EXHIBIT 4.4
This Note, and the securities issuable upon the conversion of this Note, have
not been registered under the Securities Act of 1933, as amended (the "Act") or
applicable state law and may not be sold, transferred or otherwise disposed of
unless registered under the Act and any applicable state act or unless the
Company receives an opinion from counsel for the holder and is satisfied that
this Note and the underlying securities may be transferred without registration
under the Act.
CONVERTIBLE NOTE
$________________ As of _________________
Palm Beach, Florida
FOR VALUE RECEIVED, PLATINUM AND GOLD, INC., a Nevada corporation (the
"Company"), hereby promises to pay to the order of ________________________, or
any subsequent holder of this Note (the "Payee"), at
____________________________________________, or at such other place as may be
designated by the Payee from time to time by notice to the Company, the
principal sum of ______________________________ ($________), together with
simple interest from the date hereof (the "Issuance Date") on the unpaid
principal amount at an annual rate equal to nine percent (9%) per annum. Such
principal and interest shall be paid in accordance with the terms of Section 1
below, to such account as the Payee shall direct.
1. PAYMENTS.
(a) The unpaid principal amount of this Note shall be converted into Rule 144
Restricted Common Stock of the Company as provided herein on or before
______________ (the "Maturity Date").
(b) Interest on the unpaid principal balance of this Note at the rate of nine
percent (9%) per annum shall accrue from the date hereof and shall be payable to
the Payee in shares of Common Stock of the Company at the Maturity Date, the
number of which shall be equal to the product of such interest payment divided
by the Conversion Price, as defined herein, with the overage, if any, payable in
cash. Interest shall be calculated on the basis of a 365 day year.
(c) In the event that any payment of principal and/or interest hereunder becomes
due and payable on a Saturday, Sunday or other day on which commercial banks in
the State of Florida are authorized or required by law to close, then the
maturity thereof shall be extended to the next succeeding "Business Day"
(defined as any days on which national banks in the United States are open for
business); and during any such extension, interest on principal amounts payable
shall accrue and be payable at the applicable rate.
2. RANKING OF NOTE.
Subject at all times to the subordination provisions set forth in
Section 9 hereof, this Note shall constitute senior securities of the Company
and, except as provided below, shall rank pari passu with all other indebtedness
for money borrowed by the Company and senior to any other indebtedness for money
borrowed by the Company which, by its terms shall be made expressly subject and
subordinated to this Note.
3. PREPAYMENT OF NOTE.
1
(a) Prior to the Maturity Date, the Company shall provide the holder with a
notice that a prepayment event has occurred (the "Prepayment Notice"). The
holder shall have thirty (30) days from the date of the Prepayment Notice to
elect (i) to take prepayment of the principal amount of the Note and any accrued
but unpaid interest in whole without premium or penalty or (ii) to convert in
accordance with Section 4 hereof.
(b) Notwithstanding anything to the contrary set forth in Section 3(a) hereof,
subject at all times to the holder's right to convert all or any portion of this
Note into Common Stock pursuant to Section 4 hereof, the principal amount of
this Note and any accrued and unpaid interest may be prepaid, at the option of
the Company, in whole or in part, without premium or penalty, at any time or
from time to time from and after that date which shall be the earlier to occur
of (i) the Maturity Date or (ii) the date on which the Company shall register
for resale pursuant to the Securities Act of 1933, as amended (the "Act") all
"Conversion Shares" (as herein defined) issuable upon conversion of the entire
principal amount of this Note, pursuant to a Registration Statement on the
appropriate registration form declared effective by the Securities and Exchange
Commission (the "SEC"). If either event set forth in this Section 3(b) shall
occur, the Company shall provide the holder with a Prepayment Notice.
(c) Each Prepayment Notice shall specify the principal amount of this Note to be
redeemed. Each prepayment of principal of this Note shall be accompanied by the
payment of all interest accrued and unpaid to the prepayment date on the amount
so prepaid. Each such prepayment shall be made by wire transfer of immediately
available funds or by bank cashier's check payable to the Payee. Any partial
prepayment of this Note, whether optional or mandatory, shall be applied first
to accrued and unpaid interest hereon, and then to the outstanding principal
amount of this Note in the inverse order of maturity.
