Exhibit 10.28(a)
AMENDED AND RESTATED SENIOR
SECURED PROMISSORY NOTE
|
Date of
Original Issuance: August 7, 2008
|
$1,348,525
|
Date of Amendment and Restatement: March 31,
2009
For value received, FIRSTGOLD CORP., a
corporation organized under the laws of the State of Delaware (the
“ Maker ”), hereby promises to pay to the order
of LAKEWOOD GROUP LLC, with an address of 152 West 57
th Street, 4 th Floor, New York, NY 10019 (together with its
successors, representatives, and assigns, the “ Holder
”), in accordance with the terms hereinafter provided, the
principal amount of One Million Three Hundred Forty-Eight Thousand
Five Hundred Twenty-Five Dollars ($1,348,525) hereunder, together
with interest and all other obligations outstanding
hereunder.
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 March 1, 2010 (the “
Maturity Date ”) or at such earlier time as provided
herein.
This Note was originally issued on August 7,
2008 in the original principal amount of $1,348,525 (the
“Original Note”). Effective March 31, 2009 (the
“Amendment Date”), the terms and provisions of the
Original Note are deemed amended and restated as is set forth
herein. This Note is issued in exchange for the Original Note
and does not discharge the indebtedness evidenced by the Original
Note. As of the Amendment Date, the principal amount
outstanding under this Note was $1,348,525 and accrued and unpaid
interest totaled $88,702.98. As of the Amendment Date, the Maker is
in default of its obligations under this Note and other
indebtedness of Maker to Holder (the “ Existing
Defaults ”), and amounts hereunder, and under such other
indebtedness, bear interest at the default rate set forth below. By
acceptance of this Amended and Restated Note, the Holder does not
waive any of its rights and remedies under this Note or such other
indebtedness with respect to the Existing Defaults, whether arising
at law or in equity.
ARTICLE I
Section 1.1 Purchase
Agreement . This Note has been executed and delivered pursuant
to the Note and Warrant Purchase Agreement, dated as of August 7,
2008 (as amended, the “Purchase Agreement”), by and
between the Maker, the Holder (as a Lender) and each other Lender
party thereto. 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. The outstanding principal balance of this Note
shall bear interest, in arrears, at a rate per annum equal to four
percent (4%), payable in cash on the first Business Day of each
month following the date of original issuance. Interest shall be
computed on the basis of a 360-day year of twelve (12) thirty-day
months, shall compound monthly and shall accrue commencing on the
date of original issuance. Furthermore, upon the occurrence of an
Event of Default (as defined in Section 2.1 hereof), the Maker will
pay interest to the Holder, payable on demand, on the outstanding
principal balance of the Note and on all unpaid interest from the
date of the Event of Default at a per annum rate equal to the
lesser of eighteen percent (18%) and the maximum applicable legal
rate per annum, calculated based on a 360-day year.
Section 1.3 Payment
of Principal; Prepayment .
(a) The principal amount hereof
shall be paid in full on the Maturity Date or, if earlier, upon
acceleration of this Note in accordance with the terms hereof. Any
amount of principal repaid hereunder may not be reborrowed. The
Maker may prepay all or any portion of the principal amount of this
Note upon not less than three (3) Business Days prior written
notice to the Holder, without penalty or premium.
(b) Not later than the fifteenth
(15 th
) day of each calendar month, the
Maker shall make a mandatory prepayment to the Holder equal to its
Pro Rata Share of forty percent (40%) of the Maker’s Free
Cash Flow in and for the preceding calendar month; provided,
however, that commencing with the payment to be made in December,
2008 and continuing in each month thereafter, such monthly payment
shall be equal to the Holder’s Pro Rata Share of the greater
of (i) forty percent (40%) of the Maker’s Free Cash Flow in
the preceding calendar month, and (ii) $400,000. Each such payment
shall be accompanied by financial calculations of such prior
month’s Free Cash Flow certified as being complete and
correct by the Maker’s president or chief financial officer,
in such detail and with such supporting financial documents as the
Collateral Agent (as defined below) may require. Each such
mandatory prepayment shall be applied first to any interest, fee or
expense obligation hereunder which is then due and unpaid and then
on account of the principal balance hereof. Prepayments applied to
principal shall be made against the principal balance of this Note
and of all other outstanding Notes issued under the Purchase
Agreement on a pro-rata basis. For the purposes hereof, “Free
Cash Flow” shall mean (in and for each period for which such
calculation is made, all in accordance with GAAP) the Maker’s
gross revenue from its operations at the Relief Canyon Mine less
direct operating costs from such mining operations and less taxes
resulting from such revenues.
