Exhibit
4.2
FORM OF NOTE
THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 3(c)
HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE
LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 3(c) HEREOF.
SENIOR
NOTE
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July 31, 2009
Note
No.: HMF-1
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$ 215,000
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FOR VALUE RECEIVED, EVOLUTION
RESOURCES, INC. , a Nevada
corporation (the “ Company ”), hereby promises
to pay to the order of Harborview Master Fund, L.P. or its
permitted assigns (the “ Holder ”) the principal
amount of Two Hundred Fifteen Thousand Dollars ($ 215,000 )
(the “ Initial Principal Amount ”) when due,
whether upon maturity, acceleration, redemption or otherwise, and
to pay interest (“ Interest ”) on the unpaid
principal balance hereof on each Interest Payment Date (as defined
in the Appendix hereto) and upon maturity, or earlier upon
acceleration or prepayment pursuant to the terms hereof, at the
Applicable Interest Rate (as defined in the Appendix
hereto). Interest on this Note payable on each Interest
Payment Date and upon maturity, or earlier upon acceleration or
redemption pursuant to the terms hereof, shall accrue from the
Issuance Date (as defined in the Appendix hereto) and shall
be computed on the basis of a 365-day year and actual days elapsed.
Interest shall be payable in cash in accordance with the
foregoing sentence and Section 6 .
(1)
Certain Defined Terms
. Each capitalized term used and
not otherwise defined in this Note shall have the meaning ascribed
to such term in the Appendix hereto, which is incorporated
herein by this reference.
(2)
Payments of Principal and
Interest . All payments
under this Note shall be made in lawful money of the United States
of America by wire transfer of immediately available funds to such
account as the Holder may from time to time designate by written
notice in accordance with the provisions of this Note.
Interest on the Principal shall be paid quarterly in arrears
on each Interest Payment Date. Any amount that is not paid
when due shall bear interest at the
Default Rate from the date such amount is
initially due until the same is paid in full. Whenever any
amount expressed to be due by the terms of this Note is due on any
day that is not a Business Day, the same shall be due instead on
the next succeeding Business Day.
(3)
Principal Payments
.
(a)
On the Maturity Date
. If any Principal remains
outstanding on the Maturity Date, then the Holder shall surrender
this Note, duly endorsed for cancellation to the Company, and such
Principal shall be redeemed by the Company as of the Maturity Date
by payment on the Maturity Date to the Holder, by wire transfer of
immediately available funds, of an amount equal to such Principal
and the related Interest Amount, together with all other
obligations payable under this Note or the Securities Purchase
Agreement.
(b)
Optional Early Redemption by
Company.
(i)
General . At any time after the Issuance Date, the
Company shall have the right to redeem some or all of the Principal
(a “ Company Early Redemption ”) by delivering
to the Holder written notice (the “ Company Early
Redemption Notice ”) at least 10 Business Days prior to
the date selected by the Company for such Company Early Redemption.
The Company Early Redemption Notice shall state:
(A)
the date (the “ Company Early
Redemption Date ”) on which the Company Early Redemption
will occur;
(B)
the amount of the Principal to be
redeemed by the Company on the Company Early Redemption
Date;
(C)
the Interest Amount with respect to such
Principal; and
(D)
that the Company is simultaneously
redeeming the same percentage of the outstanding principal balance
of the Other Notes.
The aggregate of (1) the amount of the
Principal to be redeemed by the Company on the Company Early
Redemption Date, and (2) the Interest Amount with respect thereto
is referred to herein as the “ Aggregate Early Redemption
Amount .” A Company Early Redemption Notice shall
be irrevocable by the Company; the failure of the Company to pay
the Aggregate Early Redemption Amount in full on the Company Early
Redemption Date shall constitute an Event of Default; and any
portion of the Aggregate Early Redemption Amount not paid on the
Company Early Redemption Date shall bear interest at the Default
Rate until paid in full.
(ii)
Mechanics of Company Early
Redemption . If the
Company has delivered a Company Early Redemption Notice in
accordance with Section 3(b)(i) , then on the Company Early
Redemption Date the Company shall pay the Aggregate Early
Redemption Amount in cash by wire transfer of immediately available
funds to an account designated by the Holder. Notwithstanding
anything contained herein to the contrary, no Company Early
Redemption Notice shall contain any material non-public information
regarding the Company or any of its Subsidiaries.
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(4)
Surrender of Note
. Notwithstanding anything to the
contrary set forth in this Note, upon any redemption of the
Principal of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to
the Company unless all of the Principal is being repaid and the
related Interest Amount and all other obligations payable under
this Note (including any other amounts due under this Note) have
been paid in full. The Holder and the Company shall maintain
records showing the principal amount redeemed and the date(s) of
such redemptions or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require
physical surrender of this Note upon each such redemption. In
the event of any dispute or discrepancy, such records of the Holder
establishing the Principal to which the Holder is entitled shall be
controlling and determinative in the absence of manifest error.
The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of this
paragraph, following redemption of any portion of this Note, the
Principal may be less than the principal amount stated on the face
hereof.
