FORM OF CALLABLE SECURED CONVERTIBLE NOTE

 

                                                                    EXHIBIT 10.2

 

FORM OF CALLABLE SECURED CONVERTIBLE NOTE

-----------------------------------------

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").

     THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE

     OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID

     ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY

     FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION

     IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR

     REGULATION S UNDER SAID ACT.

 

 

                     CALLABLE SECURED CONVERTIBLE NOTE

 

Atlanta, Georgia

June 23, 2005                                                    $_______________

 

          FOR VALUE RECEIVED, RUBY MINING COMPANY a Colorado corporation

(hereinafter called the "BORROWER"), hereby promises to pay to the order of ____

______________ or registered assigns (the "HOLDER") the sum of $____________, on

June 23, 2008 (the "MATURITY Date"), and to pay interest on the unpaid principal

balance hereof at the rate of eight percent (8%) (the "INTEREST RATE") per annum

from June 23, 2005 (the "ISSUE DATE") until the same becomes due and payable,

whether at maturity or upon acceleration or by prepayment or otherwise. Any

amount of principal or interest on this Note which is not paid when due shall

bear interest at the rate of fifteen percent (15%) per annum from the due date

thereof until the same is paid ("DEFAULT INTEREST"). Interest shall commence

accruing on the Issue Date, shall be computed on the basis of a 365-day year and

the actual number of days elapsed and shall be payable quarterly provided that

no interest shall be due and payable for any month in which the Trading Price

(as such term is defined below) is greater than $.1625 for each Trading Day (as

such term is defined below) of the month. All payments due hereunder (to the

extent not converted into common stock, $.001 par value per share (the "COMMON

Stock") in accordance with the terms hereof) shall be made in lawful money of

the United States of America provided that interest due and payable for the

first eight (8) months following the Issue Date shall be paid on the date

hereof. All payments shall be made at such address as the Holder shall hereafter

give to the Borrower by written notice made in accordance with the provisions of

this Note. Whenever any amount expressed to be due by the terms of this Note is

due on any day which is not a business day, the same shall instead be due on the

next succeeding day which is a business day and, in the case of any interest

payment date which is not the date on which this Note is paid in full, the

extension of the due date thereof shall not be taken into account for purposes

of determining the amount of interest due on such date. As used in this Note,

the term "business day" shall mean any day other than a Saturday, Sunday or a

day on which commercial banks in

 

 

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the city of New York, New York are authorized or required by law or executive

order to remain closed. Each capitalized term used herein, and not otherwise

defined, shall have the meaning ascribed thereto in that certain Securities

Purchase Agreement, dated June 23, 2005, pursuant to which this Note was

originally issued (the "PURCHASE AGREEMENT").

 

        This Note is free from all taxes, liens, claims and encumbrances with

respect to the issue thereof and shall not be subject to preemptive rights or

other similar rights of shareholders of the Borrower and will not impose

personal liability upon the holder thereof. The obligations of the Borrower

under this Note shall be secured by that certain Security Agreement and

Intellectual Property Security Agreement, each dated June 23, 2005 by and

between the Borrower and the Holder.

 

        The following terms shall apply to this Note:

 

                          ARTICLE I. CONVERSION RIGHTS

 

          1.1 CONVERSION RIGHT. The Holder shall have the right from time to

time, and at any time on or prior to the earlier of (i) the Maturity Date and

(ii) the date of payment of the Default Amount (as defined in Article III)

