SENIOR CONVERTIBLE NOTE DUE __________ __, 2022
Exhibit
99.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY
IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”).
IN ADDITION, A SECURITIES PURCHASE AGREEMENT DATED AS OF
________________ _____, 2020 CONTAINS CERTAIN ADDITIONAL TERMS AND
AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS SENIOR
NOTE.
Original
Issue Date: __________ _____, 2020 Note No. ________
Original
Conversion Price (subject to adjustment herein): $1.05 per
share
Original
Principal Amount: $_______________
SENIOR CONVERTIBLE NOTE
DUE __________ __, 2022
THIS
SENIOR CONVERTIBLE NOTE is one of a series of duly authorized and
validly issued Senior Convertible Notes of AMERICAN RESOURCES
CORPORATION, a Florida corporation and its wholly owned
subsidiaries (the “Company”), having its principal
place of business at 00000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, designated as its Senior Convertible Note due
____________ _____, 2022, which twenty-Four (24) months post the
Original Issue Date (this note, the “Note” and,
collectively with the other notes of such series, the
“Notes”).
FOR
VALUE RECEIVED, the Company promises to pay to
_____________________ or its registered assigns (the
“Holder”), or shall have paid pursuant to the terms
hereunder, the principal sum of $______________ on _________ ____,
2022 (the “Maturity Date”) or such earlier date as this
Note is required or permitted to be repaid as provided hereunder.
This Note is subject to the following additional
provisions:
Section
1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere
in this Note, (a) capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement and (b)
the following terms shall have the following meanings:
“Business
Day” means any day except any Saturday, any Sunday, any day
which is a federal legal holiday in the United States or any day on
which banking institutions in the State of New York are authorized
or required by law or other governmental action to
close.
“Common
Stock” shall have the meaning the Company’s Class A
Common stock, par value $0.0001 per share.
“Conversion”
shall have the meaning ascribed to such term in Section
4.
“Conversion
Date” shall have the meaning set forth in Section
4(a).
“Conversion
Price” shall have the meaning set forth in Section
4(b).
“Conversion
Schedule” means the Conversion Schedule in the form of
Schedule 1 attached hereto.
“Conversion
Shares” means, collectively, the shares of Common Stock
issuable upon conversion of this Note in accordance with the terms
hereof.
“Event of
Default” shall have the meaning set forth in Section
7(a).
“Note
Register” means the formal record maintained by the Company
with respect to the recording of the issuances of Notes, the
amounts thereof, and the Holders thereof.
“Notice of
Conversion” shall have the meaning set forth in Section
4(a).
“Optional
Redemption” shall have the meaning set forth in Section
6(a).
1
“Optional
Redemption Amount” means an amount equal to One and
Twenty-Five One Thousandths (1.025) of the sum of the then
outstanding principal hereof to the date of
redemption.
“Optional
Redemption Date” shall have the meaning set forth in Section
6(a).
“Optional
Redemption Notice” shall have the meaning set forth in
Section 6(a).
“Optional
Redemption Notice Date” shall have the meaning set forth in
Section 6(a).
“Optional
Redemption Period” shall have the meaning set forth in
Section 6(a).
“Original
Issue Date” means the date of the first issuance of the
Notes, regardless of any transfers of any Note and regardless of
the number of instruments which may be issued to evidence such
Notes.
Section
2.
Interest and
Repayment.
a) Interest Rate. The Note shall
bear an 12.5% effective annual interest rate, compounded monthly.
For the first Six (6) calendar months post the Original Issue Date,
all interest payable under this Note shall accrue to the Principal.
