EXHIBIT 4.6
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
“SECURITIES ACT”) OR ANY STATE OR OTHER SECURITIES LAWS
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, HYPOTHECATED, PLEDGED OR OTHERWISE DISPOSED OF IN THE UNITED
STATES OR TO U.S. PERSONS EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.
THIS NOTE IS ONE OF A SERIES OF NOTES OF THE
SAME TERMS AND TENOR THAT MAY BE ISSUED BY MAKER UP TO AN AGGREGATE
OF $15,000,000.
PRB GAS TRANSPORTATION,
INC.
SENIOR SUBORDINATED CONVERTIBLE
NOTE
|
US
$
|
|
January ,
2006
|
|
|
|
Denver, Colorado
|
FOR VALUE RECEIVED, PRB Gas
Transportation, Inc., a corporation incorporated under the laws of
the State of Nevada (the “ Company ”), promises
to pay to
(the “ Holder ”) or registered assigns, the
principal amount of US
$ ,
and to pay interest (computed on the basis of a 360-day year) (a)
on the unpaid principal amount at the rate of ten percent (10%)
quarterly in arrears commencing on March 15, 2006 and thereafter on
the fifteenth day of each June, September, December and March
thereafter (each, an “ Interest Payment Date ”)
and (b) to the extent permitted by law on any overdue payment of
the principal amount at the rate of twelve percent (12%) per annum.
Principal and accrued but unpaid interest hereunder shall be due
and payable on demand on or after the Maturity Date (as defined in
Section (f) hereof), unless converted by the Holder in accordance
with Section (g) hereof.
Payments of principal and interest
shall be made in lawful money of the United States of America by
check and mailed to the address of the Holder specified in Section
(m)(iv).
This Note is subject to the
following terms and conditions:
(a)
Note Subordination
. The indebtedness evidenced by this
Note is subordinate and subject in right of payment as to principal
and interest to the prior payment in full of all principal,
premium, if any, and interest on all indebtedness of the Company,
regardless of when incurred, including indebtedness incurred after
the date hereof, for money borrowed from the Company’s
principal banking institution (“ Senior Debt ”)
which may be secured by the Company’s oil and gas reserves.
Upon maturity of any Senior Debt, payment in full must be made on
such Senior Debt before any payment is made on or in respect of
this Note. During the continuance of any default with respect to
any Senior Debt entitling the holder thereof to accelerate the
maturity thereof, or if any such default would be caused by any
payment upon or in respect of this Note, no payment may be made by
the Company upon or in respect of the Notes. Upon any distribution
of assets of the Company in any dissolution, winding up,
liquidation or reorganization of the Company, payment of the
principal of and premium, if any, and interest on the Notes will be
subordinated to the prior payment in full of all Senior Debt. (Such
subordination will not prevent the occurrence of any event of
default, as set forth in Section (c) below.)
(b)
Security. This Note together with all
Senior Convertible Secured Notes of the Company, is secured by a
first position lien on all of the operating gathering assets of the
Company as of the date of all such notes except for the Crosby
Gathering Line and the West Tioga Gas Processing Plant.
(c)
Default .
(i)
Default . The occurrence of any one or more of the
following events shall constitute an event of default (an “
Event of Default ”) hereunder:
(1)
if the Company shall default in the
punctual payment of any sum payable with respect to, or in the
observance or performance of any of the agreements, promises,
covenants, terms and conditions of any of, the Notes.
