that the shares of
common stock issuable upon conversion of this note are
“restricted securities,” as such term is defined under
the Securities Act. Holder agrees that Holder will not
attempt to pledge, transfer, convey or otherwise dispose of such
shares except in a transaction that is the subject of either: (i)
an effective registration statement under the Securities Act and
any applicable state securities laws; or (ii) an opinion of counsel
rendered by legal counsel satisfactory to the Company, which
opinion of counsel shall be satisfactory to the Company, to the
effect that such registration is not required. The Company
may rely on such an opinion of Holder's counsel in making such
determination. Holder consents to the placement of a legend
on the shares of common stock issuable upon the exercise of this
Note stating that the shares represented by the certificate have
not been registered under the Securities Act and setting forth or
referring to the restrictions on transferability and sale thereof.
h)
Notwithstanding anything in this Note to
the contrary the Company will include the shares issuable upon the
conversion of this Note in any Registration Statement which the
Company files with the Securities and Exchange
Commission.
i)
If prior to the Conversion Date the
Company shall (i) pay a stock dividend or make a distribution to
all holders of common stock shares of its common stock, (ii)
subdivide its outstanding shares of common stock, or (iii) combine
its outstanding shares of common stock into a smaller number of
shares then the Conversion Price will be proportionately
adjusted.
j) If the common stock to be
issued on conversion of this Note shall be changed into any other
class or classes of stock, whether by capital reorganization,
reclassification, or otherwise, the holder of this Note shall, upon
its conversion be entitled to receive, in lieu of the common stock
which the Holder would have become entitled to receive but for such
change, a number of shares of s