pursuant to Section 1.6(a) or Article III, the Optional Prepayment Amount (as

defined in Section 5.1 or any payments pursuant to Section 1.7, each in respect

of the remaining outstanding principal amount of this Note to convert all or any

part of the outstanding and unpaid principal amount of this Note into fully paid

and non-assessable shares of Common Stock, as such Common Stock exists on the

Issue Date, or any shares of capital stock or other securities of the Borrower

into which such Common Stock shall hereafter be changed or reclassified at the

conversion price (the "CONVERSION PRICE") determined as provided herein (a

"CONVERSION"); provided, however, that in no event shall the Holder be entitled

to convert any portion of this Note in excess of that portion of this Note upon

conversion of which the sum of (1) the number of shares of Common Stock

beneficially owned by the Holder and its affiliates (other than shares of Common

Stock which may be deemed beneficially owned through the ownership of the

unconverted portion of the Notes or the unexercised or unconverted portion of

any other security of the Borrower (including, without limitation, the warrants

issued by the Borrower pursuant to the Purchase Agreement) subject to a

limitation on conversion or exercise analogous to the limitations contained

herein) and (2) the number of shares of Common Stock issuable upon the

conversion of the portion of this Note with respect to which the determination

of this proviso is being made, would result in beneficial ownership by the

Holder and its affiliates of more than 4.99% of the outstanding shares of Common

Stock and provided further that the Holder shall not be entitled to convert any

portion of this Note during any month immediately succeeding a Determination

Date on which the Borrower exercises its prepayment option pursuant to Section

5.2 of this Note. For purposes of the proviso to the immediately preceding

sentence, beneficial ownership shall be determined in accordance with Section

13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G

thereunder, except as otherwise provided in clause (1) of such proviso. The

number of shares of Common Stock to be issued upon each conversion of this Note

shall be determined by dividing the Conversion Amount (as defined below) by the

applicable Conversion Price then in effect on the date specified in the notice

of conversion, in the form attached hereto as Exhibit A (the "NOTICE OF

CONVERSION"), delivered to the Borrower by the Holder in accordance with Section

 

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1.4 below; provided that the Notice of Conversion is submitted by facsimile (or

by other means resulting in, or reasonably expected to result in, notice) to the

Borrower before 6:00 p.m., New York, New York time on such conversion date (the

"CONVERSION DATE"). The term "CONVERSION AMOUNT" means, with respect to any

conversion of this Note, the sum of (1) the principal amount of this Note 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 Note to the

Conversion Date plus (3) Default Interest, if any, on the amounts referred to in

the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's

option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)

hereof or pursuant to Section 2(c) of that certain Registration Rights

Agreement, dated as of June 23, 2005, executed in connection with the initial

issuance of this Note and the other Notes issued on the Issue Date (the

"REGISTRATION RIGHTS AGREEMENT"). The term "DETERMINATION DATE" means the last

business day of each month after the Issue Date.

 

          1.2 CONVERSION PRICE.

 

               (A) CALCULATION OF CONVERSION PRICE. The Conversion Price shall

be the lesser of (i) the Variable Conversion Price (as defined herein) and (ii)

the Fixed Conversion Price (as defined herein) (subject, in each case, to

equitable adjustments for stock splits, stock dividends or rights offerings by

the Borrower relating to the Borrower's securities or the securities of any

subsidiary of the Borrower, combinations, recapitalization, reclassifications,

extraordinary distributions and similar events). The "VARIABLE CONVERSION PRICE"

shall mean the Applicable Percentage (as defined herein) multiplied by the

Market Price (as defined herein). "MARKET PRICE" means the average of the lowest

three (3) Trading Prices (as defined below) for the Common Stock during the

twenty (20) Trading Day period ending one Trading Day prior to the date the

Conversion Notice is sent by the Holder to the Borrower via facsimile (the

"CONVERSION DATE"). "TRADING PRICE" means, for any security as of any date, the

intraday trading price on the Over-the-Counter Bulletin Board (the "OTCBB") as

reported by a reliable reporting service mutually acceptable to and hereafter

designated by Holders of a majority in interest of the Notes and the Borrower

or, if the OTCBB is not the principal trading market for such security, the

intraday trading price of such security on the principal securities exchange or

trading market where such security is listed or traded or, if no intraday

trading price of such security is available in any of the foregoing manners, the

average of the intraday trading prices of any market makers for such security

that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If

the Trading Price cannot be calculated for such security on such date in the

manner provided above, the Trading Price shall be the fair market value as

mutually determined by the Borrower and the holders of a majority in interest of

the Notes being converted for which the calculation of the Trading Price is

required in order to determine the Conversion Price of such Notes. "TRADING DAY"

shall mean any day on which the Common Stock is traded for any period on the

OTCBB, or on the principal securities exchange or other securities market on

which the Common Stock is then being traded. "APPLICABLE PERCENTAGE" shall mean

50.0%. The "FIXED CONVERSION PRICE" shall mean $.15.

 

               (B) CONVERSION PRICE DURING MAJOR ANNOUNCEMENTS. Notwithstanding

anything contained in Section 1.2(a) to the contrary, in the event the Borrower

(i) makes a public announcement that it intends to consolidate or merge with any

other corporation (other than a merger in which the Borrower is the surviving or

continuing corporation and its capital stock is unchanged) or sell or transfer

all or substantially all of the

 

 

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assets of the Borrower or (ii) any person, group or entity (including the

