FIRST AMENDMENT TO TERMINUS, INC./THE BLACKHAWK FUND SECURED PROMISSORY NOTE
FIRST
AMENDMENT TO
TERMINUS,
INC./THE BLACKHAWK FUND
THIS FIRST AMENDMENT TO SECURED
PROMISSORY NOTE (“First
Amendment”) is made and entered into as of July 10, 2009, by and among
Terminus, Inc., a Nevada corporation “Terminus”), The Blackhawk
Fund, a Nevada corporation (“Blackhawk”, together with
Terminus, “Borrower”)
and Professional Offshore Opportunity Fund Ltd. (“Holder”).
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RECITALS
WHEREAS, on April 24, 2008,
Borrower issued a secured promissory note (the “Note”), pursuant to which it
promised to pay to the order of Holder, the principal amount of FIVE HUNDRED
FIFTY THOUSAND DOLLARS ($550,000), together with interest incurred thereon, as
therein provided. The Note is incorporated into this First Amendment
by this reference and all defined terms in the Note shall have the same meaning
in this First Amendment;
WHEREAS, the Note provided
that all principal and interest accrued and unpaid thereunder was due and
payable on April 24, 2009 (the “Maturity Date”);
WHEREAS, the Borrower failed
to make payment in the Maturity Date and the Borrower and Holder have determined
that it is advisable and in their best interests to amend the Note to extend the
Maturity Date and include such other additional terms, as provided
herein;
NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, the Borrower and the Holder hereby agree as
follows:
AGREEMENT
1. Incorporation
of Recitals. The Recitals set forth
above are herein incorporated into this First Amendment.
2. Amendments
to Agreement.
A. The
definition of “Maturity Date” contained in the first paragraph of the Note is
hereby amended by deleting “April 24, 2009” and inserting “July 10, 2010” in
lieu thereof.
B. The
heading directly below ARTICLE I “INTEREST, PAYMENT, SENIORITY” is hereby
amended by inserting the language “AND CONVERSION” directly after the word
“SENIORITY.”
C. A
new Section 1.5 is hereby inserted to read in its entirety as
follows:
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“1.5 Conversion
1.5.1
Conversion of
Principal and Interest. Subject to the terms and conditions hereof, the
Holder, at its sole option, may deliver to the Holder a notice in the form
attached hereto as Exhibit A (a “Conversion Notice”), at any
time and from time to time after the date hereof (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, for a number of shares (the “Shares”) of Blackhawk common
stock, par value $0.001 per share (“Common Stock”) 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 convened
by the Conversion Price (as defined in Section 4.7). 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.
1.5.2
Certain
Conversion Limitations.
(a) The
Holder may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would result in the
Holder, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act (as defined in Section 4.7)
and the rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock. Since the Holder will not be
obligated to report to Blackhawk 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 4.999% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder 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 Holder
upon not less than 61 days’ prior notice to Blackhawk.
(b) The
Holder may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would result in the
Holder, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock. Since the Holder will not be obligated to report to
Blackhawk 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 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder 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 Holder
upon not less than 61 days’ prior notice to Blackhawk.
(c) The
Holder may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would require
Blackhawk to issue shares of Common Stock in excess of the Blackhawk’s then
sufficient authorized and unissued shares of Common Stock.”
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D. A
new Section (m) under Article III “COVENANTS” shall be inserted to read in its
entirety as follows:
“(m) If
at any time after September 10, 2009, there is either (i) insufficient Common
Stock to permit conversions by Holder pursuant to Section 1.5 or (ii) the Per
Share Market Value is less than the then existing par value of the Common Stock
for a period of [5] consecutive Trading Days,
Blackhawk will use its best efforts to amend its capital structure by
means of either a reverse split of its Common Stock, an increase in its
authorized Common Stock or a reduction of the par value of its Common Stock, or
any combination of the foregoing as determined by Blackhawk’s board of directors
in its reasonable discretion.”
E. A
new Section 4.7 is hereby inserted to read in its entirety as
follows:
“4.7 Definitions. For
the purposes hereof, the following terms shall have the following
meanings:
“Business Day” means
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 New York or State of Utah are
authorized or required by law or other government action to close.
“Conversion Price”
shall be the greater of (i) the then existing par value of the Common Stock or
(ii) 75% of the average of the Per Share Market Values during the twenty (20)
Trading Days immediately preceding a Conversion Date.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“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
Holder.
“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.
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“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 Nevada are authorized or required by law or other government action to
close.”
F. A
new Exhibit A attached hereto is hereby made a part of the Note.
3. Modification. This
First Amendment shall be deemed a modification of the
Agreement. Except as specifically modified hereby, the Agreement
shall be deemed controlling and effective, and the parties hereby agree to be
bound by each of its terms and conditions.
4. Counterparts. This
First Amendment may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
[Remainder
of page intentionally left blank.]
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IN WITNESS WHEREOF, the
Parties hereto, intending to be legally bound, have each executed this First
Amendment on the date set forth above.
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“BORROWER”
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TERMINUS,
INC.
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
President
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THE
BLACKHAWK FUND
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
President
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“HOLDER”
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PROFESSIONAL OFFSHORE OPPORTUNITY FUND, LTD.
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By:
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Name: Xxxxxx
Xxxxxx
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Title: Manager
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EXHIBIT
A
NOTICE
OF CONVERSION
Dated:
The undersigned hereby elects to
convert the principal amount and interest indicated below of the attached
Secured Promissory Note into shares of common stock, $0.001 par value (the
“Common Stock”), of The Blackhawk Fund, 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
Secured
Convertible Note to be Converted: ______________________________
Number of
shares of Common Stock to be Issued: ________________________
Applicable
Conversion Price:_________________________________________
Signature:
________________________________________________________
Name:___________________________________________________________
Address:
_________________________________________________________
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