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Exhibit
4.16
NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR
THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF (I) IN THE ABSENCE
OF (A) SUCH REGISTRATION OR (B) RECEIPT BY THE MAKER OF AN
OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER THE
ACT.
SILVER STAR ENERGY, INC.
Amended and Restated Senior Secured Convertible
Promissory Note
due October __, 2008
No. CN-05-__
$___________
Dated: October __, 2005
IN ACCORDANCE WITH THE TRANSACTIONS
CONTEMPLATED BY THAT CERTAIN AMENDMENT AGREEMENT BY AND BETWEEN
SILVER STAR ENERGY, INC., A NEVADA CORPORATION, AND THE
NOTEHOLDERS LISTED THEREIN, DATED AS OF MAY __, 2007, (THE "
AMENDMENT AGREEMENT "), THE MAKER HEREBY AGREES TO PAY A
PORTION OF THE PRINCIPAL AMOUNT OF THIS NOTE AS CONTEMPLATED BY
THE ESCROW AGREEMENT (AS DEFINED IN THE AMENDMENT AGREEMENT).
NOTWITHSTANDING THE ORIGINAL PRINCIPAL AMOUNT SET FORTH
ABOVE, THE PRINCIPAL AMOUNT OF THIS NOTE AS OF MAY 1, 2007 IS
$________________. AS A RESULT OF SUCH INCREASE THERE IS
NO ACCRUED AND UNPAID INTEREST ON THIS NOTE AS OF MAY 1,
2007.
* * *
For value received, SILVER STAR ENERGY, INC., a
Nevada corporation (the " Maker "), hereby promises to
pay to the order of _______________________ (together with its
successors, representatives, and permitted assigns, the "
Holder "), in accordance with the terms hereinafter
provided, the principal amount of ________________________
($______________), together with interest thereon.
Concurrently with the issuance of this Note, the Maker is
issuing separate senior secured convertible promissory notes
(the " Other Notes ") to separate purchasers (the "
Other Holders ") pursuant to the Purchase Agreement (as
defined in Section 1.1 hereof).
All payments under or pursuant to this Note
shall be made in United States Dollars in immediately available
funds to the Holder at the address of the Holder first set forth
above or at such other place as the Holder may designate from
time to time in writing to the Maker or by wire transfer of
funds to the Holder's account, instructions for which are
attached hereto as Exhibit A. The outstanding principal
balance of this Note shall be due and payable on October __,
2008 (the " Maturity Date ") or at such earlier time as
provided herein.
ARTICLE I
Section 1.1
Purchase Agreement, Amendment Agreement
This Note has been executed and delivered
pursuant to the Note and Warrant Purchase Agreement dated as of
September 30, 2005 (the " Purchase Agreement ") by and
among the Maker and the purchasers listed therein, and has been
amended and restated pursuant to that certain Amendment
Agreement dated as of May __, 2007, (the " Amendment
Agreement ") by and among the Maker and the noteholders
listed therein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for such terms
in the Purchase Agreement.
Section 1.2
Interest
Beginning on the issuance date of this Note (the
" Issuance Date "), the outstanding principal balance of
this Note shall bear interest, in arrears, at a rate per annum
equal to six percent (6%) compounded semi-annually, payable
semi-annually on December 1 and June 1 of each year commencing
December 1, 2005 in cash in accordance with terms of Section 1.3
below. Interest shall be computed on the basis of a
360-day year of twelve (12) 30-day months and shall accrue
commencing on the Issuance Date. Furthermore, upon the
occurrence of an Event of Default (as defined in Section 2.1
hereof), then to the extent permitted by law, the Maker will pay
interest to the Holder, payable on demand, on the outstanding
principal balance of the Note from the date of the Event of
Default until such Event of Default is cured at the rate of the
lesser of fifteen percent (15%) and the maximum applicable legal
rate per annum. Notwithstanding anything contained in this
Section 1.2, interest accruing on the outstanding principal
balance of this Note from and after May 1, 2007 through the
Maturity Date shall not be payable by the Maker until the
Maturity Date.
