Exhibit 10.3
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE
UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
TREND MINING COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE NOTE
FOR VALUE RECEIVED, TREND MINING COMPANY, a Delaware corporation
(hereinafter called "Borrower"), hereby promises to pay to LONGVIEW EQUITY FUND,
LP, 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Fax:
000-000-0000, (the "Holder") or its registered assigns or successors in interest
or order, without demand, the sum of ___________________________________ Dollars
($___________) ("Principal Amount"), with simple and unpaid interest thereon, on
December ____, 2007 (the "Maturity Date"), if not sooner paid.
This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder, dated of even date herewith (the
"Subscription Agreement"), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this Note:
ARTICLE I
INTEREST; AMORTIZATION; SECURITY AGREEMENT
1.1. Interest Rate. Subject to Section 5.7 hereof, interest payable on
this Note shall accrue at a rate per annum (the "Interest Rate") equal to the
"prime rate" published in The Wall Street Journal from time to time, plus three
percent (3%). The interest rate shall be increased or decreased as the case may
be for each increase or decrease in the prime rate in an amount equal to such
increase or decrease in the prime rate; each change to be effective as of the
day of the change in such rate. The Interest Rate shall not be less than ten
percent (10%). Interest shall be calculated on the basis of a 360 day year.
Interest on the Principal Amount shall be payable monthly, in arrears,
commencing on [First day of the month after 120 days after closing] and on the
first day of each consecutive calendar month thereafter (each, a "Repayment
Date") and on the Maturity Date, whether by acceleration or otherwise.
1.2. Minimum Monthly Principal Payments. Amortizing payments of the
outstanding Principal Amount of this Note shall commence on the first (1st)
Repayment Date and shall recur on each succeeding Repayment Date thereafter
until the Principal Amount has been repaid in full, whether by the payment of
cash or by the conversion of such principal into Common Stock pursuant to the
terms hereof. Subject to Section 2.1 and Article 3 below, on each Repayment
Date, the Borrower shall make payments to the Holder in the amount of
one-thirty-second (1/32nd) of the initial Principal Amount (the "Monthly
Principal Amount"), together with any accrued and unpaid interest then due on
such portion of the
Principal Amount plus any and all other amounts which are then owing under this
Note that have not been paid (the Monthly Principal Amount, together with such
accrued and unpaid interest and such other amounts, collectively, the "Monthly
Amount"). Amounts of conversions of Principal Xxxxxx made by the Holder or
Borrower pursuant to Section 2.1 or Article III, and Redemption Amounts (as
defined in Section 2.3 of this Note) actually paid to Borrower shall be applied
to Monthly Amounts commencing with the Monthly Amounts first payable and then
Monthly Amounts thereafter in chronological order. Any Principal Amount that
remains outstanding on the Maturity Date shall be due and payable on the
Maturity Date.
1.3. Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, subject to Section 6.7, the annual interest
rate on this Note shall automatically be increased by five percent (5%), and all
outstanding obligations under this Note, including unpaid interest, shall
continue to accrue interest from the date of such Event of Default at such
interest rate applicable to such obligations until such Event of Default is
cured or waived.
1.4 Pledge and Security Agreement. The obligations of the Borrower
hereunder shall be secured by, and the Holder shall be entitled to the rights
and security granted by the Borrower pursuant to, the Pledge and Security
Agreement dated as of the date hereof by the Borrower for the benefit of the
Holder.
ARTICLE II
CONVERSION REPAYMENT
2.1. (a) Payment of Monthly Amount in Cash or Common Stock. If the
Monthly Amount (or a portion thereof of such Monthly Amount if such portion of
the Monthly Amount could have been converted into shares of Common Stock but for
Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then the
Borrower shall pay the Holder an amount equal to 104% of the Monthly Amount due
and owing to the Holder on the Repayment Date in cash. If the Monthly Amount (or
a portion of such Monthly Amount if not all of the Monthly Amount may be
converted into shares of Common Stock pursuant to Section 3.2) is required to be
paid in shares of Common Stock pursuant to Section 2.1(b), the number of such
shares to be issued by the Borrower to the Holder on such Repayment Date (in
respect of such portion of the Monthly Amount converted into shares of Common
Stock pursuant to Section 2.1(b)), shall be the number determined by dividing
(x) the portion of the Monthly Amount converted into shares of Common Stock, by
(y) the then applicable Fixed Conversion Price. For purposes hereof, the initial
"Fixed Conversion Price" means thirty cents ($0.30).