Section 1.4 Security
Documents . The obligations of the Maker hereunder are secured
by a continuing security interest in substantially all of the
assets of the Maker pursuant to the terms of a Security Agreement,
dated August 7, 2008, by and between the Maker and the Collateral
Agent, a Deed or Deeds of Trust, and other collateral documents.
For the purposes hereof, the term “Collateral Agent”
shall have the meaning given thereto in the Security
Agreement.
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 New York, such payment shall 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, and may also
be pledged, hypothecated or otherwise granted as security, by the
Holder; provided, however, that any transfer or sale of this Note
must be in compliance with any applicable securities
laws.
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, 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.
Section 1.8 Use of
Proceeds . The Maker shall use the proceeds of this Note as set
forth in the Purchase Agreement.
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) any default
in respect of any payment of the principal amount, interest or any
other monetary obligation under this Note, as and when the same
shall be due and payable (whether on the Maturity Date or by
acceleration or otherwise) or within three (3) days thereafter;
or
(b) the Maker
shall fail to observe or perform any other condition, covenant or
agreement contained in this Note, which failure is not cured within
five (5) Business Days after the Maker’s receipt of notice of
such failure; 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
Capital Markets, the Nasdaq Global Market, the Nasdaq Global Select
Market or The New York Stock Exchange, Inc. for a period of five
(5) consecutive Trading Days, such a suspension to only constitute
an Event of Default if the Holder provides the Maker written
notification that it deems such suspension to be an Event of
Default; or
(d) the Maker
shall default in the performance or observance of (i) any
undertaking, covenant, condition or agreement contained in the
Purchase Agreement or any other Transaction Document and such
default is not fully cured within five (5) Business Days after the
Maker’s receipt of notice of such default; or
(e) any
representation or warranty made by the Maker herein or in the
Purchase Agreement or any other Transaction Document shall prove to
have been false or incorrect or breached in a material respect on
the date as of which made; or
(f) any failure
by Maker to cure within five (5) Business Days after the
Maker’s receipt of notice of (A) a default in any payment of
any amount or amounts of principal of or interest on any
Indebtedness of the Maker (other than the Indebtedness hereunder)
the aggregate principal amount of which Indebtedness is in excess
of $50,000 or (B) a 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
(g) 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
(h) 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
(i) any default
or event of default, or event that, with the passage of time or
giving of notice or both would constitute a default or event of
default, shall have occurred under any mining lease or mining
rights or claims agreement to which Maker is now or at any time
hereafter a party or any such agreement is terminated by any of the
parties thereto; or
(j) a judgment
or judgments in the aggregate amount exceeding $25,000 is/are
entered against the Maker and not dismissed or discharged within
twenty (20) days following the entry thereof; or
(k) Maker shall
cease to actively conduct its business operations for a period of
five (5) consecutive Business Days; or
(l) any material
portion of the properties or assets of the Maker is seized by any
governmental authority; or
(m) the Maker is
indicted for the commission of any criminal activity; or
(n) closing of a
purchase, tender or exchange offer made to the holders of more than
fifty percent (50%) of the outstanding shares of Common Stock in
which more than fifty percent (50%) of the outstanding shares of
Common Stock were tendered and accepted; or
(o) the
Maker’s notice to the Holder, including, by way of public
announcement, at any time, of its inability to comply or its
intention not to comply with proper requests for conversion of the
Conversion Amount into shares of Common Stock as set forth herein
or its failure to timely deliver shares of Common Stock upon
conversion of the Conversion Amount; or
(p) the failure
of the Maker to instruct its transfer agent to remove any legends
from the Conversion Shares eligible to be sold under Rule 144 of
the Securities Act and issue such unlegended certificates to the
Holder within four (4) business days of the receipt of
Holder’s Conversion Notice 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.
Section 2.2 Remedies
Upon An Event of Default . If an Event of Default shall have
occurred and shall be continuing, the Collateral Agent may at any
time at its option (a) declare the entire unpaid principal balance
of this Note, together with all interest accrued hereon, plus fees
and expenses, 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 described
in Sections 2.1 (g) or (h) above, the outstanding principal balance
and accrued interest hereunder, plus fees and expenses, shall be
immediately and automatically due and payable, and/or (b) exercise
or otherwise enforce any one or more of the Holder’s rights,
powers, privileges, remedies and interests as well as its own
rights, powers and remedies under this Note, the Purchase
Agreement, the Security Agreement or other Transaction Document or
applicable law. No course of delay on the part of the Collateral
Agent or the Holder shall operate as a waiver thereof or otherwise
prejudice the right of the Collateral Agent or 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. Upon and after an Event of Default, this
Note shall bear interest at the default rate set forth in Section
1.2 hereof.