4. CONVERSION.
Subject at all times to the Company's right to prepay the Notes as provided in
Section 3 hereof, the holders of the Notes shall have the following conversion
rights (the "Conversion Rights"):
(a) Voluntary Conversion. At any time or from time to time following the
Issuance Date, the holder of this Note may elect to convert up to one hundred
(100%) percent of the original principal amount of this Note and any accrued but
unpaid interest, into shares of Common Stock of the Company at the Conversion
Price, by written notice given to the Company in accordance with the provisions
of Section 4(g) hereof (the "Conversion Notice"). In no event may the holder of
this Note effect a conversion of less than $10,000 principal amount of this
Note. Such right of Voluntary Conversion shall be effected by the surrender of
this Note to the Company for conversion at any time during normal business hours
at the office of the Company, accompanied (i) by the Conversion Notice, (ii) if
so required by the Company, by instruments of transfer, in a form satisfactory
to the Company, duly executed by the registered holder or by his duly authorized
attorney and (iii) transfer tax stamps or funds therefore, if required pursuant
to Section 4(f) herein.
(b) Automatic Conversion. Effective as of the Maturity Date, to the extent not
previously converted by the holder, all remaining principal amount of this Note,
together with all accrued interest hereon, shall automatically and without
further action on the part of such holder be converted into Common Stock of the
Company at the Conversion Price.
(c) Conversion Price. Subject to adjustment from time to time as provided in
Section 4(d) below, the term "Conversion Price" shall mean $1.00 per share of
common stock.
(d) Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section 4(d).
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
2
the outstanding Common Stock, the Conversion Price in effect immediately prior
to the stock split shall be proportionately decreased. If the Company shall at
any time or from time to time after the Issuance Date, combine the outstanding
shares of Common Stock, the Conversion Price in effect immediately prior to the
combination shall be proportionately increased. Any adjustments under this
Section 4(d)(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
Company shall at any time or from 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 Conversion Price in effect immediately prior to
such event shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a fraction;
(A) 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
(B) 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) Adjustments for Other Dividends and Distributions. If the
Company 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
Conversion Price shall be made and provision shall be made (by adjustments of
the Conversion Price or otherwise) so that the holder 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 Company which they would
have received had 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 4(c)(iii) with
respect to the rights of the holders of the Note.
(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 into the same or a 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 4(d)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 4(d)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall by made and provisions shall be made (by
adjustments of the Conversion Price of otherwise) so that the holder of this
Note shall have the right thereafter to convert such Note into the kind and
amount of shares of stock and other securities receivable upon such
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 Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section 4(d)(i), (ii) and (iii), or a reclassification, exchange or substitution
of shares provided for in Section 4(d)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, 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 of this Note shall have
the right thereafter to convert this Note into the kind and amount
3
of shares of stock and other securities or property of the Company or any
successor corporation resulting from such reorganization, merger, consolidation,
or sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4(d)(v) with respect to the rights
of the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section 4(c)(v) (including any
adjustment in the Conversion Price then in effect and the number of shares of
stock or other securities deliverable upon conversion of this Note) shall be
applied after that event in as nearly an equivalent manner as may be
practicable.
(d) No Impediment. The Company 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 Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 4 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Note set forth in this
Section 4 against impairment.
(e) Certificate as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Note pursuant to this Section 4, the Company at
its expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish notice to the holder of this Note,
a certificate setting forth such adjustment and readjustment, showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon written request of the holder of this Note, at any time, furnish or
cause to be furnished to such 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 such Note. Notwithstanding the foregoing, the Company 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 Company 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 shares of Common Stock on conversion of this Note
pursuant hereto; provided, however, that the Company shall not be obligated to
pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.
(g) Notices and Delivery of Shares. All notices and other communications
hereunder shall be in writing and shall be deemed given (i) on the same date, if
delivered personally or by facsimile by not later than 5:00 p.m. Florida time
(provided, that a copy of such facsimile shall be simultaneously sent to Xxxxxx
X. Xxxxxxxx, Esq. at (000)000-0000, or (ii) three business days following being
mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the party in accordance with Section 7 hereof. Not later
than seven (7) Business Days following receipt of notice of conversion as
provided herein (the "Delivery Date"), the Company shall deliver to the holders
of this Note, against delivery of this Note surrendered for conversion,
certificates evidencing all shares of Common Stock into which this Note shall be
converted.
