Document:

ex4-1.htm

Exhibit 4.1

 

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.

 

	Effective Date:  ________________	 Void After:  ___________

 

 

CLEAN COAL TECHNOLOGIES, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

For value received on _____________, 2015 (the “Effective Date”), CCTC ACQUISITION PARTNERS LLC (the “Holder”) is entitled to purchase from Clean Coal Technologies, Inc., a Nevada corporation (the “Company”), _______________ shares (each such share as from time to time adjusted as hereinafter provided being a “Warrant Share” and all such shares being the “Warrant Shares”) of the Company’s Common Stock (as defined below), at the Exercise Price (as defined below), as adjusted from time to time as provided herein, on or before ______________, 2018 (the “Expiration Date”), in accordance with exemptions from registration afforded by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act, pursuant to a Subscription Agreement, dated as of November 25, 2015, between the Company and the Holder (the “Subscription Agreement”).  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Subscription Agreement.

 

As used in this Warrant to Purchase Common Stock (this “Warrant”), (a) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York, New York, are authorized or required by law or executive order to close; (b) “Common Stock” means the common stock of the Company, par value $0.0001 per share, including any securities issued or issuable with respect thereto or into which or for which such shares may be exchanged for, or converted into, pursuant to any stock dividend, stock split, stock combination, recapitalization, reclassification, reorganization or other similar event; (c) “Exercise Price” means $______ per share of Common Stock, subject to adjustment as provided herein; (d) “Exercise Period” means the period commencing on the Effective Date and ending at 5:00 P.M., local time in New York City, on the Expiration Date; (e) “Trading Day” means any day on which the Common Stock is traded (or available for trading) on its principal trading market; (f) “Affiliate” means any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a person, as such terms are used and construed in Rule 144 promulgated under the Securities Act.

 

  

  

  

 

1. Exercise of Warrants.

 

(a) Exercise Procedures.

 

(i) The Holder may exercise this Warrant, in whole or in part, at any time and from time to time during the Exercise Period, by delivery of the following to the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder:

 

(A) a duly executed Notice of Exercise in the form attached hereto as Exhibit A (a “Notice of Exercise”);

 

(B) this Warrant; and

 

(C) payment of the then-applicable Exercise Price per share multiplied by the number of Warrant Shares being purchased upon exercise of the Warrant (such amount, the “Aggregate Exercise Price”), which payment shall be made in the form of cash, or by certified check, bank draft or money order payable in lawful money of the United States of America.

 

(ii) If the fair market value of one Warrant Share is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash in accordance with the procedures set forth in Section 1(a)(i) above, the Holder may, in its sole discretion, exercise all or any part of the Warrant during the Exercise Period in a “cashless” or “net-issue” exercise (a “Cashless Exercise”) by surrender of this Warrant to the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder, together with a duly executed Notice of Exercise, in which event the Company shall issue to the Holder a number of Warrant Shares calculated using the following formula:

 

X = Y * (A-B)

A

 

	
where:

	
X =

	
the number of Warrant Shares to be issued to the Holder

	  	
Y =

	
the number of Warrant Shares with respect to which the Warrant is being exercised

	  	
A =

	
the fair market value per share of Common Stock

	  	
B =

	
the then-current Exercise Price

 

Solely for the purposes of this paragraph, “fair market value” per share of Common Stock shall mean the average Closing Price (as defined below) per share of Common Stock for the 20 Trading Days immediately preceding the date on which the Notice of Exercise is delivered to the Company.  “Closing Price” means, for any date, the price determined by the first of the following clauses that applies: (A) if the Common Stock is then listed or quoted on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market or any other national securities exchange, the closing price per share of the Common Stock for such date (or the nearest preceding date) on the primary eligible market or exchange on which the Common Stock is then listed or quoted; (B) if prices for the Common Stock are then quoted on OTC Markets, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; or (C) if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing bid price per share of the Common Stock so reported.  If the Common Stock is not publicly traded as set forth above, the “fair market value” per share of Common Stock shall be reasonably and in good faith determined by the Board of Directors of the Company as of the date which the Notice of Exercise is delivered to the Company.

 

  

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For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for such shares shall be deemed to have commenced, on the date this Warrant was originally issued.

