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FORM OF NOTE

Promissory Note

FORM OF NOTE | Document Parties: EVOLUTION RESOURCES, INC You are currently viewing:
This Promissory Note involves

EVOLUTION RESOURCES, INC

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Title: FORM OF NOTE
Governing Law: New York     Date: 8/6/2009

FORM OF NOTE, Parties: evolution resources  inc
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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

July 31, 2009

Note No.:  HMF-1

$ 215,000

 

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


 
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