ARTICLE IIA
CONVERSION; ANTIDILUTION;
PREPAYMENT
Section 2A.1
Conversion Option . At any time and from time to time on or
after the Amendment Date, the Conversion Amount shall be
convertible (in whole or in part, subject to the limitations set
forth herein), at the option of the Holder (the “
Conversion Option ”), into such number of fully paid
and non-assessable shares of Common Stock as is determined by
dividing (x) that portion of the Conversion Amount that the Holder
elects to convert by (y) the Conversion Price (as defined in
Section 2A.2 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: (530)
677-7626, Attn.: Chief Financial Officer) (the “
Conversion Date ”), provided, however, that the
Conversion Price shall be subject to adjustment as described below.
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.
Notwithstanding anything to the contrary
contained herein, (i) not more than $800,000 of principal and/or
accrued and unpaid interest on this Note shall be convertible
pursuant to a conversion under this Section 2A.1 without the
Maker’s express written consent (the “ Conversion
Amount ”), (ii) until April 30, 2009, conversions by the
Holder hereunder shall be deemed to be conversions of accrued and
unpaid interest under this Note, as the same exists and to the
extent counsel for the Maker delivers an opinion satisfactory to
the Holder as to the free transferability of such conversion shares
pursuant to Rule 144; thereafter, any conversion shall be deemed to
be a conversion of the principal amount hereunder; and (iii) if no
default or Event of Default exists hereunder or under any other
indebtedness of the Maker to the Holder, upon the Maker’s
written notice to the Holder, the Maker may suspend the
convertibility of this Note for so long as no such default or Event
of Default exists (provided, that, (i) the Maker shall be obligated
to honor all conversion notices delivered prior to such notice from
the Maker and (ii) if a default or an Event of Default after such
suspension occurs, such suspension shall end and this Note shall
thereafter be convertible as set forth herein).
Section 2A.2
Conversion Price . The term “Conversion Price”
shall mean $0.145, subject to adjustment under Section 2A.5
hereof.
Section 2A.3
Mechanics of Conversion .
(a) Not later
than four (4) Trading Days after receipt of a Conversion Notice,
the Maker or its designated transfer agent, as applicable, shall
issue and deliver to the Depository Trust Company (“
DTC ”) account on the Holder’s behalf via the
Deposit Withdrawal Agent Commission System (“ DWAC
”) as specified in the Conversion Notice, 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. In the
alternative, not later than four (4) Trading Days after receipt of
a Conversion Notice, the Maker shall deliver to the applicable
Holder by express courier 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)
representing the number of shares of Common Stock being acquired
upon the conversion of this Note (the “ Delivery Date
”). Notwithstanding the foregoing to the contrary, the Maker
or its transfer agent shall only be obligated to issue and deliver
the shares to the DTC on the Holder’s behalf via DWAC (or
certificates free of restrictive legends) if such conversion is in
connection with a sale and the Holder has complied with the
applicable prospectus delivery requirements (as evidenced by
documentation furnished to and reasonably satisfactory to the
Maker) or such shares may be sold pursuant to Rule 144. If in the
case of any Conversion Notice such certificate or certificates are
not delivered to or as directed by the 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
2A.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 Conversion Shares
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, if applicable, certificates) 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 (if applicable), 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 Note requested to be converted for each Trading Day
thereafter and (B) $2,000 per day (which amount shall be paid as
liquidated damages and not as a penalty). Nothing herein shall
limit the 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 not be obligated to pay the
liquidated damages accrued in accordance with this Section
2A.3(b).
(c) In addition
to any other rights available to the Holder, if the Maker fails to
cause its transfer agent to transmit via DWAC or transmit to the
Holder a certificate or certificates representing the Conversion
Shares 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 Conversion Shares which
the Holder anticipated receiving upon such conversion (a “
Buy-In” ), then the Maker shall (1) pay in cash to the
Holder the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Conversion Shares that the Maker was
required to deliver to the Holder in connection with the conversion
at issue times (B) the price at which the sell order giving rise to
such purchase obligation was executed, and (2) at the option of the
Holder, either reinstate the portion of the Note and equivalent
number of shares of Common Stock for which such conversion was not
honored or deliver to the Holder the number of shares of Common
Stock that would have been issued had the Maker timely complied
with its conversion and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Maker
shall be required to pay the Holder $1,000. 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 the 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.