(2)
if any warranty, representation or
statement of fact made herein by the Company is false or misleading
in any material respect when made;
(3)
if the Company or any significant
subsidiary, as defined in Rule 405 of the Rules and Regulations
under the Securities Act of 1933, as amended (“
Significant Subsidiary ”) shall be dissolved or
liquidated or any proceeding for dissolution or liquidation of the
Company or any Significant Subsidiary is commenced or the Company
or any Significant Subsidiary fails to maintain its corporate
existence;
(4)
if the Company or any Significant
Subsidiary becomes insolvent (however defined or evidenced) or
makes an assignment for the benefit of creditors (or similar
arrangement under the laws of the State of Colorado);
(5)
if there shall be filed by or
against the Company or any Significant Subsidiary any petition for
any relief under the bankruptcy laws of the United States now or
hereafter in effect or any proceeding shall be commenced with
respect to the Company or any Significant Subsidiary under any
insolvency, readjustment of debt, reorganization, dissolution,
liquidation or similar law or statute of any jurisdiction now or
hereafter in effect (whether at law or in equity), provided that in
the case of any involuntary filing or the commencement of any
involuntary proceeding against the Company or any Significant
Subsidiary such proceeding or petition shall have continued
undismissed and unvacated for at least 60 days;
(6)
if the usual business of the Company
or any Significant Subsidiary shall cease or be terminated or
suspended;
(7)
if any proceeding, procedure or
remedy supplementary to or in enforcement of judgment shall be
commenced against, or with respect to any property of, the Company
or any Significant Subsidiary; or
(8)
if any petition or application to
any court or tribunal, at law or in equity, be filed by or against
the Company or any Significant Subsidiary for the appointment of
any receiver or trustee for the Company or any Significant
Subsidiary or any part of the property of the Company or any
Significant Subsidiary, provided that in the case of any
involuntary filing against the Company or any Significant
Subsidiary, such proceeding or appointment shall have continued
undismissed and unvacated for at least 60 days.
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(ii)
Remedies Upon Default
. If any Event of Default shall
occur for any reason, then and in any such event, in addition to
all rights and remedies of the Holder under applicable law or
otherwise, all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and
concurrently, the Holder may, at its option, declare any or all
amounts owing under this Note, to be due and payable, whereupon the
then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with
interest accruing thereafter at the then applicable interest rate
stated above until the indebtedness evidenced by this Note is paid
in full, plus the costs and expenses of collection hereof,
including, but not limited to) attorney’s fees and legal
expenses.
(iii)
The Company’s
Waivers . The Company (i)
waives diligence, demand, presentment, protest and notice of any
kind, (ii) agrees that it will not be necessary for the Holder to
first institute suit in order to enforce payment of this Note and
(iii) consents to any one or more extensions or postponements of
time of payment, release, surrender or substitution of collateral
security, or forbearance or other indulgence, without notice or
consent, The pleading of any statute of limitations as a defense to
any demand against the Company is hereby expressly waived by the
Company.
(iv)
Certain Obligors
. The Holder may proceed against the
Company and any guarantors or endorsees hereof in such order and
manner as the Holder may choose. None of the rights of the Holder
shall be waived or diminished by any failure or delay in the
exercise thereof.
(d)
Covenants . The Company covenants and agrees that, so long
as this Note is outstanding and unpaid:
(i)
Payment of Note
. The Company will punctually pay or
cause to be paid the principal, premium, if any, and Interest on
this Note at the dates and places and in the manner specified
herein. Any sums required to be withheld from any payment of
principal, premium, if any, or Interest on this Note by operation
of law or pursuant to any order, judgment, execution, treaty, rule
or regulation may be withheld by the Company and paid over in
accordance therewith. In the event any restriction is placed upon
payment of principal, premium, if any, or Interest by virtue of a
currency or monetary control law, rule or regulation of Canada or
of the United States Federal Government, as set forth in a written
notice delivered to the Holder within thirty (30) days after the
imposition of such a restriction, such payments shall be deposited
to the account of the payee in a bank, trust company or other
financial institution in the United States, as directed by the
payee. Such payment or deposit will be deemed payment to the
Holder.
