exhibit10_2.htm


    
      

      

    

    


    THIS
SECURED NOTE AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE
“SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE
BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

     

    PLATINA
ENERGY GROUP, INC.

     

     

    Convertible
Note

     

     

    May
21, 2008

     

    


    
      	
              No.  N-2

            	
              US$2,300,000

            


    

    


    This
Secured Note (the “Note”) is issued on
May 21, 2008 (the “Closing Date”)
by Platina Energy Group, Inc., a Delaware corporation (the “Company”), to
Trafalgar Capital Specialized Investment Fund, Luxembourg (together with its
permitted successors and assigns, the “Holder”) pursuant to
exemptions from registration under the Securities Act of 1933, as
amended.

     

     

    Article
I


     

    Principal
and Interest.  For value
received, the Company hereby promises to pay to the order of the Holder on
August 21, 2011 in lawful money of the United States of America and in
immediately available funds the principal sum of Two Million Three Hundred
Thousand U.S. Dollars (US$2,300,000) together with
interest on the unpaid principal of this Note at the rate of ten percent (10.0%)
per annum compounded monthly from the date hereof until
paid.  Interest shall be computed on the basis of a 360-day year and
the actual days elapsed and the Holder shall deduct two (2) interest payments at
each Closing (as defined in the Securities Purchase Agreement).  The
Holder shall in no event be entitled to convert this Note for a number of shares
of Common Stock in excess of that number of shares of Common Stock which, upon
giving effect to such conversion, would cause the aggregate number of shares of
Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99%
of the outstanding shares of the Common Stock following such
conversion.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Optional
Conversion.  The Holder is
entitled, at its option, to convert, and sell on the same day or at any
subsequent time, at any time and from time to time, until payment in full of
this Note, all or any part of the principal amount of the Note, plus accrued
interest, into shares (the “Conversion Shares”)
of the Company’s common stock, par value US $.001 per share (“Common Stock”), at
the price per share (the “Conversion Price”)
equal to $0.081 (the “Fixed Price”) when
the Common Stock is trading at or above $0.30 per share.  The Holder
shall also have the right to convert at a price equal to eighty-five
percent (85%) of the lowest daily closing bid price of the Company’s Common
Stock, as quoted by Bloomberg, LP, for the ten (10) trading days immediately
preceding the Conversion Date (as defined herein) when the monthly
installment of the Mandatory Redemption (as described in Section 1.05 hereof) is
not paid within five (5) days of the due date of such
installment.  Subparagraphs (a) and (b) above are individually
referred to as a “Conversion
Price”.  As used herein, “Principal Market”
shall mean The National Association of Securities Dealers Inc.’s
Over-The-Counter Bulletin Board, Nasdaq Capital Market, or American Stock
Exchange.  No fraction of shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share.  To convert this Note, the Holder
hereof shall deliver written notice thereof, substantially in the form of
Exhibit “A” to this Note, with appropriate insertions (the “Conversion Notice”),
to the Company at its address as set forth herein.  The date upon
which the conversion shall be effective (the “Conversion Date”)
shall be deemed to be the date set forth in the Conversion
Notice.  Within three (3) days of receipt of a Conversion Notice from
the Holder, the Company may redeem any conversion for cash in lieu of issuing
the Conversion Shares at using the Redemption Amount.

     

    Reservation
of Common Stock.  The Company shall
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of this Note, such
number of shares of Common Stock as shall from time to time be sufficient to
effect such conversion, based upon the Conversion Price.  If at any
time the Company does not have a sufficient number of Conversion Shares
authorized and available, then the Company within ten (10) business days for the
sole purpose of increasing the number of shares authorized shall either (i)
obtain sufficient written consents from the Company’s shareholders and file an
Information Statement with the Securities and Exchange Commission (the “SEC”) or
(ii) file a preliminary proxy statement with the Securities and Exchange
Commission within ten (10) business day after such occurrence and shall call and
hold a special meeting of its stockholders as soon as practicable after such
occurrence for the sole purpose of increasing the number of authorized shares of
Common Stock. Notwithstanding the foregoing, the Holders hereby acknowledge that
the Company currently does not have sufficient shares of its Common Stock
authorized as shall be necessary to effect the issuance of the Conversion
Shares, but has obtained the written consent of a sufficient number of votes of
its shareholders to authorize such increase and has filed an Information
Statement with the SEC reflecting such approval.