Section 2A.4 Ownership
Cap and Certain Conversion Restrictions.
(a)
Notwithstanding anything to the contrary set forth in this
Note, at no time may all or a portion of this Note be converted if
the number of shares of Common Stock to be issued pursuant to such
conversion would exceed, when aggregated with all other shares of
Common Stock owned by the Holder at such time, the number of shares
of Common Stock which would result in the Holder beneficially
owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) more than 4.99% of all of
the Common Stock outstanding at such time; provided ,
however , that upon the Holder providing the Maker with
sixty-one (61) days notice (pursuant to Section 3.1 hereof) (the
“ Waiver Notice ”) that the Holder would like to
waive this Section 2A.4(a) with regard to any or all shares of
Common Stock issuable upon conversion of this Note, this Section
2A.4(a) will be of no force or effect with regard to all or a
portion of the Note referenced in the Waiver Notice.
(b)
Notwithstanding anything to the contrary set forth in this
Note, at no time may all or a portion of this Note be converted if
the number of shares of Common Stock to be issued pursuant to such
conversion, when aggregated with all other shares of Common Stock
owned by the Holder at such time, would result in the Holder
beneficially owning (as determined in accordance with Section 13(d)
of the Exchange Act and the rules thereunder) in excess of 9.99% of
the then issued and outstanding shares of Common Stock outstanding
at such time. The provisions of this Section 2A.4(b) may not be
amended or waived by the Holder or the Maker.
(c) Any
Conversion Notice delivered in connection herewith shall be deemed
to be a representation by the Holder that such conversion complies
with the provisions of this Section 2A.4.
Section 2A.5
Adjustment of Conversion Price .
(a) Until the
Note has been paid in full or the Conversion Amount has been
converted in full, the Conversion Price shall be subject to
adjustment from time to time as follows (but shall not be
increased, other than pursuant to Section 2A.5(a)(i)
hereof):
(i)
Adjustments for Stock Splits and Combinations . If the Maker
shall at any time or from time to time after the Amendment 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 Amendment Date, combine
the outstanding shares of Common Stock (e.g., a “reverse
stock split”), the applicable Conversion Price in effect
immediately prior to the combination shall be proportionately
increased. Any adjustments under this Section 2A.5(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 Amendment
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 Amendment
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 or other issuer (as
applicable) which they would have received had the convertible
portion of this Note been converted into Common Stock on the date
of such event 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 2A.5(a)(iii) with respect to
the rights of the Holder of this Note; 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.
(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 Amendment 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 2A.5(a)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of
assets provided for in Section 2A.5(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 Amendment 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
2A.5(a)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 2A.5(a)(iv)), or a
merger or consolidation of the Maker with or into another Person
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 Securities Exchange Act of 1934, as amended, 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
right thereafter to convert the convertible portion of this Note
into the kind and amount of shares of stock and other securities or
property of the Maker or any successor corporation resulting from
Organic Change, and (B) if the surviving entity in any such Organic
Change is not a public company that is registered pursuant to the
Securities Exchange Act of 1934, as amended, or its common stock is
not listed or quoted on a national exchange or the OTC Bulletin
Board, the Holder shall have the right to demand prepayment
pursuant to Section 2A.6(b) hereof.
In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section
2A.5(a)(v) with respect to the rights of the Holder after the
Organic Change to the end that the provisions of this Section
2A.5(a)(v) (including any adjustment in the applicable Conversion
Price then in effect and the number of shares of stock or other
securities deliverable upon conversion of this Note and the Other
Notes) shall be applied after that event in as nearly an equivalent
manner as may be practicable. References herein to “Other
Notes” shall mean and refer to any other convertible
promissory note issued by the Maker to the Holder or Platinum Long
Term Growth, LLC.
(b) Record
Date . In case the Maker shall establish a record date for the
purpose of entitling the holders of its Common Stock to subscribe
for or purchase Common Stock or Convertible Securities, then the
date of the issue or sale of the shares of Common Stock shall be
deemed to be such record date.
(c)
[Reserved] .