(b) Monthly Amount Conversion Guidelines. Subject to Sections
2.1(a), 2.2 and 3.2 hereof, the Holder shall convert into shares of Common Stock
all at the Fixed Conversion Price or the maximum portion of the Monthly Amount
due on each Repayment Date provided that the average closing price of the Common
Stock as reported by Bloomberg, L.P. on the Principal Market (as defined below)
for the twenty (20) consecutive trading days immediately preceding such
Repayment Date shall be greater than or equal to 15% above the Fixed Conversion
Price ("Conversion Criterion"). The Monthly Amount due on a Repayment Date that
the Holder has not been able to convert into shares of Common Stock due to
failure to meet the Conversion Criterion shall be paid by the Borrower at the
Borrower's election (i) in cash at the rate of 104% of such Monthly Amount
otherwise due on such Repayment Date within three (3) business days of the
applicable Repayment Date, or (ii) in registered, unlegended, free-trading
Common Stock at an applied conversion rate equal to eighty percent (80%) of the
average of the five (5) lowest closing bid prices of the Common Stock as
reported by Bloomberg L.P. for the twenty (20) trading days preceding
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such Repayment Date. Such shares of Common Stock must be delivered to the Holder
not later than three (3) business days of the applicable Repayable Date.
Whichever of the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange or such other principal market or exchange where the Common Stock
is listed or traded is the principal trading exchange or market for the Common
Stock is the Principal Market.
(c) Application of Conversion Amounts. Any amounts converted by the
Holder pursuant to Section 2.1(b) shall be deemed to constitute payments of, or
applied (i) first, against outstanding fees, (ii) second, against accrued
interest on the Principal Xxxxxx, and (iii) third, against the Principal Xxxxxx.
2.2. No Effective Registration. Notwithstanding anything to the
contrary herein, no amount payable hereunder may made in shares of Common Stock
by the Borrower without the Holder's consent unless (a) either (i) an effective
current Registration Statement covering the shares of Common Stock to be issued
in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144(k) of the
Securities Act, and (b) no Event of Default hereunder exists and is continuing,
unless such Event of Default is cured within any applicable cure period or is
otherwise waived in writing by the Holder in whole or in part at the Holder's
option.
2.3. Optional Redemption of Principal Amount. Provided an Event of
Default has not occurred, whether or not such Event of Default has been cured,
the Borrower will have the option of prepaying the outstanding Principal Amount
("Optional Redemption"), in whole or in part, by paying to the Holder a sum of
money equal to one hundred twenty percent (120%) of the Principal Amount to be
redeemed, together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to the Holder arising under this Note, the
Subscription Agreement or any Transaction Document through the Redemption
Payment Date as defined below (the "Redemption Amount"). Xxxxxxxx's election to
exercise its right to prepay must be by notice in writing ("Notice of
Redemption"). The Notice of Redemption shall specify the date for such Optional
Redemption (the "Redemption Payment Date"), which date shall be not less than
thirty (30) business days after the date of the Notice of Redemption (the
"Redemption Period"). A Notice of Redemption shall not be effective with respect
to any portion of the Principal Amount for which the Holder has a pending
election to convert pursuant to Section 3.1, or for conversions initiated or
made by the Holder pursuant to Section 3.1 during the Redemption Period. On the
Redemption Payment Date, the Redemption Amount less any portion of the
Redemption Amount against which the Holder has exercised its rights pursuant to
Section 3.1, shall be paid in good funds to the Holder. In the event the
Borrower fails to pay the Redemption Amount on the Redemption Payment Date as
set forth herein, then (i) such Notice of Redemption will be null and void, (ii)
Borrower will have no right to deliver another Notice of Redemption, and (iii)
Borrower's failure may be deemed by Holder to be a non-curable Event of Default.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. Subject to Section 2.2 and the
mandatory conversion provisions therein, the Holder shall have the right, but
not the obligation, to convert all or any portion of the then aggregate
outstanding Principal Amount of this Note, together with interest and fees due
hereon, into shares of Common Stock, subject to the terms and conditions set
forth in this Article III. The Holder may exercise such right by delivery to the
Borrower of a written Notice of Conversion pursuant to Section 3.3.
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3.2. Conversion Limitation. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note nor may this Note be converted in whole or in part into an
amount of Common Stock that would be convertible into that number of Common
Stock which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder and 4.99% of the outstanding shares of
Common Stock. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The foregoing limitation shall be
calculated as of each Conversion Date. Aggregate conversions over time shall not
be limited to 4.99%. The Holder may void the Conversion Share limitation
described in this Section 3.2 upon 61 days prior notice to the Borrower. The
Holder may allocate which of the equity of the Borrower deemed beneficially
owned by the Holder shall be included in the 4.99% amount described above and
which shall be allocated to the excess above 4.99%.