Section 1.3
Payment of Principal and Interest
Commencing on the sixth (6 th ) month
following the Issuance Date and continuing thereafter on the
first (1 st ) business day of each month until the
Maturity Date (each, a " Principal Payment Date "), the
Maker shall pay an amount to the Holder equal to 1/30
th of the original principal amount of this Note plus
any accrued but unpaid interest (if due on such date in
accordance with Section 1.2 above) (the " Principal
Installment Amount "); provided, however, if on any
Principal Payment Date, the outstanding principal amount of this
Note plus any accrued but unpaid interest is less than the
Principal Installment Amount, then the Maker shall pay to the
Holder such lesser amount. The Maker shall pay such
Principal Installment Amount in cash by wire transfer of
immediately available funds on the applicable Principal Payment
Date; provided, however, that if the Holder has delivered a
Conversion Notice to the Maker or delivers a Conversion Notice
prior to the applicable Principal Payment Date, the Holder shall
indicate in such Conversion Notice whether the principal amount
of this Note to be so converted shall be applied against the
final Principal Installment Amount or some other Principal
Installment Amount. This Note may not be prepaid by the
Maker, in whole or in part, other than as expressly (i) set
forth herein or (ii) contemplated by the transactions
contemplated by the Amendment Agreement. Notwithstanding
anything contained in this Section 1.3, no Principal Installment
Amount shall be due prior to the Maturity Date, and the Maker
shall pay the entire outstanding principal balance of this Note
plus all accrued but unpaid interest thereon, on the Maturity
Date.
Section 1.4
Security Agreement
The obligations of the Maker hereunder are
secured by a continuing security interest in certain assets of
the Maker pursuant to the terms of a security agreement dated as
of September 30, 2005 by and among the Maker, the Holder and the
Other Holders.
Section 1.5
Payment on Non-Business Days
Whenever any payment to be made shall be due on
a Saturday, Sunday or a public holiday under the laws of the
State of placeStateNew York, such payment may be due on the next
succeeding business day and such next succeeding day shall be
included in the calculation of the amount of accrued interest
payable on such date.
Section 1.6
Transfer
This Note may be transferred or sold, subject to
the provisions of Section 4.8 of this Note, or pledged,
hypothecated or otherwise granted as security by the Holder.
Section 1.7
Replacement
Upon receipt of a duly executed, notarized and
unsecured written statement from the Holder with respect to the
loss, theft or destruction of this Note (or any replacement
hereof) and a standard indemnity (which shall not require a
surety bond), or, in the case of a mutilation of this Note, upon
surrender and cancellation of such Note, the Maker shall issue a
new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note.
ARTICLE II
EVENTS OF DEFAULT; REMEDIES
Section 2.1
Events of Default
The occurrence of any of the following events
shall be an "Event of Default" under this Note:
(a)
the Maker shall fail to make any Principal
Installment Amount on a Principal Payment Date and such default
is not fully cured within one (1) business day after the
occurrence thereof; or
(b)
the Maker shall fail to pay the outstanding
principal balance of this Note plus all accrued and unpaid interest
on the Maturity Date; or
(c)
the suspension from listing, without subsequent
listing on any one of, or the failure of the Common Stock to be
listed on at least one of the OTC Bulletin Board, the American
Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or The New York Stock Exchange,
Inc. (each, an " Eligible Market ") for a period of five (5)
consecutive Trading Days; or
(d)
the Maker's notice to the Holder, including by way
of public announcement, at any time, of its inability to comply
(including for any of the reasons described in Section 3.8(a)
hereof) or its intention not to comply with proper requests for
conversion of this Note into shares of Common Stock; or
(e)
the Maker shall fail to (i) timely deliver the
shares of Common Stock upon conversion of the Note or any interest
accrued and unpaid, or (ii) make the payment of any amounts, fees
and/or liquidated damages under this Note, the Purchase Agreement,
the Registration Rights Agreement (other than such amounts, fees
and/or liquidated damages payable by the Maker as a result of its
failure to register the Registrable Securities (as defined in the
Registration Rights Agreement)), or the Amendment Agreement, which
failure in the case of items (i) and (ii) of this Section 2.1(e) is
not remedied within three (3) business days after the incurrence
thereof; or
(f)
Intentionally Omitted; or
(g)
default shall be made in the performance or
observance of (i) any material covenant, condition or agreement
contained in this Note and such default is not fully cured within
three (3) business days after the occurrence thereof or (ii) any
material covenant, condition or agreement contained in the Purchase
Agreement, the Other Notes, the Registration Rights Agreement
(other than the Maker's requirement to register the Registrable
Securities (as defined in the Registration Rights Agreement)), the
Amendment Agreement or any other Transaction Document which is not