 

(iii) Upon the exercise of this Warrant in compliance with the provisions of this Section 1(a), the Company shall promptly issue and cause to be delivered to the Holder a certificate for the Warrant Shares purchased by the Holder. Each exercise of this Warrant shall be effective immediately prior to the close of business on the date (such date, the “Date of Exercise”) that the conditions set forth in Section 1(a)(i) or (ii), as applicable, have been satisfied.  On the first Business Day following the date on which the Company has received each of the deliveries required under Section 1(a)(i) or (ii), as applicable (the “Exercise Delivery Documents”), the Company shall transmit an acknowledgment of receipt of the Exercise Delivery Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the fifth Business Day following the date on which the Company has received all of the Exercise Delivery Documents (such day, the “Share Delivery Date”), the Company shall use its reasonable efforts to cause the Transfer Agent to issue and dispatch by certified or registered mail or overnight courier (at the Holder’s cost) to the address as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise.

 

(b) Partial Exercise. If, pursuant to Section 1(a), this Warrant is exercised for less than all of the then-current number of Warrant Shares purchasable hereunder, then the Company shall issue to the Holder, as soon as practicable and in no event later than seven Business Days after such exercise, a new Warrant of like tenor exercisable for the remaining number of Warrant Shares purchasable hereunder.

 

(c) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 16.

 

2. Issuance of Warrant Shares.

 

(a) The Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized, fully paid and non-assessable, and (ii) free from all liens, charges and security interests, with the exception of claims arising through the acts or omissions of any Holder and except as arising from applicable federal and state securities laws.

 

(b) The Company shall register this Warrant upon records to be maintained by the Company for that purpose in the name of the record holder of such Warrant from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner thereof for the purpose of any exercise thereof, any distribution to the Holder thereof and for all other purposes.

 

(c) The Company will not, by amendment of its Articles of Incorporation, By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all action necessary or appropriate in order to protect the rights of the Holder to exercise this Warrant, or against impairment of such rights.

 

  

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3. Adjustments of Exercise Price, Number and Type of Warrant Shares, and Exercise Limit.

 

(a) The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3; provided, that notwithstanding the provisions of this Section 3, the Company shall not be required to make any adjustment if, and to the extent that, such adjustment would require the Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock that have been reserved for issuance upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock. If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company shall use its reasonable efforts to obtain the necessary shareholder consent to increase the authorized number of shares of Common Stock to make such an adjustment pursuant to this Section 3.

 

(i) Subdivision or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stock dividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares shall be proportionately increased, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination, reverse stock split or otherwise) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares shall be proportionately decreased. The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(i).

 

(ii) Reorganization, Reclassification, Consolidation, Merger or Sale.

 

(A) If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that there is no “Change of Control” of the Company (as hereafter defined) and holders of Common Stock shall be entitled to receive stock, securities, or other assets or property in exchange for their Common Stock (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable assuming the full exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, registration rights) shall thereafter be applicable, in relation to any shares of stock or securities thereafter deliverable upon the exercise hereof. The Company will not effect any such Organic Change unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such Organic Change purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to the then holders of a majority of the Warrants issued in the Offering executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

 

  

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(B) Except as otherwise provided herein, if any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that there is a “Change of Control” of the Company (as hereafter defined) and holders of Common Stock shall be entitled to receive stock, securities, or other assets or property in exchange for their Common Stock (a “Control Change”), then, the Holder shall be required to accept the net value of the Warrant (the fair market value less the Exercise Price) in exchange for the cancellation of the Warrant. Such consideration shall be paid to the Holder at the same time as the consideration from the Control Change is paid to the holders of the Company’s Common Stock. As a condition of such Control Change, the Company shall be required to comply with subsection (C) below. “Change of Control” shall mean (I) any person or group of persons within the meaning of § 13(d)(3) of the Exchange Act becoming the beneficial owner, directly or indirectly, in a single transaction or a series of transactions, of thirty percent (30%) or more of the total fair market value or total voting power of the stock in the Company, (II) the sale of all or substantially all of the Company’s assets to an entity that is not a subsidiary of the Company, or (III) a merger, consolidation or reorganization involving the Company, following which the current stockholders of the Company as of the date of this Subscription Agreement (the “Current Stockholders”) will not have voting power with respect to at least fifty percent (50%) of the voting securities entitled to vote generally in the election of directors of the surviving entity; or (IV) the consummation of a sale by the Current Stockholders to a third party of some or all of the shares of Common Stock held by the Current Stockholders, which sale results in the Current Stockholders having voting power with respect to less than fifty percent (50%) of the voting securities entitled to vote in the election of directors of the Company.