Nothing in this Note or in any other
agreement between the Holder and the Company shall require the Company to pay, or the Holder to
accept, interest in an amount which would subject the Holder to any
penalty or forfeiture under applicable law. In the event that the
payment of any charges, fees or other sums due under this Note or
provided for in any other agreement between the Company and the
Holder are or could be held to be in the nature of interest and
would subject the Holder to any penalty or forfeiture under
applicable law, then ipso facto the obligations of the Company to
make such payment to the Holder shall be reduced to the highest
rate authorized under applicable law and, in the event that the
Holder shall have ever received, collected, accepted or applied as
interest any amount in excess of the maximum rate of interest
permitted to be charged by applicable law, such amount which would
be excess interest under applicable law shall be applied first to
the reduction of principal then outstanding, and, second, if such
principal amount is paid in full, any remaining excess shall
forthwith be returned to the Company.
(ii)
Maintenance of Corporate
Existence: Merger and Consolidation. The Company will at all times cause to be done
all things necessary or appropriate to preserve and keep in full
force and effect its corporate existence and the corporate
existence of any Significant Subsidiary and all of its rights and
franchises and shall not consolidate with or merge into any other
corporation or transfer all or substantially all of its assets to
any person unless (i) the corporation formed by such consolidation
or into which the Company is merged or to which the assets of the
Company are transferred is a
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corporation that expressly assumes all of the
obligations of the Company under this Note and (ii) after giving
effect to such transaction, no Event of Default and no event which,
after notice or lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing.
(iii)
Maintenance of
Properties . The Company
will reasonably maintain in good repair, working order and
condition, reasonable wear and tear excepted, its properties and
other assets, and those of its Significant Subsidiaries, and from
time to time make all necessary or desirable repairs, renewals and
replacements thereto.
(iv)
Payment of Taxes.
The Company will use its best
efforts to pay or discharge or cause to be paid, set aside for
payment or discharge, before the same shall become delinquent, all
taxes, assessments and governmental charges levied or imposed upon
the Company or upon its income, profits or property; provided, that
the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim
whose amount or validity is being contested in good faith by
appropriate proceedings.
(v)
Compliance with
Statutes . The Company
will and will cause its Significant Subsidiaries to comply in all
material respects with all applicable statutes and regulations of
the provinces of Canada and of the United States of America and of
any state or municipality, and of any agency thereof, in respect of
the conduct of business and the ownership of property by the
Company and its Significant Subsidiaries; provided, that nothing
contained in this Section (d)(v) shall require the Company or a
Significant Subsidiary to comply with any such statute or
regulations so long as its legality or applicability shall be
contested in good faith.
(vi)
Reports; Financial Statements: No
Adverse Change . The
financial statements included in the Company’s filings (the
“ SEC Filings ”) with United States Securities
and Exchange Commission did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading.
The financial statements included in the SEC Filings (including the
related notes and schedules) fairly present, as of December 31,
2005, the financial position and results of operations for the
periods set forth therein (subject, in the case of unaudited
statements, to the omission of certain notes not ordinarily
accompanying such unaudited financial statements, and to normal
year-end audit adjustments which are not material in amount or
effect), in each case in accordance with generally accepted
accounting principles consistently applied during the period
involved. Since December 31, 2005, there has been no material
adverse change in the Company’s or a Significant
Subsidiary’s business, properties, financial condition or
results of operations, except as disclosed in the SEC
Filings.
(vii)
Restrictions on Dividends,
Redemptions Etc. The
Company will not declare or pay any dividend or make any other
distribution of the Company, except dividends or distributions
payable in equity securities of the Company.
(viii)
Transactions with
Affiliates . Neither the
Company nor any of its Significant Subsidiaries will itself, and
will not permit any of their respective officers or directors, or
holder of 5% or more of the Company’s Common Stock, to engage
in any transaction of any kind or nature with any affiliate of the
Company or any Significant Subsidiary, other than transactions with
any wholly-owned subsidiary of the Company or any Significant
Subsidiary or pursuant to the terms of any agreement existing as of
the date hereof between the Company or any Significant Subsidiary
and any affiliate of the Company or any Significant Subsidiary,
unless such transaction, or in the case of a course of related or
similar transactions or continuing transactions, such course of
transactions or continuing transactions is or are upon terms which
are fair to the Company or any Significant Subsidiary and which are
reasonably
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simil