(d) No
Impairment . The Maker shall not, by amendment of its
Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Maker, but will at all times
in good faith, assist in the carrying out of all the provisions of
this Section 2A.5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights
of the Holder against impairment. In the event a Holder shall elect
to convert the convertible portion of this Note as provided herein,
the Maker cannot refuse conversion based on any claim that such
Holder or any one associated or affiliated with such Holder has
been engaged in any violation of law, violation of an agreement to
which such Holder is a party or for any reason whatsoever, unless,
an injunction from a court, or notice, restraining and or enjoining
conversion of all or any of the Note shall have issued and the
Maker shall allocate for the benefit of such Holder in an amount
equal to one hundred thirty percent (130%) of the amount of the
shares the Holder has elected to convert, which allocation shall
remain in effect until the completion of arbitration/litigation of
the dispute.
(e)
Certificates as to Adjustments . Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of
Conversion Shares issuable upon conversion of this Note pursuant to
this Section 2A.5, the Maker at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof
and furnish to the Holder a certificate setting forth such
adjustment and readjustment, showing in detail the facts upon which
such adjustment or readjustment is based. The Maker shall, upon
written request of the Holder, at any time, furnish or cause to be
furnished to the Holder a like certificate setting forth such
adjustments and readjustments, the applicable Conversion Price in
effect at the time, and the number of shares of Common Stock and
the amount, if any, of other securities or property which at the
time would be received upon the conversion of this Note.
Notwithstanding the foregoing, the Maker shall not be obligated to
deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent (1%) of such adjusted
amount.
(f) Issue
Taxes . The Maker shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable
in respect of any issue or delivery of Conversion Shares pursuant
thereto; provided , however , that the Maker shall
not be obligated to pay any transfer taxes resulting from any
transfer requested by the Holder in connection with any such
conversion.
(g)
Fractional Shares . No fractional shares of Common Stock
shall be issued upon conversion of this Note. In lieu of any
fractional shares to which the Holder would otherwise be entitled,
the Maker shall pay cash equal to the product of such fraction
multiplied by the average of the Closing Bid Prices of the Common
Stock for the five (5) consecutive Trading Days immediately
preceding the Conversion Date.
(h)
Reservation of Common Stock . The Maker shall at all times
when this Note shall be outstanding, reserve and keep available out
of its authorized but unissued Common Stock, such number of shares
of Common Stock as shall from time to time be sufficient to effect
the conversion of this Note and all interest accrued thereon;
provided that the number of shares of Common Stock so
reserved shall at no time be less than one hundred twenty percent
(120%) of the number of shares of Common Stock for which this Note
and all interest accrued thereon are at any time convertible. The
Maker shall, from time to time in accordance with Delaware law,
increase the authorized number of shares of Common Stock if at any
time the unissued number of authorized shares shall not be
sufficient to satisfy the Maker’s obligations under this
Section 2A.5(h).
(i)
Regulatory Compliance . If any shares of Common Stock to be
reserved for the purpose of conversion of this Note or any interest
accrued thereon require registration or listing with or approval of
any governmental authority, stock exchange or other regulatory body
under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the
Maker shall, at its sole cost and expense, in good faith and as
expeditiously as possible, endeavor to secure such registration,
listing or approval, as the case may be.
Section 2A.6
Prepayment.
(a)
[Reserved] .
(b)
Prepayment Option Upon Major Transaction . In addition to
all other rights of the Holder contained herein, simultaneous with
the occurrence of a Major Transaction (as defined below), the
Holder shall have the right, at the Holder’s option, to
require the Maker to prepay all or a portion of the Holder’s
Notes in cash at a price equal to the sum of (i) the greater of (A)
one hundred percent (100%) of the aggregate principal amount of
this Note plus all accrued and unpaid interest and (B) in the event
at such time the Holder is unable to obtain the benefit of its
conversion rights through the conversion of this Note and resale of
the shares of Common Stock issuable upon conversion hereof in
accordance with the terms of this Note and the other Transaction
Documents, the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price
on (x) the date the Prepayment Price (as defined below) is demanded
or otherwise due or (y) the date the Major Transaction Prepayment
Price is paid in full, whichever is less, multiplied by the VWAP on
(x) the date the Major Transaction Prepayment Price is demanded or
otherwise due, and (y) the date the Major Transaction Prepayment
Price is paid in full, whichever is greater, and (ii) all other
amounts, costs, expenses and liquidated damages due in respect of
this Note and the other Transaction Documents (the “Major
Transaction Prepayment Price”).