     

    Issuance
of Common Stock upon Conversion. The Company shall promptly,
but no later than five (5) days following the Company’s receipt of a Conversion
Notice, cause the delivery of the full amount of the Common Stock due to be
issued to Holder at that time.  In the event that the shares of Common
Stock are not delivered within ten (10) days of the Company’s receipt of a
Conversion Notice, the Company shall pay the Holder a cash amount within three
(3) business days, after the end of the month in which such shares were due,
equal to two percent (2%) of the liquidated value of the Notes then outstanding,
as liquidated damages and not as a penalty.  The Company acknowledges
that such a failure to deliver the shares due pursuant to a Conversion Notice is
likely to cause material financial hardship to Holder and shall constitute and
Event of Default hereunder.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Mandatory
and Optional Redemption.  The Company shall redeem this Note
starting on the third month following issuance in equal installments of the then
outstanding principal and interest due plus a redemption premium of fifteen
percent (15%) on the value of the Note as it is redeemed.  The Company
shall also have the option to prepay the then outstanding principal and any
accrued but unpaid interest of this Note in full or in part at any time and from
time to time by providing the Holder a Redemption Notice. Notwithstanding the
preceding sentences, the Company shall not be permitted to redeem this Note when
the Common Stock is trading at or above $0.30 per share.

     

    Interest
Payments.  The interest so payable will be paid monthly
beginning on the first month following the Closing (the “Interest Payment
Date”) to the person in whose name this Note is
registered.  Holder shall deduct the first two (2) interest payments
at the Closing.  At the time such interest is payable, the Holder, in
its sole discretion, may elect to receive the interest in cash (via wire
transfer or certified funds) or in the form of Common Stock.  In the
event of default, as described in Article III Section 3.01 hereunder,
the Holder may elect that the interest be paid in cash (via wire transfer or
certified funds) or in the form of Common Stock.  If paid in the form
of Common Stock, the amount of stock to be issued will be calculated as follows:
the value of the stock shall be the Closing Bid Price
on:  (i) the date the interest payment is due; or (ii) if
the interest payment is not made when due, the date the interest payment is
made.  A number of shares of Common Stock with a value equal to the
amount of interest due shall be issued.  No fractional shares will be
issued; therefore, in the event that the value of the Common Stock per share
does not equal the total interest due, the Company will pay the balance in
cash.

     

    Paying
Agent and Registrar.  Initially, the Company will act as paying
agent and registrar.  The Company may change any paying agent,
registrar, or Company-registrar by giving the Holder not less than ten (10)
business days’ written notice of its election to do so, specifying the name,
address, telephone number and facsimile number of the paying agent or
registrar.  The Company may act in any such capacity.

     

    Secured
Nature of Note.  This Note is secured by all of the assets and
property of the Company as set forth on Exhibit A to the Security Agreement
dated the date hereof between the Company and the Holder (the “Security
Agreement”).  As set forth in the Security Agreement, Holder’s
security interest shall terminate upon the occurrence of an Expiration Event as
defined in the Security Agreement.

     

    Section
1.09                                                                          Currency
Exchange Rate Protections for Non U.S. Buyers.  This Section
1.09 only applies to non U.S Buyers.

     

        (a)     “Closing Date Exchange Rate” means the
Euro to US dollar spot exchange rate as converted by the Holder’s Custodian on
the date funds are transferred into escrow.

     

        (b)              “Redemption
Notice” means advance written notice provided at least three business days prior
to a Redemption.