covered by any other provisions of this Section 2.1 and such
default is not fully cured within three (3) business days after the
occurrence thereof; or
(h)
any material representation or warranty made by the
Maker herein or in the Purchase Agreement, the Registration Rights
Agreement, the Amendment Agreement, the Other Notes or any other
Transaction Document shall be false or incorrect or breached in a
material respect on the date as of which made; or
(i)
the Maker shall (A) default in any payment of any
amount or amounts of principal of or interest on any Indebtedness
(other than the Indebtedness hereunder) the aggregate principal
amount of which Indebtedness is in excess of $100,000 or (B)
default in the observance or performance of any other agreement or
condition relating to any Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit
the holder or holders or beneficiary or beneficiaries of such
Indebtedness to cause with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity; or
(j)
the Maker shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition seeking to
take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of
creditors' rights generally, (v) acquiesce in writing to any
petition filed against it in an involuntary case under United
States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (vi)
issue a notice of bankruptcy or winding down of its operations or
issue a press release regarding same, or (vii) take any action
under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing; or
(k)
a proceeding or case shall be commenced in respect
of the Maker, without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation,
reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets in connection with the liquidation
or dissolution of the Maker or (iii) similar relief in respect of
it under any law providing for the relief of debtors, and such
proceeding or case described in clause (i), (ii) or (iii) shall
continue undismissed, or unstayed and in effect, for a period of
thirty (30) days or any order for relief shall be entered in an
involuntary case under United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic) against the Maker or action
under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing shall be taken with respect to the Maker
and shall continue undismissed, or unstayed and in effect for a
period of thirty (30) days; or
(l)
the failure of the Maker to instruct its transfer
agent to remove any legends from shares of the Maker's common
stock, par value $0.001 per share (the " Common Stock ")
eligible to be sold under Rule 144 of the Securities Act and issue
such unlegended certificates to the Holder within three (3)
business days of the Holder's request so long as the Holder has
provided reasonable assurances to the Maker that such shares of
Common Stock can be sold pursuant to Rule 144, provided that no
assurance shall be required if such shares of Common Stock are
eligible for resale under Rule 144(k); or
(m)
the failure of the Maker to pay any amounts due to
the Holder herein or in the Purchase Agreement, the Registration
Rights Agreement (other than such amounts required to be paid
by the Maker as a result of its failure to register the Registrable
Securities (as defined in the Registration Rights Agreement) or the
Amendment Agreement within three (3) business days of the date such
payments are due (other than amounts contemplated by Section 2.1(a)
or 2.1(b) above); or
(n)
the occurrence of an Event of Default under any of
the Other Notes.
Section 2.2
Remedies Upon An Event of Default
If an Event of Default shall have occurred and
shall be continuing, the Holder of this Note may at any time at
its option, (a) declare the entire unpaid principal balance of
this Note, together with all interest accrued hereon, due and
payable, and thereupon, the same shall be accelerated and so due
and payable, without presentment, demand, protest, or notice,
all of which are hereby expressly unconditionally and
irrevocably waived by the Maker; provided, however, that upon
the occurrence of an Event of Default (i) described in Sections
2.1 (j) or (k), the outstanding principal balance and accrued
interest hereunder shall be automatically due and payable and
(ii) demand the prepayment of this Note pursuant to Section 3.7
hereof, (b) demand that the principal amount of this Note then
outstanding and all accrued and unpaid interest thereon shall be
converted into shares of Common Stock at a Conversion Price per
share calculated pursuant to Section 3.1 hereof assuming that
the date that the Event of Default occurs is the Conversion Date
(as defined in Section 3.1 hereof), or (c) exercise or otherwise
enforce any one or more of the Holder's rights, powers,
privileges, remedies and interests under this Note, the Purchase
Agreement, the Registration Rights Agreement (other than any
such rights, powers, privileges, remedies or interests arising
as a result of the Maker's failure to register the Registrable
Securities (as defined in the Registration Rights Agreement)),
the Amendment Agreement or applicable law. No course of
delay on the part of the Holder shall operate as a waiver
thereof or otherwise prejudice the right of the Holder. No
remedy conferred hereby shall be exclusive of any other remedy
referred to herein or now or hereafter available at law, in
equity, by statute or otherwise.