(c)
Prepayment Option Upon Triggering Event . In addition to all
other rights of the Holder contained herein, after a Triggering
Event (as defined below), the Holder shall have the right, at the
Holder’s option, to require the Maker to prepay all or a
portion of this Note in cash at a price equal to the sum of (i) the
greater of (A) one hundred percent (100%) of the aggregate
principal amount of this Note plus all accrued and unpaid interest
and (B) the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price
on (x) the date the Prepayment Price (as defined below) is demanded
or otherwise due or (y) the date the Prepayment Price is paid in
full, whichever is less, multiplied by the VWAP on (x) the date the
Prepayment Price is demanded or otherwise due, and (y) the date the
Prepayment Price is paid in full, whichever is greater, and (ii)
all other amounts, costs, expenses and liquidated damages due in
respect of this Note and the other Transaction Documents (the
“ Triggering Event Prepayment Price ,” and,
collectively with the Major Transaction Prepayment Price, the
“ Prepayment Price ”).
(d) “
Major Transaction .” A “Major Transaction”
shall be deemed to have occurred at such time as any of the
following events:
(i) the
consolidation, merger or other business combination of the Maker
with or into another Person (other than (A) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Maker or (B) a consolidation, merger or
other business combination in which the Maker is the surviving
entity and the holders of the Maker’s voting power
immediately prior to the transaction continue after the transaction
to hold, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of
the board of directors (or their equivalent if other than a
corporation) of such entity or entities).
(ii) the sale or
transfer of more than fifty percent (50%) of the Maker’s
assets (based on the fair market value as determined in good faith
by the Maker’s Board of Directors) other than inventory in
the ordinary course of business in one or a related series of
transactions; or
(iii) closing of a
purchase, tender or exchange offer made to the holders of more than
fifty percent (50%) of the outstanding shares of Common Stock in
which more than fifty percent (50%) of the outstanding shares of
Common Stock were tendered and accepted.
(e) “
Triggering Event .” A “Triggering Event”
shall be deemed to have occurred at such time as the occurrence
of any of the following events:
(i) 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 Toronto Stock Exchange, the American
Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global
Market, the Nasdaq Global Select Market or The New York Stock
Exchange, Inc. for a period of five (5) consecutive Trading
Days;
(ii) the
Maker’s notice to any holder of the Notes, including by way
of public announcement, at any time, of its inability to comply
(including for any of the reasons described in Section 2A.7) or its
intention not to comply with proper requests for conversion of any
Notes into shares of Common Stock; or
(iii) the Maker
deregisters its shares of Common Stock and as a result such shares
of Common Stock are no longer publicly traded; or
(iv) the Maker
consummates a “going private” transaction and as a
result the Common Stock is no longer registered under Sections
12(b) or 12(g) of the Exchange Act; or
(v) the Maker
shall fail to comply with Section 3.11(d) of this Note.
(f)
Mechanics of Prepayment at Option of Holder Upon Major
Transaction . No sooner than fifteen (15) days nor later than
ten (10) days prior to the consummation of a Major Transaction, but
not prior to the public announcement of such Major Transaction, the
Maker shall deliver written notice thereof via facsimile and
overnight courier (“Notice of Major Transaction”) to
the Holder of this Note. At any time after receipt of a Notice of
Major Transaction (or, in the event a Notice of Major Transaction
is not delivered at least ten (10) days prior to a Major
Transaction, at any time within ten (10) days prior to a Major
Transaction), any holder of the Notes then outstanding may require
the Maker to prepay, effective immediately prior to the
consummation of such Major Transaction, all of the holder’s
Notes then outstanding by delivering written notice thereof via
facsimile and overnight courier (“Notice of Prepayment at
Option of Holder Upon Major Transaction”) to the Maker, which
Notice of Prepayment at Option of Holder Upon Major Transaction
shall indicate (i) the principal amount of the Notes that such
holder is electing to have prepaid and (ii) the applicable Major
Transaction Prepayment Price, as calculated pursuant to Section
2A.6(b) above.
(g)
Mechanics of Prepayment at Option of Holder Upon Triggering
Event . Within one (1) business day after the occurrence of a
Triggering Event, the Maker shall deliver written notice thereof
via facsimile and overnight courier (“Notice of Triggering
Event”) to each holder of the Notes. At any time after the
earlier of a holder’s receipt of a Notice of Triggering Event
and such holder becoming aware of a Triggering Event, any holder of
this Note and the Other Notes then outstanding may require the
Maker to prepay all of the Notes on a pro rata basis by delivering
written notice thereof via facsimile and overnight courier
(“Notice of Prepayment at Option of Holder Upon Triggering
Event”) to the Maker, which Notice of Prepayment at Option of
Holder Upon Triggering Event shall indicate (i) the amount of the
Note that such holder is electing to have prepaid and (ii) the
applicable Triggering Event Prepayment Price, as calculated
pursuant to Section 2A.6(c) above.
A holder shall only be permitted to require the
Maker to prepay the Note pursuant to Section 2A.6 hereof for the
greater of a period of ten (10) days after receipt by such holder
of a Notice of Triggering Event or for so long as such Triggering
Event is continuing.
(h) Payment
of Prepayment Price . Upon the Maker’s receipt of a
Notice(s) of Prepayment at Option of Holder Upon Triggering Event
or a Notice(s) of Prepayment at Option of Holder Upon Major
Transaction from any holder of the Notes, the Maker shall
immediately notify each holder of the Notes by facsimile of the
Maker’s receipt of such Notice(s) of Prepayment at Option of
Holder Upon Triggering Event or Notice(s) of Prepayment at Option
of Holder Upon Major Transaction and each holder which has sent
such a notice shall promptly submit to the Maker such
holder’s certificates representing the Notes which such
holder has elected to have prepaid. The Maker shall deliver the
applicable Triggering Event Prepayment Price, in the case of a
prepayment pursuant to Section 2A.6(g), to such holder within five
(5) business days after the Maker’s receipt of a Notice of
Prepayment at Option of Holder Upon Triggering Event and, in the
case of a prepayment pursuant to Section 2A.6(f), the Maker shall
deliver the applicable Major Transaction Prepayment Price
immediately prior to the consummation of the Major Transaction;
provided that a holder’s original Note shall have been so
delivered to the Maker; provided further that if the Maker is
unable to prepay all of the Notes to be prepaid, the Maker shall
prepay an amount from each holder of the Notes being prepaid equal
to such holder’s pro-rata amount (based on the number of
Notes and Other Notes held by such holder relative to the number of
Notes and Other Notes outstanding) of all Notes being prepaid. If
the Maker shall fail to prepay all of the Notes submitted for
prepayment (other than pursuant to a dispute as to the arithmetic
calculation of the Prepayment Price), in addition to any remedy
such holder of the Notes may have under this Note and the Purchase
Agreement, the applicable Prepayment Price payable in respect of
such Notes not prepaid shall bear interest at the rate of two
percent (2%) per month (prorated for partial months) until paid in
full. Until the Maker pays such unpaid applicable Prepayment Price
in full to a holder of the Notes submitted for prepayment, such
holder shall have the option (the “ Void Optional
Prepayment Option ”) to, in lieu of prepayment, require
the Maker to promptly return to such holder(s) all of the Notes
that were submitted for prepayment by such holder(s) under this
Section 2A.6 and for which the applicable Prepayment Price has not
been paid, by sending written notice thereof to the Maker via
facsimile (the “ Void Optional Prepayment Notice
”). Upon the Maker’s receipt of such Void Optional
Prepayment Notice(s) and prior to payment of the full applicable
Prepayment Price to such holder, (i) the Notice(s) of Prepayment at
Option of Holder Upon Triggering Event or the Notice(s) of
Prepayment at Option of Holder Upon Major Transaction, as the case
may be, shall be null and void with respect to those Notes
submitted for prepayment and for which the applicable Prepayment
Price has not been paid, and (ii) the Maker shall immediately
return any Notes submitted to the Maker by each holder for
prepayment under this Section 2A.6(h) and for which the applicable
Prepayment Price has not been paid. A holder’s delivery of a
Void Optional Prepayment Notice and exercise of its rights
following such notice shall not effect the Maker’s
obligations to make any payments which have accrued prior to the
date of such notice. Payments provided for in this Section 2A.6
shall have priority to payments to other stockholders in connection
with a Major Transaction.
Section 2A.7
Inability to Fully Convert .