          

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

        (c)               “Redemption
Amount” means the amount of principal and interest redeemed pursuant to a
Redemption Notice.

     

        (d)             “Repayment
Exchange Rate” means in relation to each date of a Conversion Notice or
date of a Redemption Notice, the Euro to US dollar spot exchange rate as
quoted by Bloomberg or Proquote on such date.

     

        (e)                       If
on the date of any Conversion Notice or Redemption Notice, the Repayment
Exchange Rate is more than the Closing Date Exchange Rate then the number of
Shares to be issued shall be increased by the same percentage as results from
dividing the Repayment Exchange Rate by the relevant Closing Date Exchange
Rate.  By way of example, if the number of Shares to be issued in
respect of a particular Conversion Notice or Redemption Notice would, but for
this Section 1.08, be 1,000 and if the Closing Date Exchange Rate is 1.75 and
the relevant Repayment Exchange Rate is 1.80, then 1,029 Shares will be issued
in relation to that Conversion Notice or Redemption Notice, as the case may
be.  For the avoidance of doubt, the formula for such calculation, by
way of example for this Section, equals ((1.80 /1.75)-1)*1000 = 29 additional
shares.

     

        (f)                       If
on the Repayment Date or any Interest Repayment Date, the Cash Payment Date
Exchange Rate, as defined below is less than the Closing Date Exchange Rate then
the amount of cash required to satisfy the amounts due at such time shall be
increased by the same percentage as results from dividing the Cash Payment Date
Exchange Rate by the relevant Closing Date Exchange Rate. “Cash Payment Date
Exchange Rate” relation to each Repayment Date or Interest Repayment Date
the US dollar spot exchange rate as quoted by Bloomberg or Proquote on such
date.  By way of example, if the amount of cash required to repay all
amounts due on such date would, but for this Section 1.08, be $1,000 and if the
Closing Date Exchange Rate is 1.75 and the relevant Repayment Date Exchange Rate
is 1.80 then the amount of cash from the Cash Payment required to repay all
amounts due on such date will be $1,028.57.  For the avoidance of
doubt, the formula for such calculation, by way of example for this Section,
equals ((1.80/1.75)-1)*$1000 = $28.57 additional dollars.

     

     

    Article II



     

    Amendments and Waiver of Default.  The Note may not
be amended.  Notwithstanding the above, without the consent of the
Holder, the Note may be amended to cure any ambiguity, defect or inconsistency,
or to provide for assumption of the Company obligations to the
Holder.

     

     

    Article III



     

    Events of
Default.  An Event of
Default is defined as follows: (a) failure by the Company to pay amounts
due hereunder within fifteen (15) days of the date of maturity of this
Note; (b) failure by the Company to comply with the terms of the
Irrevocable Transfer Agent Instructions attached to the Securities Purchase
Agreement; (c) after the Registration Statement has been declared effective,
failure by the Company’s transfer agent to issue freely tradeable Common Stock
(including Common Stock tradable under Rule 144) to the Holder within
five (5) days of the Company’s receipt of the attached Notice of Conversion
from Holder; (d) failure by the Company for ten (10) days after notice
to it to comply with any of its other agreements in the Note; (e) events of
bankruptcy or insolvency; (f) a breach by the Company of its obligations
under the Securities Purchase Agreement which is not cured by the Company within
ten (10) days after receipt of written notice thereof or (g) any attempts,
actions or inactions taken by or under the direction of the Company made with
the intention of rescinding, cancelling or modifying in any matter the
Irrevocable Transfer Agent Instructions executed on the date
hereof.  Upon the occurrence of an Event of Default, the Holder may,
in its sole discretion, accelerate full repayment of all Notes outstanding and
accrued interest thereon or may, notwithstanding any limitations contained in
this Note and/or the Securities Purchase Agreement dated the date hereof between
the Company and Trafalgar Capital Specialized Investment Fund, Luxembourg (the
“Securities Purchase
Agreement”), convert all Notes outstanding and accrued interest thereon
into shares of Common Stock pursuant to Section 1.02 herein.