3.3. Mechanics of Xxxxxx's Conversion.
(a) In the event that the Holder elects to convert any amounts
outstanding under this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion (a
"Notice of Conversion") to the Borrower, which Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. The original Note is not required to be
surrendered to the Borrower until all sums due under the Note have been paid. On
each Conversion Date (as hereinafter defined) and in accordance with its Notice
of Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records and shall provide
written notice thereof to the Borrower within three (3) business days after the
Conversion Date. Each date on which a Notice of Conversion is delivered or
telecopied to the Borrower in accordance with the provisions hereof shall be
deemed a "Conversion Date." A form of Notice of Conversion to be employed by the
Holder is annexed hereto as Exhibit A.
(b) Pursuant to the terms of a Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel, if so required by the Borrower's transfer agent, within two (2)
business days after the date of the delivery to Borrower of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Borrower of the Notice of Conversion (the
"Delivery Date"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of such shares of
Common Stock, unless the Holder provides the Borrower written instructions to
the contrary. Notwithstanding the foregoing to the contrary, the Borrower 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 the registration statement providing for the resale of the shares of
Common Stock issuable upon the conversion of this Note is effective and the
Holder has complied with all applicable securities laws in connection with the
sale of the Common Stock, including, without limitation, the prospectus delivery
requirements. In the event that Conversion Shares cannot be delivered to the
Holder via DWAC, the Borrower shall deliver physical certificates representing
the Conversion Shares by the Delivery Date.
3.4. Conversion Mechanics.
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(a) The number of shares of Common Stock to be issued upon each
conversion of this Note pursuant to this Article III shall be determined by
dividing that portion of the Principal Amount and interest and fees to be
converted, if any, by the then applicable Fixed Conversion Price.
(b) The Fixed Conversion Price and number and kind of shares or
other securities to be issued upon conversion shall be subject to adjustment
from time to time upon the happening of certain events while this conversion
right remains outstanding, as follows:
X. Xxxxxx, Sale of Assets, etc. If the Borrower at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
B. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.
D. Share Issuance. So long as this Note is outstanding, if the
Borrower shall issue any Common Stock except for the Excepted Issuances (as
defined in the Subscription Agreement), prior to the complete conversion of this
Note for a consideration less than the Fixed Conversion Price that would be in
effect at the time of such issue, then, and thereafter successively upon each
such issuance, the Fixed Conversion Price shall be reduced to such other lower
issue price. For purposes of this adjustment, the issuance of any security or
debt instrument of the Borrower carrying the right to convert such security or
debt instrument into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Fixed Conversion Price upon
the issuance of the above-described security, debt instrument, warrant, right,
or option and again upon the issuance of shares of Common Stock upon exercise of
such conversion or purchase rights if such issuance is at a price lower than the
then applicable Conversion Price. The reduction of the Fixed Conversion Price
described in this paragraph is in addition to the other rights of the Holder
described in the Subscription Agreement.
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(c) Whenever the Conversion Price is adjusted pursuant to Section
3.4(b) above, the Borrower shall promptly mail to the Holder a notice setting
forth the Conversion Price after such adjustment and setting forth a statement
of the facts requiring such adjustment.
3.5. Reservation. During the period the conversion right exists,
Borrower will reserve from its authorized and unissued Common Stock not less
than one hundred fifty percent (150%) of the number of shares to provide for the
issuance of Common Stock upon the full conversion of this Note. Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Xxxxxxxx agrees that its issuance of this Note
shall constitute full authority to its officers, agents, and transfer agents who
are charged with the duty of executing and issuing stock certificates to execute
and issue the necessary certificates for shares of Common Stock upon the
conversion of this Note.
3.6 Issuance of Replacement Note. Upon any partial conversion of this
Note, a replacement Note containing the same date and provisions of this Note
shall, at the written request of the Holder, be issued by the Borrower to the
Holder for the outstanding Principal Amount of this Note and accrued interest
which shall not have been converted or paid, provided Xxxxxx has surrendered an
original Note to the Company. In the event that the Holder elects not to
surrender a Note for reissuance upon partial payment or conversion, the Holder
hereby indemnifies the Borrower against any and all loss or damage attributable
to a third-party claim in an amount in excess of the actual amount then due
under the Note.
ARTICLE IV
EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
4.1 Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of Principal Amount, interest or other sum due under this Note or
any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date.
4.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of the Subscription Agreement, this Note or Transaction
Document in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower from
the Holder.
4.3 Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement, Transaction Document or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or therewith shall be
false or misleading in any material respect as of the date made and a Closing
Date.
4.4 Receiver or Trustee. The Borrower or any Subsidiary of Borrower
shall make an assignment for the benefit of creditors, or apply for or consent
to the appointment of a receiver or trustee for them or for a substantial part
of their property or business; or such a receiver or trustee shall otherwise be
appointed.
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4.5 Judgments. Any money judgment, writ or similar final process shall
be entered or filed against Borrower or any subsidiary of Borrower or any of
their property or other assets for more than $50,000, and shall remain
unvacated, unbonded or unstayed for a period of forty-five (45) days.
4.6 Non-Payment. A default by the Borrower under any one or more
obligations in an aggregate monetary amount in excess of $100,000for more than
twenty (20) days after the due date.
4.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower and if instituted against them are not dismissed within forty-five (45)
- days of initiation.
4.8 Delisting. Delisting of the Common Stock from the OTC Bulletin
Board ("Bulletin Board") or such other principal exchange on which the Common
Stock is listed for trading; failure to comply with the requirements for
continued listing on the Bulletin Board for a period of seven consecutive
trading days; or notification from the Bulletin Board or any Principal Market
that the Borrower is not in compliance with the conditions for such continued
listing on the Bulletin Board or other Principal Market.
4.9 Stop Trade. An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Xxxxxxxx's Common Stock that lasts for five
or more consecutive trading days.
4.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note or the Subscription Agreement, or, if requested by
Borrower, a replacement Note, and such failure continues for a period of two (2)
business days after the due date.
4.11 Non-Registration Event. The occurrence of a Non-Registration Event
as described in the Subscription Agreement that is not cured within five (5)
business days after notice from Holder.
4.12 Reverse Splits. The Borrower effectuates a reverse split of its
Common Stock without the prior written consent of the Holder.
4.13 Cross Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any Transaction Document or other agreement
to which the Borrower and Holder are parties, or the occurrence of a material
event of default under any such other agreement which is not cured after any
required notice and/or cure period.
ARTICLE V
SECURITY INTEREST
5. Security Interest/Waiver of Automatic Stay. This Note is secured by
a security interest granted to the Collateral Agent for the benefit of the
Holder pursuant to a Security Agreement, as delivered by Borrower to Holder. The
Borrower acknowledges and agrees that should a proceeding under any bankruptcy
or insolvency law be commenced by or against the Borrower, or if any of the
Collateral (as defined in the Security Agreement) should become the subject of
any bankruptcy or insolvency proceeding, then the Holder should be entitled to,
among other relief to which the Holder may be entitled under the Transaction
Documents and any other agreement to which the Borrower and Holder are parties
(collectively, "Loan Documents") and/or applicable law, an order from the court
granting immediate relief
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from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder
to exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby consents to
any motion for relief from stay that may be filed by the Holder in any
bankruptcy or insolvency proceeding initiated by or against the Borrower and,
further, agrees not to file any opposition to any motion for relief from stay
filed by the Holder. The Borrower represents, acknowledges and agrees that this
provision is a specific and material aspect of the Loan Documents, and that the
Holder would not agree to the terms of the Loan Documents if this waiver were
not a part of this Note. The Borrower further represents, acknowledges and
agrees that this waiver is knowingly, intelligently and voluntarily made, that
neither the Holder nor any person acting on behalf of the Holder has made any
representations to induce this waiver, that the Borrower has been represented
(or has had the opportunity to he represented) in the signing of this Note and
the Loan Documents and in the making of this waiver by independent legal counsel
selected by the Borrower and that the Borrower has discussed this waiver with
counsel.
ARTICLE VI
MISCELLANEOUS
6.1 Failure or Indulgence Not Waiver. No failure or delay on the part
of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
6.2 Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Borrower to: Trend Mining Company,
0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attn: Xxxxxx Xxxxxx,
President and CEO, telecopier number: (000) 000-0000, with a copy by telecopier
only to: Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, The Chrysler Building, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxx,
telecopier number: (000) 000-0000, and (ii) if to the Holder, to the name,
address and telecopy number set forth on the front page of this Note,
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with a copy by telecopier only to Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
6.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
6.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
6.5 Cost of Collection. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.
6.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
6.7 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
6.8. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
6.9 Redemption. This Note may not be redeemed or called without the
consent of the Holder except as described in this Note.
6.10 Shareholder Status. The Holder shall not have rights as a
shareholder of the Borrower with respect to unconverted portions of this Note.
However, the Holder will have the rights of a shareholder of the Borrower with
respect to the Shares of Common Stock to be received after delivery by the
Holder of a Conversion Notice to the Borrower.
9
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its
name by an authorized officer as of the ____ day of December, 2004.
TREND MINING COMPANY
By:
----------------------------------
Name: Xxxxxx Xxxxxx
Title: President & CEO
WITNESS:
--------------------------------------
10
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by Trend Mining Company on
December ____, 2004 into Shares of Common Stock of Trend Mining Company (the
"Borrower") according to the conditions set forth in such Note, as of the date
written below.
Date of Conversion:_____________________________________________________________
Conversion Price:_______________________________________________________________
Number of Shares of Common Stock Beneficially Owned on the Conversion Date: Less
than 5% of the outstanding Common Stock of Trend Mining Company.
Shares To Be Delivered:_________________________________________________________
Signature:______________________________________________________________________
Print Name:_____________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
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