ARTICLE III
CONVERSION; ANTIDILUTION; PREPAYMENT
Section 3.1
Conversion Option
(a)
At any time on or after the Issuance Date, this
Note shall be convertible (in whole or in part), at the option
of the Holder (the " Conversion Option "), into such
number of fully paid and non-assessable shares of Common Stock
(the " Conversion Rate ") as is determined by dividing
(x) that portion of the outstanding principal balance plus any
accrued but unpaid interest under this Note as of such date that
the Holder elects to convert by (y) the Conversion Price (as
defined in Section 3.2(a) hereof) then in effect on the date on
which the Holder faxes a notice of conversion (the "
Conversion Notice "), duly executed, to the Maker
(facsimile number (310) ___-____, Attn.: Chief Executive
Officer) (the " Conversion Date "), provided, however,
that the Conversion Price shall be subject to adjustment as
described in Section 3.6 below. The Holder shall deliver
this Note to the Maker at the address designated in the Purchase
Agreement at such time that this Note is fully converted.
With respect to partial conversions of this Note, the
Maker shall keep written records of the amount of this Note
converted as of each Conversion Date.
(b)
Intentionally Omitted.
(c)
The term "Closing Bid Price" shall mean, on any
particular date (i) the closing bid price per share of the Common
Stock on such date on the OTC Bulletin Board or another registered
national stock exchange on which the Common Stock is then listed,
or if there is no such price on such date, then the closing bid
price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not listed then
on the OTC Bulletin Board or any registered national stock
exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or
in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (iii) if the
Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the
average of the "Pink Sheet" quotes for the relevant conversion
period, as determined in good faith by the Holder, or (iv) if the
Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by the Holder and reasonably
acceptable to the Maker.
Section 3.2
Conversion Price
(a)
The term "Conversion Price" shall mean $0.04,
subject to adjustment under Section 3.6 hereof.
(b)
Notwithstanding any of the foregoing to the
contrary, if during any period (a " Black-out Period "),
a Holder is unable to trade any Common Stock issued or issuable
upon conversion of this Note immediately due to the postponement
of filing or delay or suspension of effectiveness of a
registration statement or because the Maker has otherwise
informed such Holder that an existing prospectus cannot be used
at that time in the sale or transfer of such Common Stock
(provided that such postponement, delay, suspension or fact that
the prospectus cannot be used is not due to factors solely
within the control of the Holder of this Note or due to the
Maker exercising its rights under Section 3(n) of the
Registration Rights Agreement), such Holder shall have the
option but not the obligation on any Conversion Date within ten
(10) Trading Days following the expiration of the Black-out
Period of using the Conversion Price applicable on such
Conversion Date or any Conversion Price selected by such Holder
that would have been applicable had such Conversion Date been at
any earlier time during the Black-out Period or within the ten
(10) Trading Days thereafter. In no event shall the
Black-out Period have any effect on the Maturity Date of this
Note.
Section 3.3
Mechanics of Conversion
(a)
Not later than three (3) Trading Days after any
Conversion Date, the Maker or its designated transfer agent, as
applicable, shall (A) provided the Maker's transfer agent is
participating in The Depository Trust Company (" DTC ")
Fast Automated Securities Transfer Program and the Common Stock
issuable upon conversion of any portion of this Note specified
in the applicable Conversion Notice are eligible for resale
pursuant to Rule 144(k) under the Securities Act of 1933, as
amended, credit such aggregate number of shares of Common Stock
to which the Holder shall be entitled to the Holder's or its
designee's balance account with DTC through its Deposit
Withdrawal Agent Commission (" DWAC ") system, or (B) if
the Maker's transfer agent is not participating in the DTC Fast
Automated Securities Transfer Program or the Common Stock
issuable upon conversion of any portion of this Note are not
eligible for resale pursuant to Rule 144(k) under the Securities
Act of 1933, as amended, issue and deliver by express courier to
the address as specified in the Conversion Notice, a certificate
or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 5.1
of the Purchase Agreement to the extent such shares are not
eligible for resale under Rule 144(k)), registered in the name
of the Holder or its designee, for the number of shares of
Common Stock to which the Holder shall be entitled upon the
conversion of this Note (the " Delivery Date "). If
in the case of any Conversion Notice such certificate or
certificates are not delivered to or as directed by the
applicable Holder by the Delivery Date, the Holder shall be
entitled by written notice to the Maker at any time on or before
its receipt of such certificate or certificates thereafter, to
rescind such conversion, in which event the Maker shall
immediately return this Note tendered for conversion, whereupon
the Maker and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such
notice of revocation, except that any amounts described in
Sections 3.3(b) and (c) shall be payable through the date notice
of rescission is given to the Maker.
(b)
The Maker understands that a delay in the delivery
of the shares of Common Stock upon conversion of this Note beyond
the Delivery Date could result in economic loss to the Holder.
If the Maker fails to deliver to the Holder such shares via
DWAC or a certificate or certificates pursuant to this Section
hereunder by the Delivery Date, the Maker shall pay to such Holder,
in cash, an amount per Trading Day for each Trading Day until such
shares are delivered via DWAC or certificates are delivered,
together with interest on such amount at a rate of 10% per annum,
accruing until such amount and any accrued interest thereon is paid
in full, equal to the greater of (A) (i) 1% of the aggregate
principal amount of the Notes requested to be converted for the
first five (5) Trading Days after the Delivery Date and (ii) 2% of
the aggregate principal amount of the Notes requested to be
converted for each Trading Day thereafter and (B) $2,000 per day
(which amount shall be paid as partial damages and not as a
penalty). Nothing herein shall limit a Holder's right to
pursue actual damages for the Maker's failure to deliver
certificates representing shares of Common Stock upon conversion
within the period specified herein and such Holder shall have the
right to pursue all remedies available to it at law or in equity
(including, without limitation, a decree of specific performance
and/or injunctive relief). Notwithstanding anything to the
contrary contained herein, the Holder shall be entitled to withdraw
a Conversion Notice, and upon such withdrawal the Maker shall only
be obligated to pay the partial damages accrued in accordance with
this Section 3.3(b) through the date the Conversion Notice is
withdrawn.
(c)
In addition to any other rights available to the
Holder, if the Maker fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing the shares
of Common Stock issuable upon conversion of this Note and register
such shares of Common Stock on the Maker's share register or credit
the Holder's balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon such conversion
hereunder (as the case may be) on or before the Delivery Date, and
if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the shares of
Common Stock issuable upon conversion of this Note which the Holder
anticipated receiving upon such exercise (a " Buy-In "),
then, in addition to all other remedies available to the Holder,
the Maker shall, within three (3) business days after the Holder's
request and in the Holder's discretion, either (i) pay cash to the
Holder in an amount equal to the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common
Stock so purchased (the " Buy-In Price "), at which point
the Maker's obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or
certificates representing such shares of Common Stock or credit the
Holder's balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon such Holder's
exercise hereunder (as the case may be) and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock times (B)
the VWAP of the Common Stock for the five (5) Trading Day period
immediately preceding the date of the Conversion Notice. The
Holder shall provide the Maker written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably
requested by the Maker. Nothing herein shall limit a Holder's
right to pursue any other remedies available to it hereunder, at
law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the
Maker's failure to timely deliver certificates representing shares
of Common Stock upon conversion of this Note as required pursuant
to the terms hereof.
(d)
The Person or Persons entitled to receive the
shares of Common Stock issuable upon a conversion of all or any
portion of this Note shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on the
Conversion Date.
Section 3.4
Ownership Cap and Certain Conversion Restrictions
(a)
. Notwithstanding anything to the contrary
contained in this Note, the Holder may not convert any portion
of this Note into shares of Common Stock to the extent (but only
to the extent) that, if converted by the Holder, the Holder or
any of its affiliates would beneficially own in excess of 4.99%
(the " Maximum Percentage ") of the outstanding shares of
Common Stock. To the extent the above limitation applies, the
determination of whether any portion of this Note shall be
convertible (vis-a-vis other convertible, exercisable or
exchangeable securities owned by the Holder) and of which
convertible, exercisable or exchangeable securities shall be
convertible (as among all convertible, exercisable or
exchangeable securities owned by the Holder) shall, subject to
such Maximum Percentage limitation, be determined on the basis
of the first submission to the Maker for conversion, exercise or
exchange (as the case may be). No prior inability to convert any
portion of this Note pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exerciseability.
For the purposes of this paragraph, beneficial ownership and all
determinations and calculations (including, without limitation,
with respect to calculations of percentage ownership) shall be
determined by the Holder in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the " 1934
Act ") and the rules and regulations promulgated thereunder.