(5)
Interest . Interest shall be payable by the Company on
each Interest Payment Date and at the Maturity Date, to the record
Holder of this Note on such Interest Payment Date by wire transfer
of immediately available funds. Any accrued and unpaid Interest
which is not paid within two Business Days of such accrued and
unpaid Interest’s Interest Payment Date shall bear interest
at the Default Rate from such Interest Payment Date until the same
is paid in full.
(6)
Voting Rights . The holders of the Notes shall have no voting
rights, except as required by law and as expressly provided in this
Note.
(7)
Defaults and Remedies
.
(a)
Events of Default
. An “ Event of
Default ” means:
(i)
Any default in payment of (A) any
Principal on any of the Notes or (B) any Aggregate
Early Redemption Amount, when and as due;
(ii)
Any default in payment of any Interest
Amount or any other amounts due that is not included in an amount
described in the immediately preceding clause (i) and that is not
cured within two Business Days from the date such Interest Amount
or other amounts were due;
(iii)
Any failure by the Company for 10 days to
comply with any other provision of this Note in all material
respects;
(iv)
Any default under, redemption of or
acceleration prior to maturity of any Indebtedness of the Company
or any of its Subsidiaries;
(v)
The Company or any of its Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law: (A)
commences a voluntary case or applies for a receiving order; (B)
consents to the entry of an order for relief against it in an
involuntary case or consents to any involuntary application for a
receiving order; (C) consents to the appointment of a Custodian of
it or any of its Subsidiaries for all or substantially all of its
property; (D) makes a general assignment for the benefit of its
creditors; or (E) admits in writing that it is generally unable to
pay its debts as the same become due;
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(vi)
An involuntary case or other proceeding
is commenced directly against the Company or any of its
Subsidiaries seeking liquidation, reorganization or other relief
with respect to it or its Indebtedness under any Bankruptcy Law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or
other Bankruptcy Law proceeding remains undismissed and unstayed
for a period of 30 days, or an order of relief is entered against
the Company or any of its Subsidiaries as debtor under the
Bankruptcy Laws as are now or hereafter in effect;
(vii)
The Company or any of its Subsidiaries
that is a party thereto breaches any covenant or other term or
condition of the Security Documents;
(viii)
The Company or any of its Subsidiaries
breaches any covenant or other term or condition of the Securities
Purchase Agreement, or any other Transaction Document (other than
this Note or any of the Security Documents); provided , that
in the case of a breach of a covenant or other term that is curable
and would not otherwise constitute an Event of Default under any
other subparagraph of this Section 7(a) , if such breach
continues for 10 or more days; provided , further ,
that the Company agrees that a breach of either Section 4(v)
or Section 4(w) of the Securities Purchase Agreement,
amongst other provisions in the Transaction Documents, will not be
capable of being cured.
(ix)
The Company breaches, or otherwise does
not comply with, any of the provisions of Section 4(s), or any of
the provisions of Section 5 of the Securities Purchase
Agreement;
(x)
The breach by the Company of the terms of
any subordination agreement to which it is a party relating to the
subordination of any Indebtedness to this Note;
(xi)
One or more judgments, non-interlocutory
orders or decrees shall be entered by a U.S. state or federal or a
foreign court or administrative agency of competent jurisdiction
against the Company and/or any of its Subsidiaries involving, in
the aggregate, a liability as to any single or related series of
transactions, incidents or conditions, of $25,000 or more, and the
same shall remain unsatisfied, unvacated, unbonded or unstayed
pending appeal for a period of 30 days after the entry
thereof;
(xii)
There shall occur a Change of
Control;
(xiii)
Any representation, warranty,
certification or statement made by the Company or any of its
Subsidiaries in the Securities Purchase Agreement, this Note, the
Security Documents or any other Transaction Documents or in any
certificate, financial statement or other document delivered
pursuant to any such Transaction Document is incorrect in any
material respect when made (or deemed made);
(xiv)
Any Lien created by any of the Security
Documents shall at any time fail to constitute a valid first
priority perfected Lien on all of the Collateral purported to be
secured thereby, or the Company or any of its Subsidiaries shall so
assert;
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(xv)
The Company fails to file, or is
determined to have failed to file, in a timely manner any Periodic
Report or Current Report (other than a Current Report that is
required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05,
2.06, 4.02(a) or 5.02(e) of Form 8-K as in effect on the Issuance
Date) required to be filed with the SEC pursuant to the 1934
Act;
(xvi)
any bank at which any deposit account,
blocked account, or lockbox account of the Company or any
Subsidiary is maintained shall fail to comply with any material
term of any deposit account, blocked account, lockbox account or
similar agreement to which such bank is a party or any securities
intermediary, commodity intermediary or other financial institution
at any time in custody, control or possession of any investment
property of the Company or any Subsidiary shall fail to comply with
any of the terms of any investment property control agreement to
which such Person is a party (it being understood that only
accounts pursuant to which the Collateral Agent has requested
account control agreements should be subject to this clause
(xvi));
(xvii)
any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God
or public enemy, or other casualty which causes, for more than
fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of the
Company or any Subsidiary, if any such event or circumstance could
reasonably be expected to have a Mater