 

(C) If there is an Organic Change or a Control Change, then the Company shall cause to be mailed to the Holder at its last address as it shall appear on the books and records of the Company, at least ten calendar days before the effective date of the Organic Change or the Control Change, a notice stating the date on which such Organic Change or Control Change 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 for securities, cash, or other property delivered upon such Organic Change or Control Change; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the ten-day period commencing on the date of such notice to the effective date of the event triggering such notice. In any event, the successor corporation (if other than the Company) resulting from an Organic Change (but not from a Control Change) shall be deemed to assume such obligation to deliver to such Holder such shares of stock, securities or assets even in the absence of a written instrument assuming such obligation to the extent such assumption occurs by operation of law.

 

(b) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The certificate shall also set forth the number of shares and the amount, if any, of other property which at the time would be received upon the exercise of the Warrant.

 

(c) Certain Events. If any event occurs as to which the other provisions of this Section 3 are not strictly applicable but the lack of any adjustment would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, then the Company’s Board  of Directors will, in good faith, make an appropriate adjustment to protect the rights of the Holder; provided, that no such adjustment pursuant to this Section 3(c) will increase the Exercise Price or decrease the number of Warrant Shares except as otherwise determined pursuant to this Section 3.

 

  

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(d) Adjustment of Exercise Price Upon Issuance of Additional Shares of Common Stock. In the event the Company shall at any time prior to the Expiration Date issue Additional Shares of Common Stock, as defined below, without consideration or for a consideration per share less than the Exercise Price (as such amount may be adjusted just prior to such issue pursuant to this Section 3), then the Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Exercise Price by a fraction, (i) the numerator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue plus (B) the number of shares of Common Stock which the aggregate consideration received or to be received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price; and (ii) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued; provided that, (I) for the purpose of this Section 3(d), all shares of Common Stock issuable upon conversion or exchange of convertible securities outstanding immediately prior to such issue shall be deemed to be outstanding, and (II) the number of shares of Common Stock deemed issuable upon conversion or exchange of such outstanding convertible securities shall be determined without giving effect to any adjustments to the conversion or exchange price or conversion or exchange rate of such convertible securities resulting from the issuance of Additional Shares of Common Stock that is the subject of this calculation. For purposes of this Warrant, “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Company after the Effective Date (including, without limitation, any shares of Common Stock issuable upon conversion or exchange of any convertible securities or upon exercise of any option or warrant), other than:  (1) shares of Common Stock issued or issuable upon conversion or exchange of any convertible securities or exercise of any options or warrants outstanding on the Effective Date; (2) shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Sections 3(a) above; (3) shares of Common Stock (or options with respect thereto) issued or issuable to employees or directors of, or consultants to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company including, but not limited to, the Company’s equity incentive plans described in the Company’s SEC Filings (as defined in the Subscription Agreement); (4) any securities issued or issuable by the Company pursuant to this Warrant; (5) securities issued pursuant to acquisitions or strategic transactions approved by a majority of disinterested directors of the Company (excluding transactions in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities); (6) securities issued to financial institutions, institutional investors or lessors in connection with credit arrangements, equipment financings or similar transactions approved by a majority of disinterested directors of the Company; and (7) shares of Common Stock issued or issuable upon conversion or exchange of any convertible securities or exercise of any options or warrants issued pursuant to the Subscription Agreement.  The provisions of this Section 3(d) shall not operate to increase the Exercise Price.

 

Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 3(d), the number of Warrant Shares issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

 

(e) Notwithstanding the provisions of this Section 3, the Company shall not be required to make any adjustment if, and to the extent that, such adjustment would require the Company to issue a number of Warrant Shares in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock.  If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company shall use its reasonable efforts to obtain the necessary stockholder consent to increase the authorized number of shares of Common Stock to make such an adjustment pursuant to this Section 3.