(a)
Holder’s Option if Maker Cannot Fully Convert . If,
upon the Maker’s receipt of a Conversion Notice, the Maker
cannot issue shares of Common Stock for any reason, including,
without limitation, because the Maker (x) does not have a
sufficient number of shares of Common Stock authorized and
available, or (y) is otherwise prohibited by applicable law or by
the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with
jurisdiction over the Maker or any of its securities from issuing
all of the Common Stock which is to be issued to the Holder
pursuant to a Conversion Notice, then the Maker shall issue as many
shares of Common Stock as it is able to issue in accordance with
the Holder’s Conversion Notice and, with respect to the
unconverted portion of this Note that is entitled to be converted,
the Holder, solely at Holder’s option (in addition to its
other remedies hereunder), can elect to:
(i) If the
Maker’s inability to honor any conversion fully is pursuant
to Section 2A.7(a)(x) or (y) above, require the Maker to prepay
that portion of this Note for which the Maker is unable to issue
Common Stock in accordance with the Holder’s Conversion
Notice (the “ Mandatory Prepayment ”) at a price
per share equal to the Triggering Event Prepayment Price as of such
Conversion Date (the “ Mandatory Prepayment Price
”);
(ii) void its
Conversion Notice and retain or have returned, as the case may be,
this Note that was to be converted pursuant to the Conversion
Notice (provided that the Holder’s voiding its Conversion
Notice shall not effect the Maker’s obligations to make any
payments which have accrued prior to the date of such
notice);
(iii) exercise its
Buy-In rights pursuant to and in accordance with the terms and
provisions of Section 2A.3(c) of this Note.
In the event a Holder shall elect to convert any
portion of its Notes as provided herein, the Maker cannot refuse
conversion based on any claim that such Holder or any one
associated or affiliated with such Holder has been engaged in any
violation of law, violation of an agreement to which such Holder is
a party or for any reason whatsoever, unless, an injunction from a
court, on notice, restraining and/or enjoining conversion of all or
of said Notes shall have been issued and the Maker shall allocate
for the benefit of such Holder in an amount equal to 130% of the
amount of the shares the Holder has elected to convert, which
allocation shall remain in effect until the completion of
arbitration/litigation of the dispute.
(b)
Mechanics of Fulfilling Holder’s Election . The Maker
shall immediately send via facsimile to the Holder, upon receipt of
a facsimile copy of a Conversion Notice from the Holder which
cannot be fully satisfied as described in Section 2A.7(a) above, a
notice of the Maker’s inability to fully satisfy the
Conversion Notice (the “ Inability to Fully Convert
Notice ”). Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Maker is unable to fully satisfy
such holder’s Conversion Notice, (ii) the amount of this Note
which cannot be converted and (iii) the applicable Mandatory
Prepayment Price. The Holder shall notify the Maker of its election
pursuant to Section 2A.7(a) above by delivering written notice via
facsimile to the Maker (“ Notice in Response to Inability
to Convert ”).
(c) Payment
of Prepayment Price . If the Holder shall elect to have its
Notes prepaid pursuant to Section 2A.7(a)(i) above, the Maker shall
pay the Mandatory Prepayment Price to the Holder within thirty (30)
days of the Maker’s receipt of the Holder’s Notice in
Response to Inability to Convert, provided that prior to the
Maker’s receipt of the Holder’s Notice in Response to
Inability to Convert the Maker has not delivered a notice to the
Holder stating, to the satisfaction of the Holder, that the event
or condition resulting in the Mandatory Prepayment has been cured
and all Conversion Shares issuable to the Holder can and will be
delivered to the Holder in accordance with the terms of this Note.
If the Maker shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on the date that is thirty (30) days following
the Maker’s receipt of the Holder’s Notice in Response
to Inability to Convert (other than pursuant to a dispute as to the
determination of the arithmetic calculation of the Prepayment
Price), in addition to any remedy the Holder may have under this
Note and the Purchase Agreement, such unpaid amount shall bear
interest at the rate of two percent (2%) per month (prorated for
partial months) until paid in full. Until the full Mandatory
Prepayment Price is paid in full to the Holder, the Holder may (i)
void the Mandatory Prepayment with respect to that portion of the
Note for which the full Mandatory Prepayment Price has not been
paid, and (ii) receive back such Note.
(d) Pro-rata
Conversion and Prepayment . In the event the Maker receives a
Conversion Notice from more than one holder of the Notes on the
same day and the Maker can convert and prepay some, but not all, of
the Notes pursuant to this Section 2A.7, the Maker shall convert
and prepay from each holder of the Notes electing to have its Notes
converted and prepaid at such time an amount equal to such
holder’s pro-rata amount (based on the principal amount of
the Notes held by such holder relative to the principal amount of
the Notes and any Other Notes outstanding) of all the Notes being
converted and prepaid at such time.
Section 2A.8 No
Rights as Shareholder . Nothing contained in this Note shall be
construed as conferring upon the Holder, prior to the conversion of
this Amended and Restated Note, the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in
respect of any meeting of shareholders for the election of
directors of the Maker or of any other matter, or any