     

    Failure
to Issue Common Stock.
As indicated in Article III Section 3.01, a breach by the
Company of its obligations under the Securities Purchase Agreement shall be
deemed an Event of Default, which if not cured within ten (10) days, shall
entitle the Holder to accelerate full repayment of the Notes together with
accrued interest thereon or, notwithstanding any limitations contained in this
Note and/or the Securities Purchase Agreement, to convert all amounts
outstanding under the Notes together with accrued interest thereon into shares
of Common Stock pursuant to Section 1.02 herein.  The Company
acknowledges that failure to honor a Notice of Conversion except as set forth
herein, shall cause irreparable harm to the Holder.

     

     

    


    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Article IV


    Re-issuance
of Note.  When the Holder
elects to convert a part of the Note, then the Company shall reissue a new Note
in the same form as this Note to reflect the new principal amount.

     

     

    Article V



     

    Anti-dilution.  In the event that
the Company shall at any time subdivide the outstanding shares of Common Stock,
or shall issue a stock dividend on the outstanding Common Stock, the Conversion
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in the event that the Company
shall at any time combine the outstanding shares of Common Stock, the Conversion
Price in effect immediately prior to such combination shall be proportionately
increased, effective at the close of business on the date of such subdivision,
dividend or combination as the case may be.

     

    Consent  of
Holder to Sell Capital Stock, Incur Debt or Grant Security Interests.  Except for the
Securities Purchase Agreement dated the date hereof between the Company and
Trafalgar Capital Specialized Investment Fund, Luxembourg, and except for shares
of the Company’s common stock permitted to be issued pursuant to the securities
purchase agreement between the Company and Buyer entered into as of December 31,
2007 (the “Prior Agreement”, so long as any of the principal of or interest on
this Note remains unpaid and unconverted, the Company shall not, without the
prior consent of the Holder:  (i) issue or sell in excess of
fifty thousand dollars ($50,000) worth of Common Stock or Preferred Stock, none
of which shall be issued or sold without consideration or for a consideration
per share less than the bid price of the Common Stock determined immediately
prior to its issuance, (ii) issue or sell in excess of fifty thousand
dollars ($50,000) worth of Preferred Stock, warrant, option, right, contract,
call, or other security or instrument granting the holder thereof the right to
acquire Common Stock, however no Preferred Stock or Common Stock shall be issued
or sold without consideration or for a consideration per share less than such
Common Stock’s bid price value determined immediately prior to its issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of the assets of the Company, (iv) file any registration statement on
Form S-8 or (v) other than in the ordinary course of business consistent with
past practice, directly or indirectly permit, create, incur assume, permit to
exist, increase, renew or extend on or after the date hereof any additional debt
or permit any subsidiary of the Company to do or allow any of the foregoing
without the Holder’s prior written consent beyond that which is set forth in
Schedule 4(j) attached to the Securities Purchase Agreement.  In the
event that Holder does provide its consent hereunder to issue any such
securities described under (i), (ii) or (iv) of this Section or the Company
issues any of the Common Stock permitted to be issued under the Prior Agreement,
in either event if the Company defaults under the Note, the Fixed Price
hereunder shall be equal to the lesser of: (a) the Fixed Price as defined herein
and (b) eighty-five percent (85%) of the lowest consideration paid per share for
any such security issued by the Company.

     

    


    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Article VI


    


     

    Notice.  Notices regarding
this Note shall be sent to the parties at the following addresses, unless a
party notifies the other parties, in writing, of a change of
address:

     

    
      	
              If
      to the Company, to:

            	
              Blair
      Merriam, CEO

            
	 
      	
              14850
      Montfort Drive, Suite 131

            
	 
      	
              Dallas,
      Texas 75254

            
	 
      	
              Telephone:
      (303) 881-2604

            
	 
      	
              Facsimile:
      (480)287-9560

            
	 
      	 
      
	
              With
      a copy to:

            	
              Michael
      J. Tauger, Esq.