 

  

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(f) Notwithstanding anything to the contrary set forth in this Warrant, at no time may a Holder of this Warrant (other than the Holder for purposes of this Section 3(f)) exercise this Warrant if the number of Warrant Shares to be issued pursuant to such exercise would cause the number of shares of Common Stock owned by such Holder at such time to exceed, when aggregated with all other shares of Common Stock owned by such Holder and its affiliates at such time, the number of shares of Common Stock which would result in such Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of such Holder, or any other persons whose beneficial ownership of Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) and Section 16 of the 1934 Act, beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) (such ownership, “Beneficial Ownership”) in excess of 9.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a Holder of this Warrant providing the Company with 61 days’ notice (pursuant to this Warrant) (the “Waiver Notice”) that such Holder would like to waive this Section 3(f)  with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 3(f) shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice.

 

4. Transfers and Exchanges of Warrant and Warrant Shares.

 

(a) Registration of Transfers and Exchanges. Subject to Section 4(c) of this Warrant, upon the Holder’s surrender of this Warrant, with a duly executed copy of the Form of Assignment attached hereto as Exhibit B, to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder, the Company shall register the transfer of all or any portion of this Warrant. Upon such registration of transfer, the Company shall issue a new Warrant, in substantially the form of this Warrant, evidencing the acquisition rights transferred to the transferee and a new Warrant, in similar form, evidencing the remaining acquisition rights not transferred (if any), to the Holder requesting the transfer.

 

(b) Warrant Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new Warrant or Warrants, in substantially the form of this Warrant, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number of Warrant Shares as shall be designated by the Holder. The Holder shall surrender this Warrant with duly executed instructions regarding such re-certification of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder.

 

(c) Restrictions on Transfers. This Warrant may not be transferred at any time without (i) registration under the Securities Act or (ii) an exemption from such registration and a written opinion of legal counsel addressed to the Company that the proposed transfer of the Warrant may be effected without registration under the Securities Act, which opinion will be in form and from counsel reasonably satisfactory to the Company.

 

5. Mutilated or Missing Warrant Certificate.

 

If this Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder, the Company will, at its expense, issue, in exchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, in substantially the form of this Warrant, representing the right to acquire the equivalent number of Warrant Shares; provided, that, as a prerequisite to the issuance of a substitute Warrant, the Company may require satisfactory evidence of loss, theft or destruction as well as an indemnity from the Holder of a lost, stolen or destroyed Warrant.

 

  

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6. Payment of Taxes.

 

The Company will pay all transfer and stock issuance taxes attributable to the preparation, issuance and delivery of this Warrant and the Warrant Shares (and replacement Warrants other than those replacement Warrants issued pursuant to Section 5) including, without limitation, all documentary and stamp taxes; provided, however, that the Company shall not be required to pay any tax in respect of the transfer of this Warrant, or the issuance or delivery of certificates for Warrant Shares or other securities in respect of the Warrant Shares to any person or entity other than to the Holder.

 

7. Fractional Warrant Shares.

 

No fractional Warrant Shares shall be issued upon exercise of this Warrant. The Company, in lieu of issuing any fractional Warrant Share, shall round down the aggregate number of Warrant Shares issuable to a Holder to the nearest whole share.

 

8. No Stock Rights; Legend.

 

No holder of this Warrant, as such, shall be entitled to vote or be deemed the holder of any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise (except as provide herein).

 

The Warrant Shares issuable upon exercise of this Warrant  may not be sold or transferred unless (a) the Company or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that (i) the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (ii) such shares are to be sold or transferred pursuant to Rule 144 under the Securities Act (or a successor rule) (“Rule 144”) without any restriction as to the number of securities as of a particular date that can then be immediately sold or (iii) such shares are to be sold or transferred outside the United States in accordance with Rule 904 of Regulation S under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold or (b) such shares are registered for sale by the Holder under an effective registration statement filed under the Securities Act.  Except as otherwise provided in this Agreement (and subject to the removal provisions set forth below), until such time as the Warrant shall have been registered under the Securities Act, or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon exercise of this Warrant that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) WITHIN THE UNITED STATES AFTER REGISTRATION OR IN ACCORDANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITHIN THE UNITED STATES IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION.