The provisions of this paragraph shall be implemented in a
manner otherwise than in strict conformity with the terms of
this paragraph to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or
to make changes or supplements necessary or desirable to
properly give effect to such Maximum Percentage limitation. The
limitations contained in this paragraph shall apply to each and
every successor holder of this Note. The holders of shares of
Common Stock shall be third party beneficiaries of this
paragraph and the Maker may not waive this paragraph without the
consent of holders of a majority of its outstanding shares of
Common Stock. For purposes of this paragraph, in
determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (1) the Maker's most recent Form
10-K, Form 10-Q, Current Report on Form 8-K or other public
filing with the SEC (as the case may be) (2) a more recent
public announcement by the Maker or (3) any other notice by the
Maker or the Maker's transfer agent setting forth the number of
shares of Common Stock outstanding. For any reason at any time,
upon the written or oral request of the Holder, the Maker shall
within one (1) business day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of
convertible or exercisable securities into shares of Common
Stock, including, without limitation, pursuant to the exercise
of the conversion rights granted to the Holder. By written
notice to the Maker, the Holder may increase or decrease the
Maximum Percentage to any other percentage not in excess of
9.99% specified in such notice; provided that any such increase
will not be effective until the sixty-first (61 st )
day after such notice is delivered to the Maker.
Section 3.5
Intentionally Omitted
Section 3.6
Adjustment of Conversion Price
.
(a)
The Conversion Price shall be subject to
adjustment from time to time as follows:
(i)
Adjustments for Stock Splits and
Combinations . If the Maker shall at any time or from
time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in
effect immediately prior to the stock split shall be
proportionately decreased. If the Maker shall at any time
or from time to time after the Issuance Date, combine the
outstanding shares of Common Stock, the applicable Conversion
Price in effect immediately prior to the combination shall be
proportionately increased. Any adjustments under this
Section 3.6(a)(i) shall be effective at the close of business on
the date the stock split or combination occurs.
(ii)
Adjustments for Certain Dividends and
Distributions . If the Maker shall at any time or from
time to time after the Issuance Date, make or issue or set a record
date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of
Common Stock, then, and in each event, the applicable Conversion
Price in effect immediately prior to such event shall be decreased
as of the time of such issuance or, in the event such record date
shall have been fixed, as of the close of business on such record
date, by multiplying, the applicable Conversion Price then in
effect by a fraction:
(1)
the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date; and
(2)
the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in
payment of such dividend or distribution.
(iii)
Adjustment for Other Dividends and
Distributions . If the Maker shall at any time or from
time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be
made and provision shall be made (by adjustments of the
Conversion Price or otherwise) so that the holders of this Note
shall receive upon conversions thereof, in addition to the
number of shares of Common Stock receivable thereon, the number
of securities of the Maker which they would have received had
this Note been converted into Common Stock on the date of such
event (without regard to any limitations on conversion) and had
thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities
(together with any distributions payable thereon during such
period), giving application to all adjustments called for during
such period under this Section 3.6(a)(iii) with respect to the
rights of the holders of this Note and the Other Notes;
provided, however, that if such record date shall have been
fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be adjusted pursuant to this paragraph as
of the time of actual payment of such dividends or distributions
(without regard to any limitations on conversion).
(iv)
Adjustments for Reclassification, Exchange or
Substitution . If the Common Stock issuable upon
conversion of this Note at any time or from time to time after the
Issuance Date shall be changed to the same or different number of
shares of any class or classes of stock, whether by
reclassification, exchange, substitution or otherwise (other than
by way of a stock split or combination of shares or stock dividends
provided for in Sections 3.6(a)(i), (ii) and (iii), or a
reorganization, merger, consolidation, or sale of assets provided
for in Section 3.6(a)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall be made and provisions shall
be made (by adjustments of the Conversion Price or otherwise) so
that the Holder shall have the right thereafter to convert this
Note into the kind and amount of shares of stock and other
securities receivable upon reclassification, exchange, substitution
or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all
subject to further adjustment as provided herein.
(v)
Adjustments for Reorganization, Merger,
Consolidation or Sales of Assets . If at any time or from
time to time after the Issuance Date there shall be a capital
reorganization of the Maker (other than by way of a stock split or
combination of shares or stock dividends or distributions provided
for in Section 3.6(a)(i), (ii) and (iii), or a reclassification,
exchange or substitution of shares provided for in Section
3.6(a)(iv)), or a merger or consolidation of the Maker with or into
another corporation where the holders of outstanding voting
securities prior to such merger or consolidation do not own over
fifty percent (50%) of the outstanding voting securities of the
merged or consolidated entity, immediately after such merger or
consolidation, or the sale of all or substantially all of the
Maker's properties or assets to any other person (an " Organic
Change "), then as a part of such Organic Change, (A) if the
surviving entity in any such Organic Change is a public company
that is registered pursuant to the 1934 Act, and its common stock
is listed or quoted on a national exchange or the OTC Bulletin
Board, an appropriate revision to the Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the Holder shall have the righ
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