THE SECURITIES REPRESENTED BY THIS NOTE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER APPLICABLE SECURITIES
LAWS.
SANTA FE GOLD CORPORATION
10% CONVERTIBLE SENIOR SUBORDINATED PROMISSORY
NOTE
| $ _________ |
Albuquerque, New Mexico |
October ___, 2007 |
FOR
VALUE RECEIVED, the undersigned, Santa Fe Gold Corporation, a
Delaware corporation (the “ Company ”), with its
principal offices located at 1128 Pennsylvania NE, Suite 200,
Albuquerque, New Mexico 87110 promises to pay to the order of
__________________________________________________ (the “
Holder ”) or its assigns, at
_____________________________________, the amount of
_____________________________DOLLARS ($___________) (the “
Original Principal Amount ”) in legal and lawful money
of the United States of America, together with interest (calculated
on the basis of a 360-day year) on the Unpaid Principal Balance (as
herein defined) from the date of this note (the “ Note
”) until maturity at the rate of ten percent (10%) per annum.
All past due principal and interest will bear interest at the
Maximum Rate (as herein defined).
1.
Definitions. As used in this Note, the following
terms, unless the context otherwise requires, have the following
meanings:
(a)
“Act” means the Securities Act of
1933, as amended.
(b)
“Common Stock” means the shares of
common stock, $.002 par value, of the Company.
(c)
“Company” includes any corporation
which shall succeed to or assume the obligations of the Company
under this Note.
(d)
“Event of Default” means one or more
of the following events:
(1) Default in
the payment of the Unpaid Principal Balance of, or accrued interest
on, this Note when due and payable, if such default is not cured by
the Company within thirty (30) days after Holder has given the
Company written notice of such default; or
(2) The
institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it, or the filing by
it of a petition or answer or consent seeking reorganization or
release under the United States Bankruptcy Code, as amended, or any
other applicable federal or state law, or the consent by it to the
filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee or other similar official of the
Company, or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the taking
of corporate action by the Company in furtherance of any such
actions; or
(3) If, within
sixty (60) days after the commencement of an action against the
Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such action shall not have been
resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) days after the
appointment without the consent or acquiescence of the Company of
any trustee, receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such appointment
shall not have been vacated; or
(4) Any
declared default of the Company under any Senior Indebtedness that
gives the holder thereof the right to accelerate such Senior
Indebtedness and such Senior Indebtedness is in fact accelerated by
the holder.
(e) “Holder” means any person who
shall at the time be the holder of this Note.
(f) “Maximum Rate” means fourteen
percent (14%) per annum.
(h) “Senior Indebtedness” means the principal of
and unpaid accrued interest on all current and future debt of the
Company, (i) that is evidenced by one or more outstanding
convertible notes, and that may be issued in connection with
additional investment rights issued in private placements completed
on March 21, 2006, and September 6, 2006, respectively, as
described in the Company’s Registration Statement on Form
SB-2, SEC Registration No. 333-141558 and (ii) that may be incurred
by the Company for working capital and capital expenditures for
development of its mining projects.
(i) “Unpaid Principal Balance” means the
Original Principal Amount less (i) any principal amount of this
Note converted by Holder into Common Stock and (ii) any principal
amount of this Note prepaid or redeemed by the Company.
2.
Interest. Interest only on the Unpaid Principal
Balance is payable in arrears commencing on _________ __, 2009
1 and thereafter continuing regularly on the 15
th day of each calendar quarter until _________ __,
2012, 2 at which time the entire Unpaid Principal
Balance, together with all accrued and unpaid interest, shall be
immediately due and payable in full. Interest will be computed upon
the Unpaid Principal Balance of this Note at the rate stated above
to the last day of the month immediately prior to the date of each
payment, except for the payment at maturity which will be computed
upon the Unpaid Principal Balance of this Note at the rate stated
above to the date of payment.
No
provision of this Note shall require the payment or permit the
collection of interest in excess of the maximum lawful rate which
the Company may stipulate and agree to pay as determined by a court
of competent jurisdiction. If it is so determined that any excess
interest is provided for in this Note, the Company shall not be
obligated to pay the amount of interest to the extent that it is in
excess of the amount permitted by law, and any excess interest paid
shall be credited as a payment on the Unpaid Principal Balance of
this Note or, if applicable, refunded to the Company.
3.
Event of Default. Upon the occurrence of an Event
of Default, Holder may, as long as such condition exists, declare
the entire Unpaid Principal Balance and unpaid accrued interest
thereon immediately due and payable by giving notice in writing to
the Company.
___________________________________
1 The first day of the nineteenth (19 th ) month
following the issuance of the Note.
2 The last business day of the 60 th month
following the issuance of the Note.
-2-
4.
Subordination. The indebtedness evidenced by this
Note is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior
payment in full of all the Company’s Senior Indebtedness.
If
there should occur any receivership, insolvency, assignment for the
benefit of creditors, bankruptcy, reorganization or arrangements
with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets,
dissolution, liquidation or any other marshalling of the assets and
liabilities of the Company, or if this Note shall be declared due
and payable upon the occurrence of an event of default with respect
to any Senior Indebtedness, then (i) no amount shall be paid by the
Company in respect of the Unpaid Principal Balance of, or accrued
and unpaid interest on, this Note at the time outstanding, unless
and until the principal of and interest on the Senior Indebtedness
then outstanding shall be paid in full, and (ii) no claim or proof
of claim shall be filed with the Company by or on behalf of the
Holder of this Note that shall assert any right to receive any
payments in respect of the Unpaid Principal Balance and accrued and
unpaid interest thereon (including declaring an Event of Default,
acceleration, instituting any legal action or otherwise enforcing
its rights with respect to the indebtedness evidenced by this
Note), except subject to the payment in full of the principal of
and interest on all of the Senior Indebtedness then outstanding. If
there occurs an event of default that has been declared in writing
with respect to any Senior Indebtedness, or in the instrument under
which any Senior Indebtedness is outstanding, permitting the holder
of such Senior Indebtedness to accelerate the maturity thereof,
then, unless and until such event of default shall have been cured
or waived or shall have ceased to exist, or all Senior Indebtedness
shall have been paid in full, no payment shall be made in respect
of the Unpaid Principal Balance and accrued and unpaid interest
thereon.
Subject
to the rights, if any, of the holders of Senior Indebtedness under
this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder, nothing
contained in this Section 4 shall impair, as between the
Company and the Holder, the obligation of the Company, subject to
the terms and conditions hereof, to pay to the Holder the Unpaid
Principal Balance and unpaid accrued interest thereon as and when
the same become due and payable, or shall prevent the Holder of
this Note, upon default hereunder, from exercising all rights,
powers and remedies otherwise provided herein or by applicable
law.
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