 

  

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The legend set forth above shall be removed and the Company shall issue to the Holder a new certificate therefor free of any transfer legend if (A) the Company or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Securities Act and the shares are so sold or transferred or (B) in the case of Common Stock issuable upon exercise  of this Warrant  (to the extent such securities are deemed to have been acquired on the same date), such securities are registered for sale by the Holder under an effective registration statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold.  The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the effective date of any registration statement under the Act registering the resale of the Common Stock issuable upon exercise of this Warrant if required by the Company’s transfer agent to effect the removal of the legend hereunder.

 

9. Notices.

 

Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 20 of the Subscription Agreement.

 

10. Severability.

 

If a court of competent jurisdiction holds any provision of this Warrant invalid or unenforceable, the other provisions of this Warrant will remain in full force and effect. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

11. Binding Effect.

 

This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, and the registered Holder or Holders from time to time of this Warrant and the Warrant Shares.

 

12. Survival of Rights and Duties.

 

This Warrant shall terminate and be of no further force and effect on the earlier of (a) 5:00 p.m., local time in New York City, on the Expiration Date and (b) the date on which this Warrant has been exercised in full.

 

13. Governing Law.

 

This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof.  The Holder, by accepting this Warrant, and the Company each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or -arising out of this Warrant.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.  The Holder, by accepting this Warrant, and the Company each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Holder, by accepting this Warrant, and the Company each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  THE HOLDER, BY ACCEPTING THIS WARRANT, AND THE COMPANY EACH WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.  Each party shall bear its own expenses in any litigation conducted under this section.

 

  

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14. Dispute Resolution.

 

In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations to the Holder within five Business Days of receipt of the Notice of Exercise giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within five Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within five business days, submit (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to resolve such dispute by choosing, in its entirety, the determination or calculation proposed by either the Company or the Holder, and the investment bank or accountant, as the case may be, shall have no authority to make any other resolution of such dispute.  The investment bank or accountant, as the case may be, shall notify the Company and the Holder of the results no later than 30 days from the time it receives the disputed determinations or calculations.  The investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon the Company and the Holder absent manifest error.  The costs and expenses of the investment bank or accountant, as the case may be, in connection with the resolution of such dispute will be paid by the party whose determination or calculation is not chosen by the investment bank or accountant, as the case may be, in its resolution of the dispute.

 

15. Notices of Record Date.

 

Upon (a) any establishment by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or right or option to acquire securities of the Company, or any other right, or (b) any capital reorganization, reclassification, recapitalization, merger or consolidation of the Company with or into any other corporation, any transfer of all or substantially all the assets of the Company, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, or the sale, in a single transaction, of a majority of the Company’s voting stock (whether newly issued, or from treasury, or previously issued and then outstanding, or any combination thereof), the Company shall mail to the Holder at least ten Business Days, or such longer period as may be required by law, prior to the record date specified therein, a notice specifying (i) the date established as the record date for the purpose of such dividend, distribution, option or right and a description of such dividend, option or right, (ii) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up, or sale is expected to become effective and (iii) the date, if any, fixed as to when the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, transfer, consolation, merger, dissolution, liquidation or winding up.

 

  

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16. Reservation of Shares.

 

Subject to Section 3(e) of this Warrant, the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock for issuance upon the exercise of this Warrant, free from pre-emptive rights, such number of shares of Common Stock for which this Warrant shall from time to time be exercisable. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation. Subject to Section 3(e) of this Warrant, without limiting the generality of the foregoing, the Company covenants that it will use reasonable efforts to take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and use reasonable efforts to obtain all such authorizations, exemptions or consents, including but not limited to consents from the Company’s stockholders or Board of Directors or any public regulatory body, as may be necessary to enable the Company to perform its obligations under this Warrant.

 

17. No Third Party Rights.

 

This Warrant is not intended, and will not be construed, to create any rights in any parties other than the Company and the Holder, and no person or entity may assert any rights as third-party beneficiary hereunder.

 

[Signature page follows]

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first set forth above.

CLEAN COAL TECHNOLOGIES INC.