            
	 
      	
              5445
      DTC Parkway, Suite 520

            
	 
      	
              Greenwood
      Village, CO 80111

            
	 
      	
              Telephone:
      (303) 713-0363

            
	 
      	
              Facsimile:
      (720) 489-1587

            
	 
      	 
      
	 
      	 
      
	
              If
      to the Holder:

            	
              Trafalgar
      Capital Specialized Investment Fund

            
	 
      	
              8-10
      Rue Mathias Hardt

            
	 
      	
              BP
      3023

            
	 
      	
              L-1030
      Luxembourg

            
	 
      	
              Attention:                                  Andrew
      Garai, Chairman of the Board of

            
	 
      	
              Facsimile:                                  011-44-207-405-0161
      and

                                      001-786-323-1651

            
	 
      	 
      
	
              With
      a copy to:

            	
              James
      G. Dodrill II, P.A.

            
	 
      	
              5800
      Hamilton Way

            
	 
      	
              Boca
      Raton, FL  33496

            
	 
      	
              Attention:                                  James
      Dodrill, Esq.

            
	 
      	
              Telephone:                                  (561)
      862-0529

            
	 
      	
              Facsimile:                                  (561)
      892-7787

            


    

    


    Governing
Law.  This Note shall
be deemed to be made under and shall be construed in accordance with the laws of
the State of Florida without giving effect to the principals of conflict of laws
thereof.  Each of the parties consents to the jurisdiction of the
U.S. District Court sitting in the Southern District of the State of
Florida or the state courts of the State of Florida sitting in Broward County,
Florida in connection with any dispute arising under this Note and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.

     

    Severability.  The invalidity of
any of the provisions of this Note shall not invalidate or otherwise affect any
of the other provisions of this Note, which shall remain in full force and
effect.

     

    Entire
Agreement and Amendments.  This Note
represents the entire agreement between the parties hereto with respect to the
subject matter hereof and there are no representations, warranties or
commitments, except as set forth herein.  This Note may be amended
only by an instrument in writing executed by the parties hereto.

     

    Counterparts.  This Note may be
executed in multiple counterparts, each of which shall be an original, but all
of which shall be deemed to constitute on instrument.

     

    IN WITNESS WHEREOF, with the
intent to be legally bound hereby, the Company has executed this Note as of the
date first written above.

     

    
      	 
      	
              PLATINA
      ENERGY GROUP, INC.

            
	 
      	 
      
	 
      	
              By:

            
	 
      	
              Name:
      Blair Merriam

            
	 
      	
              Title:
      Chief Executive Officer

            


    

    


    


    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    EXHIBIT
“A”

     

     

    NOTICE
OF CONVERSION

     

     

    (To
be executed by the Holder in order to Convert the Note)

     

    


    
      	
              TO:

            	 
      


    

    


    The
undersigned hereby irrevocably elects to convert US$ of the principal amount of
the above Note into Shares of Common Stock of Platina Energy Group,
Inc., according to the conditions stated therein, as of the Conversion
Date written below.

     

    
      	
              Conversion
      Date:

            	 
      
	
              Applicable
      Conversion Price:

            	 
      
	
              Signature:

            	 
      
	
              Name:

            	 
      
	
              Address:

            	 
      
	
              Amount
      to be converted:

            	
              US$ 

            
	
              Amount
      of Note unconverted:

            	
              US$

            
	
              Conversion
      Price per share:

            	
              US$ 

            
	
              Number
      of shares of Common Stock to be issued:

            	 
      
	
              Please
      issue the shares of Common Stock in the following name and to the
      following address:

            	 
      
	
              Issue
      to:

            	 
      
	
              Authorized
      Signature:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      
	
              Phone
      Number:

            	 
      
	
              Broker
      DTC Participant Code:

            	 
      
	
              Account
      Number: