THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION...
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID
ACT.
THIS NOTE
IS ISSUED IN CONNECTION WITH A LOAN AND SECURITY AGREEMENT AMONG THE PAYEE, THE
MAKER AND OTHERS OF EVEN DATE HEREWITH, PURSUANT TO WHICH THE PAYEE HAS AGREED
TO BE A LENDER TO THE MAKER, ALL AS SET FORTH IN THE LOAN AND SECURITY
AGREEMENT.
|
U.S.
$2,136,902.21
|
March
8,
2010
|
FOR VALUE RECEIVED, Gwenco, Inc., a
Kentucky corporation (the “Maker”),
hereby promises to pay to Interstellar Holdings, LLC, or its successors and
assigns (the “Payee”),
at its address at 0000 Xxxxxxx Xxxx, Xxxxxxxxx XX, 00000, or to such other
address as the Payee shall provide in writing to the Maker for such purpose, the
principal sum of up to TWO MILLION ONE HUNDRED THIRTY SIX THOUSAND NINE HUNDRED
TWO AND 21/100 DOLLARS (U.S. $2,136,902.21), or such lesser amount as may then
constitute the aggregate outstanding principal balance of all Revolving Credit
Loans made by the Payee to the Maker pursuant to the Loan Agreement (as defined
below). Capitalized terms used herein but not defined shall have the
meanings ascribed to them in the Loan Agreement.
The
entire principal amount hereunder, together with all accrued but unpaid interest
shall be due and payable in full on March 8, 2015 (the “Maturity
Date”), or on such earlier date as such amount may earlier become due and
payable pursuant to the terms hereof or the terms of the Loan
Agreement. The Maker hereby authorizes the Payee to record, on the
schedule(s) annexed to this Convertible Promissory Note as Exhibit
A (the “Loan
Schedule”), the date and amount of each Revolving Credit Loan, of each
payment or prepayment of principal made by the Maker, and of each conversion
pursuant to Section 3 below, and agrees that all such notations shall be
conclusive absent manifest error; provided, however, that the
failure of the Payee to make any such notation shall not affect the Maker’s
obligations hereunder.
This Convertible Promissory Note is
issued pursuant to the Loan and Security Agreement of even date herewith
(together with all modifications, renewals, amendments, restatements, or
replacements, the “Loan
Agreement”) among the Payee, the Maker, Quest Minerals & Mining
Corp., and Quest Minerals & Mining Ltd., and is subject to, and entitled to,
all provisions and benefits thereof.
-1-
1. Interest
Rate.
(a) Interest
shall accrue on the unpaid principal amount of this Convertible Promissory Note
(the “Note”)
at the rate of twelve percent (12%) per annum from the date hereof until the
earlier of (a) the date such unpaid principal amount and all accrued but unpaid
interest hereon are paid in full or (b) the date all such principal amount and
accrued interest are converted into shares (the “Shares”)
of the common stock, $0.0001 par value, of Quest Minerals & Mining Corp.
(the “Parent”),
a Utah corporation and the parent corporation of the Maker (the “Common
Stock”), in accordance with the terms hereof. Interest
hereunder shall be paid as set forth in the Loan Agreement or on such earlier
date as any principal amount and accrued interest hereunder are converted in
accordance with the terms hereof. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed. If the
principal amount of this Note and all accrued interest are not paid in full on
the Maturity Date, interest at the default rate set forth in the Loan Agreement
shall continue to accrue on the balance of any unpaid principal and interest
until such balance is paid.
(b) All
payments made on this Note shall be applied in accordance with the Loan
Agreement. After the Maturity Date or upon an Event of Default,
interest shall continue to accrue on this Note at the default rate set forth in
the Loan Agreement and shall be payable as provided in the Loan
Agreement.
2. Conversion of Principal and
Interest.
(a) Subject
to the terms and conditions hereof, the Payee, at its sole option, may deliver
to the Maker a notice in the form attached hereto as Exhibit
B (a “Conversion
Notice”) at any time and from time to time after the date hereof and
prior to the payment in full of the principal amount of and all accrued interest
on this Note (the date of the delivery of a Conversion Notice, a “Conversion
Date”), to convert all or any portion of the outstanding principal amount
of this Note, plus accrued and unpaid interest thereon, into that number of
Shares equal to the quotient obtained by dividing the dollar amount of such
outstanding principal amount of this Note, plus the accrued and unpaid interest
thereon, being converted by the Conversion Price (as defined in Section
13). Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Note plus all accrued and unpaid interest
thereunder in an amount equal to the applicable conversion, which shall be
evidenced by entries set forth in the Conversion Notice and the Loan
Schedule.
(b) The
Parent shall at all times use its best commercial efforts to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion provisions of this Note, such number of
Shares as shall from time to time be sufficient to effect the conversion
provisions of this Note.
-2-
(c) If,
at any time while this Note is outstanding, the Per Share Market Value of a
share of Common Stock falls below $0.0015 for three (3) consecutive Trading
Days, then within thirty (30) calendar days thereafter, the Parent shall effect
a reverse split of its Common Stock as directed by Lender.
3. Certain Conversion
Limitations.
(a) The
Payee may not convert any outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would result in the
Payee, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act (as defined in Section 13)
and the rules promulgated thereunder) in excess of 4.99% of the then-issued and
outstanding shares of Common Stock. Since the Payee will not be
obligated to report to the Parent the number of shares of Common Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would
result in the issuance of Shares in excess of 4.99% of the then-outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Payee or an affiliate thereof, the Payee shall have
the authority and obligation to determine whether and the extent to which the
restriction contained in this Section will limit any particular conversion
hereunder. The provisions of this Section may be waived by the Payee
upon not less than 61 days’ prior notice to the Maker.
(b) The
Payee may not convert any outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would require the
Parent to issue shares of Common Stock in excess of Parent’s then-maximum
authorized but unissued shares of Common Stock; provided, however, that Parent
shall use its best efforts to increase its maximum authorized shares of Common
Stock to accommodate such conversion.
4. Deliveries. Not
later than three Trading Days (as defined in Section 13) after any Conversion
Date (the “Delivery
Date”), the Maker will deliver to the Payee (i) a certificate or
certificates representing the number of Shares being acquired upon the
conversion of the principal amount of this Note and any interest accrued
thereunder being converted pursuant to the Conversion Notice (subject to the
limitations set forth in Section 3 hereof), and (ii) an endorsement by the Maker
of the Loan Schedule acknowledging the remaining outstanding principal amount of
this Note plus all accrued and unpaid interest thereon not converted (an “Endorsement”). The
Maker’s delivery to the Payee of stock certificates in accordance with clause
(i) above shall be Maker’s conclusive endorsement of the remaining outstanding
principal amount of this Note plus all accrued and unpaid interest thereon not
converted as set forth in the Loan Schedule.
-3-
5. Mandatory Prepayment Upon
Triggering Events. Upon the occurrence of a Triggering Event (as defined
below), the Payee shall have the right (in addition to all other rights it may
have hereunder, under the Loan Agreement or under applicable law), exercisable
at the sole option of the Payee, to require the Maker to prepay all or a portion
of the outstanding principal amount of this Note plus all accrued and unpaid
interest thereon. Such prepayment shall be due and payable within thirty (30)
Trading Days of the date on which the notice for the payment therefor is
provided by the Payee.
A “Triggering
Event” means any one or more of the following events (whatever the reason
and whether it shall be voluntary or involuntary, or effected by operation of
law or pursuant to any judgment, decree or order of any court, or any order,
rule or regulation of any administrative or governmental body):
(i)
an Event of Default; or
(ii) the
Maker shall fail for any reason to deliver certificates or an Endorsement to the
Payee prior to the sixtieth (60th) day
after a Conversion Date pursuant to and in accordance with Section
4.
6. No Waiver of Payee’s Rights,
etc. All payments of principal and interest shall be made
without setoff, deduction or counterclaim. No delay or failure on the
part of the Payee in exercising any of its options, powers or rights, nor any
partial or single exercise of its options, powers or rights shall constitute a
waiver thereof or of any other option, power or right, and no waiver on the part
of the Payee of any of its options, powers or rights shall constitute a waiver
of any other option, power or right. The Maker hereby waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of this Note and all other notices or demands in connection with the
delivery, acceptance, performance, default or endorsement of this
Note. Acceptance by the Payee of less than the full amount due and
payable hereunder shall in no way limit the right of the Payee to require full
payment of all sums due and payable hereunder in accordance with the terms
hereof.
7. Modifications. No
term or provision contained herein may be modified, amended or waived except by
as provided in the Loan Agreement.
8. Cumulative Rights and
Remedies; Usury. The rights and remedies of the Payee
expressed herein are cumulative and not exclusive of any rights and remedies
otherwise available. If it shall be found that any interest outstanding
hereunder shall violate applicable laws governing usury, the applicable rate of
interest outstanding hereunder shall be reduced to the maximum permitted rate of
interest under such law.
-4-
9. Collection Expenses.
If this obligation is placed in the hands of an attorney for collection after
default, the Maker shall pay (and shall indemnify and hold harmless the Payee
from and against), all reasonable attorneys’ fees and expenses incurred by the
Payee in pursuing collection of this Note, and such fees and expenses shall be
included as Lender Expenses.
10. Successors and Assigns;
Assignment. This Note shall be binding upon the Maker and its successors
and shall inure to the benefit of the Payee and its successors and
assigns. The term “Payee” as used
herein, shall also include any endorsee, assignee or other holder of this
Note. This Note and the rights and obligations hereunder may not be
assigned or delegated, in whole or in part, by the Maker without the prior
written consent of the Payee, which may be withheld in Payee’s sole
discretion. The Payee may assign and/or delegate this Note and its
rights and obligations hereunder.
11. Lost or Stolen Promissory
Note. If this Note is lost, stolen, mutilated or otherwise
destroyed, the Maker shall execute and deliver to the Payee a new promissory
note containing the same terms, and in the same form, as this
Note. In such event, the Maker may require the Payee to deliver to
the Maker an affidavit of lost instrument and customary indemnity in respect
thereof as a condition to the delivery of any such new promissory
note.
12. Governing Law; Choice of
Venue; Jury Trial Waiver.
(a) This
Note shall be governed by and construed and enforced in accordance with the
internal laws of the Commonwealth of Kentucky without regard to the principles
of conflicts of law thereof. Each of parties hereto hereby agrees
that all actions or proceedings arising in connection with this Note shall be
tried and litigated only in the state and federal courts located in Fairfield,
Connecticut; provided, however, that any
suit seeking enforcement against any collateral or other property may be
brought, at the Payee’s option, in the courts of any jurisdiction where the
Payee elects to bring such action or where such collateral or other property may
be found. Each of the parties waives, to the extent permitted under
applicable law, any right each may have to assert the doctrine of forum non conveniens or to
object to venue to the extent any proceeding is brought in accordance with this
Section 12. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
(b) EACH
OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF THE PARTIES HERETO REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
-5-
13. Definitions. For
the purposes hereof, the following terms shall have the following
meanings:
“Conversion Price”
shall be the lesser of (i) $0.001 per share (which shall not be adjusted if the
Parent, at any time while this Note is outstanding, shall (a) pay a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of the Common Stock any shares of its capital
stock), and (ii) 40% of the average of the three (3) lowest Per Share Market
Values during the ten (10) Trading Days immediately preceding the applicable
Conversion Date; provided, however, that in no event shall the Conversion Price
be less than the par value of the Common Stock in effect at the time of
conversion.
“Per Share Market
Value” means on any particular date (a) the closing bid price per share
of Common Stock on such date on the OTC Bulletin Board or on such Subsequent
Market on which the shares of Common Stock are then listed or quoted, or if
there is no such price on such date, then the closing bid price on the OTC
Bulletin Board or on such Subsequent Market on the date nearest preceding such
date, or (b) if the shares of Common Stock are not then listed or quoted on the
OTC Bulletin Board or a Subsequent Market, the closing bid price for a share of
Common Stock in the over-the-counter market, as reported by the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the shares of Common Stock are not then reported by the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the “Pink Sheet” quotes for
the relevant conversion period, as determined in good faith by the
Payee.
“Securities Act” means
the Securities Act of 1933, as amended.
“Subsequent Market”
means the New York Stock Exchange, American Stock Exchange, Nasdaq SmallCap
Market or Nasdaq National Market.
“Trading Day” means
(a) a day on which the shares of Common Stock are traded on such Subsequent
Market on which the shares of Common Stock are then listed or quoted, or (b) if
the shares of Common Stock are not listed on a Subsequent Market, a day on which
the shares of Common Stock are traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (c) if the shares of Common Stock are not
quoted on the OTC Bulletin Board, a day on which the shares of Common Stock are
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided, however, that in the event that the
shares of Common Stock are not listed or quoted as set forth in (a), (b) and (c)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of Connecticut are authorized or required by law or other government
action to close.
-6-
[Remainder
of page intentionally left blank.]
-7-
IN
WITNESS WHEREOF, the Maker has caused this Convertible Promissory Note to be
duly executed and delivered as of the date first set forth above.
|
GWENCO,
INC.
|
||
|
By:
|
/s/ Xxxxxx Xxxxxxxxxxx, Xx. | |
|
Name: Xxxxxx
Xxxxxxxxxxx, Xx.
|
||
|
Title: President
|
||
THE TERMS
OF THE FOREGOING NOTE ARE HEREBY ACCEPTED AND AGREED TO AS OF THE DATE FIRST SET
FORTH ABOVE.
|
QUEST
MINERALS & MINING CORP.
|
||
|
By:
|
/s/
Xxxxxx
Xxxxxxxxxxx, Xx.
|
|
|
Name: Xxxxxx
Xxxxxxxxxxx, Xx.
|
||
|
Title: President
|
||
-8-
EXHIBIT
A
LOAN
SCHEDULE
|
Type of Loan
Transaction1
|
Date of Borrowing /
Prepayment / Conversion
|
Amount of Borrowing /
Prepayment /
Conversion
|
Remaining
Principal
Amount
|
|||||||
|
B
|
10/12/2009
|
$ | 1,916,372.69 | $ | 1,916,372.69 | |||||
|
B
|
10/31/2009
|
$ | 65,306.00 | $ | 1,981,678.69 | |||||
|
B
|
3/8/2010
|
$ | 56,773.50 | $ | 2,038,452.19 | |||||
-Exhibit
A-
EXHIBIT
B
NOTICE
OF CONVERSION
Dated:
The undersigned hereby elects to
convert the principal amount and interest indicated below of the attached
Convertible Promissory Note into shares of common stock, $0.0001 par value (the
“Common
Stock”), of Quest Minerals & Mining Corp., according to the
conditions hereof, as of the date written below. No fee will be
charged to the holder for any conversion.
Exchange
calculations: ______________________________________________
Date to
Effect Conversion: ___________________________________________
Principal
Amount and Interest of
Convertible
Note to be Converted: _____________________________________
Number of
shares of Common Stock to be Issued: ________________________
Applicable
Conversion Price:
Signature:
__________________________________________
Name:_____________________________________________
Address:
___________________________________________
-Exhibit
B-