Borrower) publicly announces a tender offer to purchase 50% or more of the

Borrower's Common Stock (or any other takeover scheme) (the date of the

announcement referred to in clause (i) or (ii) is hereinafter referred to as the

"ANNOUNCEMENT DATE"), then the Conversion Price shall, effective upon the

Announcement Date and continuing through the Adjusted Conversion Price

Termination Date (as defined below), be equal to the lower of (x) the Conversion

Price which would have been applicable for a Conversion occurring on the

Announcement Date and (y) the Conversion Price that would otherwise be in

effect. From and after the Adjusted Conversion Price Termination Date, the

Conversion Price shall be determined as set forth in this Section 1.2(a). For

purposes hereof, "ADJUSTED CONVERSION PRICE TERMINATION DATE" shall mean, with

respect to any proposed transaction or tender offer (or takeover scheme) for

which a public announcement as contemplated by this Section 1.2(b) has been

made, the date upon which the Borrower (in the case of clause (i) above) or the

person, group or entity (in the case of clause (ii) above) consummates or

publicly announces the termination or abandonment of the proposed transaction or

tender offer (or takeover scheme) which caused this Section 1.2(b) to become

operative.

 

          1.3 AUTHORIZED SHARES. Subject to the Stockholder Approval (as defined

in the Agreement), the Borrower covenants that during the period the conversion

right exists, the Borrower will reserve from its authorized and unissued Common

Stock a sufficient number of shares, free from preemptive rights, to provide for

the issuance of Common Stock upon the full conversion of this Note and the other

Notes issued pursuant to the Purchase Agreement. The Borrower is required at all

times to have authorized and reserved two times the number of shares that is

actually issuable upon full conversion of the Notes (based on the Conversion

Price of the Notes or the Exercise Price of the Warrants in effect from time to

time) (the "RESERVED AMOUNT"). The Reserved Amount shall be increased from time

to time in accordance with the Borrower's obligations pursuant to Section 4(h)

of the Purchase Agreement. The Borrower represents that upon issuance, such

shares will be duly and validly issued, fully paid and non-assessable. In

addition, if the Borrower shall issue any securities or make any change to its

capital structure which would change the number of shares of Common Stock into

which the Notes shall be convertible at the then current Conversion Price, the

Borrower shall at the same time make proper provision so that thereafter there

shall be a sufficient number of shares of Common Stock authorized and reserved,

free from preemptive rights, for conversion of the outstanding Notes. The

Borrower (i) acknowledges that it has irrevocably instructed its transfer agent

to issue certificates for the Common Stock issuable upon conversion of this

Note, and (ii) agrees that its issuance of this Note shall constitute full

authority to its officers and agents who are charged with the duty of executing

stock certificates to execute and issue the necessary certificates for shares of

Common Stock in accordance with the terms and conditions of this Note.

 

               If, at any time a Holder of this Note submits a Notice of

Conversion, and the Borrower does not have sufficient authorized but unissued

shares of Common Stock available to effect such conversion in accordance with

the provisions of this Article I (a "CONVERSION DEFAULT"), subject to Section

4.8, the Borrower shall issue to the Holder all of the shares of Common Stock

which are then available to effect such conversion. The portion of this Note

which the Holder included in its Conversion Notice and which exceeds the amount

which is then convertible into available shares of Common Stock (the "EXCESS

AMOUNT") shall,

 

 

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notwithstanding anything to the contrary contained herein, not be convertible

into Common Stock in accordance with the terms hereof until (and at the Holder's

option at any time after) the date additional shares of Common Stock are

authorized by the Borrower to permit such conversion, at which time the

Conversion Price in respect thereof shall be the lesser of (i) the Conversion

Price on the Conversion Default Date (as defined below) and (ii) the Conversion

Price on the Conversion Date thereafter elected by the Holder in respect

thereof. In addition, the Borrower shall pay to the Holder payments ("CONVERSION

DEFAULT PAYMENTS") for a Conversion Default in the amount of (x) the sum of (1)

the then outstanding principal amount of this Note plus (2) accrued and unpaid

interest on the unpaid principal amount of this Note through the Authorization

Date (as defined below) plus (3) Default Interest, if any, on the amounts

referred to in clauses (1) and/or (2), multiplied by (y) .24, multiplied by (z)

(N/365), where N = the number of days from the day the holder submits a Notice

of Conversion giving rise to a Conversion Default (the "CONVERSION DEFAULT

DATE") to the date (the "AUTHORIZATION DATE") that the Borrower authorizes a

sufficient number of shares of Common Stock to effect conversion of the full

outstanding principal balance of this Note. The Borrower shall use its best

efforts to authorize a sufficient number of shares of Common Stock as soon as

practicable following the earlier of (i) such time that the Holder notifies the

Borrower or that the Borrower otherwise becomes aware that there are or likely

will be insufficient authorized and unissued shares to allow full conversion

thereof and (ii) a Conversion Default. The Borrower shall send notice to the

Holder of the authorization of additional shares of Common Stock, the

Authorization Date and the amount of Holder's accrued Conversion Default

Payments. The accrued Conversion Default Payments for each calendar month shall

be paid in cash or shall be convertible into Common Stock (at such time as there

are sufficient authorized shares of Common Stock) at the applicable Conversion

Price, at the Borrower's option, as follows:

 

               (A) In the event Holder elects to take such payment in cash, cash

payment shall be made to Holder by the fifth (5th) day of the month following

the month in which it has accrued; and

 

                (B) In the event Holder elects to take such payment in Common

Stock, the Holder may convert such payment amount into Common Stock at the

Conversion Price (as in effect at the time of conversion) at any time after the

fifth day of the month following the month in which it has accrued in accordance

with the terms of this Article I (so long as there is then a sufficient number

of authorized shares of Common Stock).

 

          The Holder's election shall be made in writing to the Borrower at any

time prior to 6:00 p.m., New York, New York time, on the third day of the month

following the month in which Conversion Default payments have accrued. If no

election is made, the Holder shall be deemed to have elected to receive cash.

Nothing herein shall limit the Holder's right to pursue actual damages (to the

extent in excess of the Conversion Default Payments) for the Borrower's failure

to maintain a sufficient number of authorized shares of Common Stock, and each

holder shall have the right to pursue all remedies available at law or in equity

(including degree of specific performance and/or injunctive relief).

 

 

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          1.4 METHOD OF CONVERSION.

 

               (A) MECHANICS OF CONVERSION. Subject to Section 1.1, this Note

may be converted by the Holder in whole or in part at any time from time to time

after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion

(by facsimile or other reasonable means of communication dispatched on the

Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to

Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

               (B) SURRENDER OF NOTE UPON CONVERSION. Notwithstanding anything

to the contrary set forth herein, upon conversion of this Note in accordance

with the terms hereof, the Holder shall not be required to physically surrender

this Note to the Borrower unless the entire unpaid principal amount of this Note

is so converted. The Holder and the Borrower shall maintain records showing the

principal amount so converted and the dates of such conversions or shall use

such other method, reasonably satisfactory to the Holder and the Borrower, so as

not to require physical surrender of this Note upon each such conversion. In the

event of any dispute or discrepancy, such records of the Borrower shall be

controlling and determinative in the absence of manifest error. Notwithstanding

the foregoing, if any portion of this Note is converted as aforesaid, the Holder

may not transfer this Note unless the Holder first physically surrenders this

Note to the Borrower, whereupon the Borrower will forthwith issue and deliver

upon the order of the Holder a new Note of like tenor, registered as the Holder

(upon payment by the Holder of any applicable transfer taxes) may request,

representing in the aggregate the remaining unpaid principal amount of this

Note. The Holder and any assignee, by acceptance of this Note, acknowledge and

agree that, by reason of the provisions of this paragraph, following conversion

of a portion of this Note, the unpaid and unconverted principal amount of this

Note represented by this Note may be less than the amount stated on the face

hereof.

 

               (C) PAYMENT OF TAXES. The Borrower shall not be required to pay

any tax which may be payable in respect of any transfer involved in the issue

and delivery of shares of Common Stock or other securities or property on

conversion of this Note in a name other than that of the Holder (or in street

name), and the Borrower 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 Borrower the amount of any such tax or shall have established to the

satisfaction of the Borrower that such tax has been paid.

 

               (D) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon receipt by the

Borrower from the Holder of a facsimile transmission (or other reasonable means

of communication) of a Notice of Conversion meeting the requirements for

conversion as provided in this Section 1.4, the Borrower shall issue and deliver

or cause to be issued and delivered to or upon the order of the Holder

certificates for the Common Stock issuable upon such conversion within three (3)

business days after such receipt (and, solely in the case of conversion of the

entire unpaid principal amount hereof, surrender of this Note) (such second

business day being hereinafter referred to as the "DEADLINE") in accordance with

the terms hereof and the Purchase Agreement (including, without limitation, in

accordance with the requirements of Section 2(g) of the Purchase Agreement that

certificates for shares of Common Stock issued on or after the effective date of

the Registration Statement upon conversion of this Note shall not bear any

restrictive legend).

 

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                (E) OBLIGATION OF BORROWER TO DELIVER COMMON STOCK. Upon receipt

by the Borrower 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 Note shall be reduced to reflect such conversion, and, unless the Borrower

defaults on its obligations under this Article I, all rights with respect to the

portion of this Note 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 Borrower's obligation to issue and deliver

the certificates for 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 to enforce the same, any failure or

delay in the enforcement of any other obligation of the Borrower 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 Borrower,

and irrespective of any other circumstance which might otherwise limit such

obligation of the Borrower to the Holder in connection with such conversion. The

Conversion Date specified in the Notice of Conversion shall be the Conversion

Date so long as the Notice of Conversion is received by the Borrower before 6:00

p.m., New York, New York time, on such date.

 

               (F) DELIVERY OF COMMON STOCK BY ELECTRONIC TRANSFER. In lieu of

delivering physical certificates representing the Common Stock issuable upon

conversion, provided the Borrower's transfer agent is participating in the

Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")

program, upon request of the Holder and its compliance with the provisions

contained in Section 1.1 and in this Section 1.4, the Borrower shall use its

best efforts to cause its transfer agent to electronically transmit the Common

Stock issuable upon conversion to the Holder by crediting the account of

Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission

("DWAC") system.

 

               (G) FAILURE TO DELIVER COMMON STOCK PRIOR TO DEADLINE. Without in

any way limiting the Holder's right to pursue other remedies, including actual

damages and/or equitable relief, the parties agree that if delivery of the

Common Stock issuable upon conversion of this Note is more than three (3)

business days after the Deadline (other than a failure due to the circumstances

described in Section 1.3 above, which failure shall be governed by such Section)

the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond

the Deadline that the Borrower fails to deliver such Common Stock. Such cash

amount shall be paid to Holder by the fifth day of the month following the month

in which it has accrued or, at the option of the Holder (by written notice to

the Borrower by the first day of the month following the month in which it has

accrued), shall be added to the principal amount of this Note, in which event

interest shall accrue thereon in accordance with the terms of this Note and such

additional principal amount shall be convertible into Common Stock in accordance

with the terms of this Note.

 

          1.5 CONCERNING THE SHARES. The shares of Common Stock issuable upon

conversion of this Note may not be sold or transferred unless (i) such shares

are sold pursuant to an effective registration statement under the Act or (ii)

the Borrower or its transfer agent shall have been furnished with an opinion of

counsel (which opinion shall be in form, substance and

 

 

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scope customary for opinions of counsel in comparable transactions) to the

effect that the shares to be sold or transferred may be sold or transferred

pursuant to an exemption from such registration or (iii) such shares are sold or

transferred pursuant to Rule 144 under the Act (or a successor rule) ("RULE

144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule

144) of the Borrower who agrees to sell or otherwise transfer the shares only in

accordance with this Section 1.5 and who is an Accredited Investor (as defined

in the Purchase Agreement). Except as otherwise provided in the Purchase

Agreement (and subject to the removal provisions set forth below), until such

time as the shares of Common Stock issuable upon conversion of this Note have

been registered under the Act as contemplated by the Registration Rights

Agreement or otherwise may be sold pursuant to Rule 144 without any restriction

as to the number of securities as of a particular date that can then be

immediately sold, each certificate for shares of Common Stock issuable upon

conversion of this Note that has not been so included in an effective

registration statement or that has not been sold pursuant to an effective

registration statement or an exemption that permits removal of the legend, shall

bear a legend substantially in the following form, as appropriate:

 

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE

     SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF

     AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT,

     OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR

     OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS

     NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR

     REGULATION S UNDER SAID ACT."

 

          The legend set forth above shall be removed and the Borrower shall

issue to the Holder a new certificate therefor free of any transfer legend if

(i) the Borrower or its transfer agent shall have received an opinion of

counsel, in form, substance and scope customary for opinions of counsel in

comparable transactions, to the effect that a public sale or transfer of such

Common Stock may be made without registration under the Act and the shares are

so sold or transferred, (ii) such Holder provides the Borrower or its transfer

agent with reasonable assurances that the Common Stock issuable upon conversion

of this Note (to the extent such securities are deemed to have been acquired on

the same date) can be sold pursuant to Rule 144 or (iii) in the case of the

Common Stock issuable upon conversion of this Note, such security is registered

for sale by the Holder under an effective registration statement filed under the

Act or otherwise may be sold pursuant to Rule 144 without any restriction as to

the number of securities as of a particular date that can then be immediately

sold. Nothing in this Note shall (i) limit the Borrower's obligation under the

Registration Rights Agreement or (ii) affect in any way the Holder's obligations

to comply with applicable prospectus delivery requirements upon the resale of

the securities referred to herein.

 

          1.6 EFFECT OF CERTAIN EVENTS.

 

               (A) EFFECT OF MERGER, CONSOLIDATION, ETC. At the option of the

Holder, the sale, conveyance or disposition of all or substantially all of the

assets of the Borrower, the effectuation by the Borrower of a transaction or

series of related transactions in

 

 

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which more than 50% of the voting power of th