Starting on calendar month Seven (7), through to the Maturity Date,
the interest shall be paid in cash along with, and included within,
the monthly amount of the Principal Repayment amounts described in
Section 2(b) below to the Holder by on the last day of the calendar
month. Any Notes issued after the first day of the month shall have
the first month of accrued interest pro-rated for the number of
days of the month outstanding.
b) Principal Payments. Payments of
Principal and interest shall be made in cash starting on calendar
month Seven (7) post the Original Issue Date in the sum of
Twenty-Eight Thousand ($28,000) for every Five Hundred Thousand
($500,000) of Principal investment (the “Principal
Repayment”) and shall continue monthly until the Maturity
Date. The monthly Principal Repayment shall be made on the last day
of each calendar month.
c) Payment at Maturity Date. At
the Maturity Date the sum of any outstanding interest and principal
shall be due and payable in cash.
d) Prepayment of Note. The Company
shall have the ability to prepay, in whole or in part, the Note
without penalty and apply different prepayment amounts to different
holders of the Notes, at the Company’s
discretion.
Section
3.
Registration of
Transfers and Exchanges.
a) Different Denominations. This
Note is exchangeable for an equal aggregate principal amount of
Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be payable for
such registration of transfer or exchange.
b) Investment Representations.
This Note has been issued subject to certain investment
representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance
with the Purchase Agreement and applicable federal and state
securities laws and regulations.
c) Reliance on Note Register.
Prior to due presentment for transfer to the Company of this Note,
the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note is
overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
Section
4.
Conversion.
a) Voluntary
Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note shall be convertible,
in whole or in part, into shares of Common Stock at the option of
the Holder, at any time and from time to time (subject to the
conversion limitations set forth in Section 4(d) hereof). The
Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as Annex
A (each, a “Notice of Conversion”), specifying therein
the principal amount of this Note to be converted and the date on
which such conversion shall be effected (such date, the
“Conversion Date”). If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date
that such Notice of Conversion is deemed delivered hereunder. No
ink-original Notice of Conversion shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Conversion form be required. To effect conversions
hereunder, the Holder shall not be required to physically surrender
this Note to the Company unless the entire principal amount of this
Note has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Note in
an amount equal to the applicable conversion. The Company may
deliver an objection to any Notice of Conversion within 3 Business
Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest
error.
b) Conversion
Price. The conversion price in effect on any Conversion Date
shall be equal to $1.05 per share of Common Stock, subject to
adjustment herein (the “Conversion
Price”).
2
c) Mechanics
of Conversion.
i.
Conversion Shares Issuable Upon
Conversion of Principal Amount.
ii.
The number of
Conversion Shares issuable upon a conversion at Holders option
pursuant to Section 4(a) shall be determined by the quotient
obtained by dividing (x) the applicable dollar amount being
converted in either case by (y) the Conversion Price.
iii.
Delivery of Conversion Shares Upon
Conversion. Not later than 5 Trading Day after each
Conversion Date (the “Share Delivery Date”), the
Company shall deliver, or cause to be delivered, to the Holder the
number of Conversion Shares being acquired upon the conversion of
this Note which, on or after the 6 month anniversary of the
Original Issue Date under Rule 144 shall be free of restrictive
legends and trading restrictions (other than those which may then
be required by the Purchase Agreement) and shall be delivered by
the Company under this Section 4(c) electronically through the
Depository Trust Company or another established clearing
corporation performing similar functions.
iv.
Failure to Deliver Conversion
Shares. If, in the case of any Notice of Conversion, such
Conversion Shares are not delivered to or as directed by the
applicable Holder by the Share Delivery Date, the Holder shall be
entitled to elect by written notice to the Company at any time on
or before its receipt of the Conversion Shares, to rescind such
Conversion, in which event the Company shall promptly return to the
Holder any original Note delivered to the Company and the Holder
shall promptly return to the Company the Conversion Shares issued
to such Holder pursuant to the rescinded Conversion
Notice.
v.
Obligation Absolute; Partial
Liquidated Damages. The Company’s obligations to issue
and deliver the Conversion Shares upon conversion of this Note in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of such Conversion Shares; provided,
however, that such delivery shall not operate as a waiver by the
Company of any such action the Company may have against the Holder.
If the Company fails for any reason to deliver to the Holder the
Conversion Shares pursuant to Section 4(c)(iii) by the Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $500 of principal
amount being converted, $5 per Trading Day for each Trading Day
after such Share Delivery Date until such Conversion Shares are
delivered or Holder rescinds such conversion. Nothing herein shall
limit a Holder’s right to pursue actual damages for the
Company’s failure to deliver Conversion Shares within the
period specified herein and the Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. Nothing herein shall limit a
Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 8 hereof for the Company’s
failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
vi.
Compensation for Buy-In on Failure to
Timely Deliver Conversion Shares Upon Conversion. In
addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such
Conversion Shares by the Share Delivery Date pursuant to Section
4(c)(iii), and if after such Share Delivery Date the Holder is
required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which
the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the Company
shall (A) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount, if any,
by which (x) the Holder’s total purchase price (including any
brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common
Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell
order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of the
Holder, either reissue (if surrendered) this Note in a principal
amount equal to the principal amount of the attempted conversion
(in which case such conversion shall be deemed rescinded) or
deliver to the Holder the number of shares of Common Stock that
would have been issued if the Company had timely complied with its
delivery requirements under Section 4(c)(ii). For example, if the
Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion
of this Note with respect to which the actual sale price of the
Conversion Shares (including any brokerage commissions) giving rise
to such purchase obligation was a total of $10,000 under clause (A)
of the immediately preceding sentence, the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver Conversion
Shares upon conversion of this Note as required pursuant to the
terms hereof. Such amounts shall be not owed for Buy-In if the
delay is not a result of the Company’s doing.
3
vii.
Reservation of Shares Issuable Upon
Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
shares of Common Stock for the sole purpose of issuance upon
conversion of this Note, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of
Persons other than the Holder (and the other holders of the Note),
not less than such aggregate number of shares of the Common Stock
as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 5) upon the conversion of
the then outstanding principal amount of this Note. The Company
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable.
viii.
Fractional Shares. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Note. As to any fraction of a
share which the Holder would otherwise be entitled to purchase upon
such conversion, the Company shall round down if less than 50% of a
share and round up if 50% or greater to the next whole
share.
ix.
Transfer Taxes and Expenses.
All expenses associated with the issuance of Conversion Shares on
conversion of this Note shall be the sole responsibility of the
Holder.
d) Holder’s
Conversion Limitations. The Company shall not effect any
conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that after giving
effect to the conversion set forth on the applicable Notice of
Conversion, the Holder (together with the Holder’s
Affiliates, and any Persons acting as a group together with the
Holder or any of the Holder’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the
remaining, unconverted principal amount of this Note beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Company subject to a limitation on conversion or
exercise analogous to the limitation contained herein (including,
without limitation, any other Notes or the Warrants) beneficially
owned by the Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 4(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 4(d) applies, the determination of whether this Note is
convertible (in relation to other securities owned by the Holder
together with any Affiliates) and of which principal amount of this
Note is convertible shall be in the sole discretion of the Holder,
and the submission of a Notice of Conversion shall be deemed to be
the Holder’s determination of whether this Note may be
converted (in relation to other securities owned by the Holder
together with any Affiliates) and which principal amount of this
Note is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction,
the Holder will be deemed to represent to the Company each time it
delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 4(d), in
determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written notice
by the Company or the Company’s transfer agent setting forth
the number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within one Trading
Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Note, by the Holder or its Affiliates since the date
as of which such number of outstanding shares of Common Stock was
reported. The “
Beneficial Ownership Limitation” shall be
4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of this Note held by the Holder. The
Beneficial Ownership Limitation provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 4(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation.
The
limitations contained in this Section 4(d) shall apply to a
successor holder of this Note.
Section
5.
Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of the Notes), (ii)
subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common
Stock (excluding any treasury shares of the Company) outstanding
immediately before such event, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
4
b) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 5(a) above, if at
any time the Company grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete conversion of this
Note (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
c) Pro Rata Distributions. During
such time as this Note is outstanding, if the Company shall declare
or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Note,
then, in each such case, the Holder shall be notified five days
prior to such Distribution to exercise its right to convert such
Note into Common Stock to benefit from such Distribution subject to
the Beneficial Ownership Limitation.
d) Fundamental Transaction. If, at
any time while this Note is outstanding, (i) the Company, directly
or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase
offer, tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for
other securities, cash or property and has been accepted by the
holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires
more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase
agreement or other business combination where the Company is not
the surviving entity) (each, a “Fundamental
Transaction”), then, upon any subsequent conversion of this
Note, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction
(without regard to any limitation in Section 4(d) on the conversion
of this Note), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of
such Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Note is convertible immediately prior
to such Fundamental Transaction (without regard to any limitation
in Section 5(d) on the conversion of this Note).
e) Calculations. All calculations
under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 5, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Company) issued and outstanding.
f) Notice to the
Holder.
i.
Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment.
5
ii.
Notice to Allow Conversion by
Holder. If (A) the Company shall declare a dividend on the
Common Stock, (B) the Company shall declare a special nonrecurring
cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common
Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of this Note, and shall cause to be
delivered to the Holder at its last address as it shall appear upon
the Note Register, at least 10 calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
convert this Note during the 10 calendar day period commencing on
the date of such notice through the effective date of the event
triggering such notice except as may otherwise be expressly set
forth herein.
Section
6.
Redemption.
a) Optional Redemption at Election of
Company. Subject to the provisions of this Section 6(a), at
any time after Six (6) months after the Original Issue Date, the
Company may deliver to the Holder (an “Optional Redemption
Notice” and the date such notice is deemed delivered
hereunder, the “Optional Redemption Notice Date”) of
its irrevocable election to redeem some or all of the then
outstanding principal amount and/or accrued interest of this Note
for cash in an amount equal to the Optional Redemption Amount on
the 10th Business Day following the Optional Redemption Notice Date
(such date, the “Optional Redemption Date”, such 10th
Business Day period, the “Optional Redemption Period”
and such redemption, the “Optional Redemption”). The
Optional Redemption Amount is payable in full on the Optional
Redemption Date.
b) Redemption Procedure. Upon
Delivery of the Optional Redemption Notice at the Optional
Redemption Notice Date, the Holder shall have the right to convert,
in part or in whole, the outstanding principal amount and/or
accrued interest of this Note into Common Stock pursuant to Section
4 prior to the Optional Redemption Date. Furthermore, upon Delivery
of the Optional Redemption Notice at the Optional Redemption Notice
Date to the Holder, and if the Holder elects to convert, in part or
in whole, the outstanding principal amount and/or accrued interest
of this Note into Common Stock pursuant to Section 4 prior to the
Optional Redemption Date, and if that conversion to Common Stock
will result in the Holder exceeding the Beneficial Ownership
Limitation, as defined in Section 4(d), then the Company shall be
limited in the redemption under Section 6 to be only that principal
amount and/or accrued interest that, when converted to Common
Stock, is less than the Beneficial Ownership Limitation of 4.99%,
unless otherwise waived by mutual agreement between the Company and
the Holder. To put in other words, the Company cannot redeem any
part of the principal amount and/or interest of the Notes that,
when potentially converted to Common Shares by the Holder pursuant
to Section 4, would result in the Holder exceeding the Beneficial
Ownership Limitation of 4.99%. The payment of cash, as applicable,
pursuant to an Optional Redemption shall be payable on the Optional
Redemption Date. Notwithstanding anything to the contrary in this
Section 6, the Company’s determination to redeem is not
required to be applied ratably among the Holders of
Notes.
Section
7.
Events of
Default.
a) “Event of
Default” means, wherever used herein, any of the following
events (whatever the reason for such event and whether such event
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.
any default in the
payment of the interest or the principal amount of any Note as and
when the same shall become due and payable;
ii.
the Company shall
materially fail to observe or perform any other covenant or
agreement contained in the Notes which failure is not cured, if
possible to cure, within the earlier to occur of (A) 15 Trading
Days after notice of such failure sent by the Holder or by any
other Holder to the Company and (B) 15 Trading Days after the
Company has become or should have become aware of such
failure;
iii.
any representation
or warranty made in this Note, any other Transaction Documents, any
written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder
or any other Holder shall be materially untrue or incorrect in any
material respect as of the date when made or deemed
made;
6
b) Remedies Upon Event of Default.