(h) Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Note. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Company shall pay cash equal to the product of
such fraction multiplied by the Conversion Price of one share of the Company's
Common Stock on the applicable Conversion Date.
(i) Reservation of Common Stock. The Company shall at all times reserve and keep
available, out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the Note, the full number of shares
deliverable upon conversion of all the Note from time to time outstanding. The
Company shall, from time to time in accordance with the Nevada General
Corporations Law, as amended, increase the authorized number of shares of Common
Stock if at any time the unissued number of authorized shares shall not be
sufficient to permit the conversion
4
of all of the Note at the time outstanding. In such connection, the Company
shall hold a special meeting of stockholders not later than 180 days after any
date in which the Company shall have insufficient shares of Common Stock so
reserved for the purpose of authorizing additional shares of Common Stock.
(j) Retirement of Note. Conversion of this Note shall be deemed to have been
effected on the applicable Conversion Date. The converting holder shall be
deemed to have become a stockholder of record of the Common Stock on the
applicable Conversion Date. Upon conversion of only a portion of this Note, the
Company shall issue and deliver to such holder, at the expense of the Company,
against receipt of the original Note delivered for partial cancellation, a new
Note representing the unconverted portion of this Note so surrendered and Common
Stock equal to the portion converted.
(k) Regulatory Compliance.
(i) If any shares of Common Stock to be reserved for the purpose of
conversion of this Note require registration or listing with or approval of any
government 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 Company 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.
(ii) The shares of Common Stock issuable upon the election to convert
shall be Rule 144 restricted shares (the "Restricted Securities").
(iii) The holder of such shares shall have the following registration
rights:
(A) Neither this Note nor the Shares underlying it have been
registered under the Securities Act of 1933, as amended (the "Act"). Unless and
until registered under the Act, this Note and all replacement Notes shall bear
the following legend:
This Note, and the securities issuable upon the conversion of this Note,
have not been registered under the Securities Act of 1933, as amended
(the "Act") or applicable state law and may not be sold, transferred or
otherwise disposed of unless registered under the Act and any applicable
state act or unless the Company is satisfied that this Note and the
underling securities may be transferred without registration under the
Act.
(a) This offering is being conducted pursuant to Section 3(b) of the
Securities Act of 1933, as amended (the "Act"), and Rule 504 of Regulation D
promulgated thereunder ("Rule 504") or other applicable provisions, although the
shares issuable upon conversion of this Note shall be Rule 144 restricted
shares. The Company expects to file for an exemption for shares under Regulation
A in the near future. In the event the Company acquires such an exemption under
Regulation A, the Company shall issue Regulation A exempt shares in lieu of such
restricted shares. In addition, upon conversion of this Note, and after issuance
of the Shares, at any time that the Company proposes to file a Company
registration statement on Form S-1 under the Act (the "Registration Statement"),
either for its own account or for the account of a stockholder or stockholders,
the Company shall give the Holder written notice of its intention to do so and
of the intended method of sale (the "Registration Notice") within a reasonable
time prior to the anticipated filing date of the Company's Registration
Statement effecting such Company registration. Holder may request inclusion of
any Restricted Securities in such Registration Statement by delivering to the
Company, within ten (10) Business Days after receipt of the Registration Notice,
a written notice (the "Piggyback Notice") stating the number of Restricted
Securities proposed to be included and that such shares are to be included in
any underwriting only on the same terms and conditions as the shares of Common
Stock otherwise being sold through underwriters under such Company Registration
Statement. The Company shall use its best efforts to cause all Restricted
Securities specified in the Piggyback Notice to be included in the Company
Registration Statement and any related offering, all to the extent requisite to
permit the sale by the Holder of its Restricted Securities in accordance with
the method of sale applicable to the other shares of Common Stock included in
such Company Registration Statement; provided, however, that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the Company Registration Statement filed
5
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of Holder's Restricted Securities, the
Company may, at its election, give written notice of such determination to
Holder and, thereupon:
(i) in the ease of a determination not to register, shall be
relieved of its obligation to register Holder's Restricted Securities in
connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be permitted
to delay registering Holder's Restricted Securities for the same period as the
delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company's Registration Statement shall be subject to the following limitations:
(i) The Company may elect, at its sole option and for any
reason, not to register Holder's Restricted Shares, provided however, that this
right is limited to one (1) time and relative to one (1) particular Company
Registration Statement.
(ii) The Company shall not be obligated to include any
Restricted Securities in a registration statement
filed on Form X-0, Xxxx X-0 or such other similar successor forms then in effect
under the Securities Act.
(iii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company in
writing that in its opinion, the number of securities requested to be included
in such Company Registration Statement exceeds the number which can be sold in
such offering without adversely affecting the offering, the Company shall
include in such Company Registration Statement the number of such securities
which the Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(A) first, the securities proposed by the Company
to be sold for it own account, and
(B) second, any Restricted Securities requested
to be included in such registration and any
other securities of the Company in accordance with the priorities, if and then
existing among the holders of such securities pro rata among the holders thereof
requesting such registration on the basis of the number of shares of such
securities requested to be included by such holders.
(iv) The Company shall not be obligated to include
Restricted Securities in more than one (1) Company
Registration Statement.
(c) To the extent Holder's Restricted Securities are intended to be
included in a Company Registration Statement, Holder may include any of its
Restricted Securities in such Company Registration Statement pursuant to this
Agreement only if Holder furnishes to the Company in writing, within ten (10)
business days after receipt of a written request therefore, such information
specified in Item 507 of Regulation S-K under the Act or such other information
as the Company may reasonably request for use in connection with the Company
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to the NASD. Holder as to which the Company Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make all information previously
furnished to the Company by Holder not materially misleading.
6
5. EVENTS OF DEFAULT.
The occurrence and continuance of any one or more of the following events is
herein referred to as an Event of Default:
(a) If the Company shall default in converting the applicable principal amount
of this Note into Common Stock and delivering stock certificates in respect of
such conversion within thirty (30) Business Days from the Company's receipt of
the applicable notice of conversion pursuant to the provisions hereof, whether
on the Maturity Date or otherwise; or
(b) If the Company shall default in the payment of any installment of interest
on this Note when payable in accordance with the terms thereof for more than
sixty (60) calendar days after the same shall become due if the Payee has not
elected to take such interest in Common Stock; and if the Payee has elected to
take such interest in Common Stock, if the Company shall default in delivering
stock certificates in respect of such election within sixty (60) Business Days
from the Company's receipt of the notice of such election; or
(c) If the Company shall not, at the time of receipt of a Conversion Notice
hereunder, have a sufficient number of authorized and unissued shares of its
Common Stock available for issuance to the holder of this Note upon conversion
of all or any portion of this Note in accordance with the terms hereof, and such
default shall not have been remedied within one hundred eighty (180) calendar
days from the date of such Conversion Notice; or
(d) If the Company shall default in the performance of or compliance with any of
its material covenants or agreements contained herein and such default shall not
have been remedied within thirty (30) calendar days after written notice thereof
shall have been delivered to the Company by the holder of this Note in
accordance with the notice provisions herein; or
(e) If any representation or warranty made in writing by or on behalf of the
Company in connection with the transactions contemplated hereby shall prove to
have been false or incorrect in any material respect on the date as of which
made; or
(f) If the Company or any of its "Significant Subsidiaries" (as defined herein)
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts as they become due, or shall file a voluntary
petition in bankruptcy or shall have an order for relief under the Bankruptcy
Act granted against it or them, or shall be adjudicated a bankrupt or insolvent,
or shall file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or shall file any
answer admitting or not contesting the material allegations of a petition filed
against the Company or any of its Significant Subsidiaries in any such
proceeding, or shall seek or consent to or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company or any of its Significant
Subsidiaries, or the Company or its directors shall take any action looking to
the dissolution or liquidation of the Company or any of its Significant
Subsidiaries. For purposes of this Section 5(f), the term Significant Subsidiary
shall mean and include any other person, firm or corporation (i) more than 50%
of the common stock or equity interests of which are owned of record by the
Company or any Subsidiary of the Company, and (ii) the net income before taxes
or total assets of which represent more than 15% of the consolidated net income
before taxes or consolidated assets of the Company and all of its Subsidiaries;
or
(g) If, within sixty (60) days after the commencement of any proceeding against
the Company or any Significant Subsidiary seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief
7
under any present or future statute, law or regulation, such proceeding shall
not have been dismissed, or if, within sixty (60) days after the appointment,
without the consent or acquiescence of the Company or any Significant
Subsidiary, of any trustee, receiver or liquidator of the Company or any
Significant Subsidiary or of all or any substantial part of the properties of
the Company or any Significant Subsidiary, such appointment shall not have been
vacated.
6. REMEDIES ON DEFAULT; ACCELERATION.
Upon the occurrence and during the continuance of an Event of Default, the
entire unpaid balance of principal and accrued interest on this Note may be
accelerated and declared to be immediately due and payable by the holder in Rule
144 Restricted Shares of the Company's Common Stock. Unless waived by the
written consent of the holder, such holder may proceed to protect and enforce
its rights by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein, or for
an injunction against a violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law. Upon the occurrence of an Event
of Default, the Company agrees to pay to the holder of this Note such further
amount as shall be sufficient to cover the cost and expense of collection,
including, without limitation, reasonable attorneys' fees and expenses. No
course of dealing and no delay on the part of the holder of this Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers and remedies. No right, power
or remedy conferred hereby upon the holder hereof shall be exclusive of any
other right, power or remedy referred to herein nor now or hereafter available
at law, in equity, by statute or otherwise.
7. NOTICES.
All notices, requests, demands or other communications hereunder shall be in
writing and personally addressed or sent by telecopier or by registered or
certified mail, return receipt requested, postage pre-paid, addressed or
telecopied as follows or to such other address or telecopier number of which
notice has been given pursuant hereto:
If to the Company: Platinum and Gold, Inc.
00000 X.X. 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copy to: Mintmire & Associates
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Holder: to such Holder at the address set forth on the records of the
Company. In addition, copies of all such notices or other communications shall
be concurrently delivered by the person giving the same to each person who has
been identified to the Company by such Holder as a person who is to receive
copies of such notices.
8
8. GOVERNING LAW.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Nevada, without giving effect to conflict of law
principles.
9. SUBORDINATION TO SENIOR DEBT.
(a) Payment of the principal of and interest on this Note is subordinated, to
the extent and in the manner provided herein, to the prior payment of all
indebtedness of the Company and/or all Subsidiaries of the Company, for money
borrowed or other obligations which is now or may hereafter be owed
(collectively, "Senior Debt") to any bank, commercial finance company, factor,
insurance company or other institution the lending activities of which are
regulated by law (individually, a "Senior Lender" and collectively, "Senior
Lenders"), which may, hereafter on any one or more occasions provide financing
to the Company or any of its Subsidiaries, secured by liens on any of the assets
and properties of the Company and/or any of its Subsidiaries (individually and
collectively, an "Institutional Borrower").
(b) Upon any payment or distribution of assets or securities of the
Institutional Borrower, as the case may be, of any kind or character, whether in
cash, property or securities, upon any dissolution or winding up or total or
partial liquidation or reorganization of the Institutional Borrower, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts payable under Senior Debt shall first be paid in full
in cash, or payment provided for in cash or cash equivalents, before the holder
hereof shall be entitled to receive any payment on account of principal of or
interest on this Note. Before any payment may be made by the Institutional
Borrower of the principal of or interest on this Note upon any such dissolution
or winding up or liquidation or reorganization, any payment or distribution of
assets or securities of the Institutional Borrower of any kind of character,
whether in cash, property or securities, to which the holder hereof would be
entitled, except for the provisions of this Section 9, shall be made by the
Institutional Borrower or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, directly to
the holders of Senior Debt or their representatives to the extent necessary to
pay all such Senior Debt in full after giving effect to any concurrent payment
or distribution to the holders of such Senior Debt.
(c) Upon the happening of any default in payment of the principal of or interest
on any Senior Debt, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment in cash,
property or securities, by set-off or otherwise, shall be made or agreed to be
made by the Institutional Borrower on account of the principal of or interest on
this Note.
(d) Upon the happening of an event of default (other than under circumstances
when the terms of Section 9(c) above are applicable) with respect to any Senior
Debt pursuant to which the holder thereof is entitled under the terms of such
Senior Debt to accelerate the maturity thereof, and upon written notice thereof
given to each of the Institutional Borrower and the holder of this Note by such
holder of Senior Debt ("Payment Notice"), then, unless and until such event of
default shall have been cured or waived or shall have ceased to exist, no action
shall or may be taken for collection of any amounts under this Note, and no
direct or indirect payment in cash, property or securities, by set-off or
otherwise, shall be made or agreed to be made by the Institutional Borrower an
account of the principal of or interest on this Note until such Senior Debt has
been paid in full accordance with its terms.
9
(e) In the event that, notwithstanding the provisions of this Section 9, any
payment shall be made on account of the principal of or interest on this Note in
contravention of such provisions, then such payment shall be held for the
benefit of, and shall be paid over and delivered to, the holders of such Senior
Debt remaining unpaid to the extent necessary to pay in full in cash or cash
equivalents the principal of and interest on such Senior Debt in accordance with
its terms after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
(f) Nothing contained in this Section 9 shall
(i) impair the conversion rights of the holder hereof referred to in
Section 4 above,
(ii) impair, as between the Company and the holder of this Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder hereof principal and interest as the same shall become due and payable,
or
(iii) prevent the holder hereof from exercising all rights, powers
and remedies otherwise provided herein or by applicable law, all subject to the
express limitations provided herein.
(g) Upon the occurrence of an Event of Default, if any Senior Debt shall then be
outstanding, no acceleration of the maturity of this Note shall be effective
until the earlier of (i) ten (10) days shall have passed following the date of
delivery to the Institutional Borrower by a Senior Lender(s) of written notice
of acceleration of any Senior Debt, or (ii) the maturity of any then outstanding
Senior Debt shall have been accelerated by reason of a default hereon. The
Company may pay the holder hereof any defaulted payment and all other amounts
due following any such acceleration of the maturity of this Note if this Section
9 would not prohibit such payment to be made at that time.
(h) Upon payment in full of all Senior Debt, the Payee of this Note shall be
subrogated to the rights of the holder or holders of Senior Debt to receive all
payments or distributions applicable on such Senior Debt to the extent of the
prior application thereto of moneys or other assets which would have been
received in respect of this Note, but for these subordination provisions, until
the principal of, and interest on, this Note shall have been paid in full.
(i) The Payee, by accepting this Note
(i) shall be bound by all of the foregoing subordination provisions;
(ii) agrees expressly for the benefit of the present and future
holders of Senior Debt that this Note is subject to the foregoing subordination
provisions;
(iii) authorizes such persons as shall be designated by all holders
of Senior Debt at any given time, on his or its benefit to execute and deliver
such agreements, assignments, proofs of claim and other documents appropriate to
effectuate the foregoing subordination provisions; and
(iv) hereby appoints the person so designated his or its
attorney-in-fact for such purpose.
(j) The foregoing subordination provisions shall be for the benefit of all
holders of Senior Debt from time to time
10
outstanding, and each of such holders may proceed to enforce such provisions
either directly against the holder hereof or in any other manner provided by
law.
10. PERMITTED PAYMENTS.
Notwithstanding the provisions of Section 9 of this Note, and provided that no
default or event of default (or event which, with the passage of time or giving
of notice or both) has occurred, will occur as a result of the "Permitted
Payment" (herein defined), or will occur with the passage of time or giving of
notice or both, under any document or instrument evidencing such Senior Debt,
the Company may pay to the Payee, and the Payee may accept from the Company, the
principal payments of, and/or interest payments on, the outstanding principal
amount of this Note when due on an unaccelerated basis (herein, "Permitted
Payments"); it being understood and agreed by the Payee by accepting this Note
that neither:
(a) the payment terms set forth in Section l of this Note;
(b) the subordination provisions contained in Section 9 of this Note, nor
(c) the provisions of this Section 10 of this Note, may be modified or
amended without the prior written consent of each and every holder of
Senior Debt.
11. SUCCESSORS AND ASSIGNS.
This Note shall be binding upon and inure to the benefit of the Company and the
holder hereof and their respective successors and permitted assigns; provided,
however, that the Company may not transfer or assign any of its rights or
obligations hereunder without the prior written consent of the holder hereof;
and provided, further, that transfer or assignment by the holder is in
accordance with the rules governing Restricted Securities.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly
authorized officers as of the date first set forth above.
PLATINUM AND GOLD, INC.
By: ___________________________________
Xxxxx Xxxx, President
Attest: ___________________________________
11