If any Event of Default occurs, and the Company fails to cure the
Event of Default within Fifteen (15) days post notice being
provided by the Holder to the Company of the occurrence of an Event
of Default pursuant to Section 5.4 of the Purchase Agreement, the
outstanding principal amount of this Note, plus accrued but unpaid
interest and other amounts owing in respect thereof through the
date of acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Mandatory Default
Amount. Commencing 30 days after the occurrence of any Event of
Default that results in the eventual acceleration of this Note, the
interest rate on this Note shall accrue at an interest rate equal
to the lesser of 16% per annum or the maximum rate permitted under
applicable law if lower. Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Note to or
as directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of
any kind, and the Holder may immediately and without expiration of
any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law. Such acceleration may be rescinded and annulled by Holder at
any time prior to payment hereunder and the Holder shall have all
rights as a holder of the Note until such time, if any, as the
Holder receives full payment pursuant to this Section. No such
rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.
Section
8.
Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation,
shall be in writing and delivered personally, by facsimile or email
(if by email, with an acknowledged response returned by an officer
of the Company), or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth
above, or such other facsimile number or address as the Company may
specify for such purposes by notice to the Holder delivered in
accordance with this Section 8(a). Any and all notices or other
communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by
facsimile, by electronic mail if a confirmation of receipt is
received from the Holder to the Company or sent by a nationally
recognized overnight courier service addressed to each Holder at
the facsimile number or address of the Holder appearing on the
books of the Company, or if no such facsimile number or address
appears on the books of the Company, at the principal place of
business of such Holder, as set forth in the Purchase Agreement.
Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or electronic mail set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on any date or (ii) upon actual receipt by the party to
whom such notice is required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal,
as applicable, on this Note at the time, place, and rate, and in
the coin or currency, herein prescribed. This Note is a direct debt
obligation of the Company.
c) Lost
or Mutilated Note. If this Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Note, or in lieu of or in substitution for a lost, stolen or
destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of
the ownership hereof, reasonably satisfactory to the
Company.
d) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of the Purchase
Agreement.
e) Waiver.
Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of
any other provision of this Note. The failure of the Company or the
Holder to insist upon strict adherence to any term of this Note on
one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Note on any other occasion.
Any waiver by the Company or the Holder must be in
writing.
f) Severability.
If any provision of this Note is invalid, illegal or unenforceable,
the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates the applicable law
governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law.
7
g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under
this Note and any of the other Transaction Documents at law or in
equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the
Holder’s right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this Note.
The Company covenants to the Holder that there shall be no
characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with
respect to payments and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not,
except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for
any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available
remedies, to an injunction restraining any such breach or any such
threatened breach. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Note.
h) Next
Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business
Day.
i) Headings.
The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or
affect any of the provisions hereof.
j) No
Rights as Stockholder Until Conversion. The Note does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the conversion of the
Notes as provided herein.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed by a duly authorized officer as of the date first above
indicated.
AMERICAN RESOURCES
CORPORATION
By:__________________________________________
Name:
Title:
Facsimile No. for
delivery of Notices: (000) 000-0000
8
20200325
ANNEX A
NOTICE OF CONVERSION
The
undersigned hereby elects to convert principal under the Senior
Convertible Debenture No. ____ due _________________ of American
Resources Corporation, a Florida corporation (the
“Company”), into shares of class A common stock (the
“Common Stock”), of the Company according to the
conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in
accordance therewith.
By the
delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 4 of this
Debenture, as determined in accordance with Section 13(d) of the
Exchange Act.
The
undersigned agrees to comply with the applicable securities laws in
connection with any transfer of the aforesaid shares of Common
Stock.
Conversion
calculations:
Date to
Effect Conversion: _______________________
Principal Amount of
Debenture to be Converted:
_________________
Number
of shares of Common Stock to be issued:
_________________
Signature:
_______________________________
Name: _______________________________
Address
for Delivery of Conversion Shares:
_________________________
_________________________
Or
DWAC
Instructions:
Broker
No: _______________________________
Account
No:
_______________________________
Deliver notice to Company via email:
xxxxxxxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx
9