 

 

By:                                                         

 

Name:    Robin Eves

 

Title:      President and Chief Executive Officer

 

  

[SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK]

  

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

To Clean Coal Technologies, Inc.:

 

The undersigned hereby irrevocably elects to purchase ____________ shares of common stock, par value $0.0001 per share, in Clean Coal Technologies, Inc. pursuant to the terms of the attached Warrant (the “Warrant”).  In connection with such exercise:

 

(mark one)

 

_________   the undersigned tenders herewith the Aggregate Exercise Price (as defined in the Warrant) in the amount of $                                                                  , and agrees to tender payment of any applicable taxes payable by the undersigned pursuant to the Warrant; or 

 

_________  the undersigned elects to purchase such shares pursuant to the terms of the Cashless Exercise provisions set forth in Section 1(a)(ii) of the Warrant, and agrees to tender payment of any applicable taxes payable by the undersigned pursuant to the Warrant.

 

The undersigned requests that certificates for such shares be issued in the name of:

 

                                                                                     

 

  (Please print name, address and social security or federal employer identification number (if applicable))

 

                                                                                     

 

                                                                                     

 

                                                                                     

 

                                                                                     

 

If the shares issuable upon this exercise of the Warrant are not all of the Warrant Shares which the Holder is entitled to acquire upon the exercise of the Warrant, the undersigned requests that a new Warrant evidencing the rights not so exercised be issued in the name of and delivered to:

 

                                                                                     

 

  (Please print name, address and social security or federal employer identification number (if applicable))

 

                                                                                     

 

                                                                                     

 

                                                                                     

 

 

Name of Holder (print):                                                               

 

Signature:                                                                                      

 

By:                                                                                                  

 

Title:                                                                                               

 

Dated:                                                                                            

 

  

  

  

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned under the attached Warrant (the “Warrant”) to acquire the number of Warrant Shares (as defined in the Warrant) set opposite the name of such assignee below, and all other rights of the undersigned in and to the foregoing Warrant with respect to such Warrant Shares:

 

	
Name of Assignee

	 	
Address

	 	
Number of Warrant Shares

	  	 	  	 	  
	 	 	 	 	 
	  	 	  	 	  
	  	 	  	 	  
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

 

If the total of the Warrant Shares assigned hereby are not all of the Warrant Shares evidenced by the Warrant, the undersigned requests that a new Warrant evidencing the right to acquire the Warrant Shares not so assigned be issued in the name of and delivered to the undersigned at the address set forth below.

 

 

Name of Holder (print):                                                               

 

Signature:                                                                                      

 

By:                                                                                                  

 

Title:                                                                                               

 

Address:ex4-2.htm

 

Exhibit 4.2

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY APPLICABLE STATE LAW. THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

CLEAN COAL TECHNOLOGIES, INC.

 

SERIES A 12% SECURED CONVERTIBLE PROMISSORY NOTE

 

 

	No. 1	Issuance Date:  November 25, 2015

 

$3,741,472.38

 

This Series A 12% secured convertible promissory note (this “Series A Note” or “Note”) is one of a series of duly authorized and issued convertible promissory notes of Clean Coal Technologies, Inc., a Nevada corporation (the “Company”), issued to CCTC ACQUISITION PARTNERS, LLC (together with its permitted successors and assigns, the “Holder”) in accordance with exemptions from registration afforded by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission under the Securities Act, pursuant to a Subscription Agreement, dated as of November 25, 2015 (the “Subscription Agreement”), entered into between the Company and the Holder.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Subscription Agreement, or if such terms are not otherwise defined in the Subscription Agreement, such terms shall have the meanings ascribed to them in the Security Agreement, dated as of November 25, 2015, by and between the Company and the Holder (the “Security Agreement”).

 

ARTICLE I

NOTE

 

Section 1.01                      Principal and Interest.

 

(a)           For value received, the Company hereby promises to pay to the order of the Holder, in lawful money of the United States of America and in immediately available funds the principal sum of Three Million Seven Hundred Forty-One Thousand Four Hundred Seventy-Two Dollars and Thirty-Eight Cents ($3,741,472.38) on November 25, 2018 (the “Maturity Date”), together with any accrued and outstanding interest as set forth in Section 1.01(b) below, unless this Note is earlier prepaid as herein provided or earlier converted into Units (as defined below) in accordance with Article II below.

 

  

  

  

 

(b) Interest on this Note shall commence accruing on November 25, 2015 (the “Issuance Date”) and shall accrue daily on the then outstanding principal amount of this Note at a rate per annum equal to twelve percent (12%) (the “Interest Rate ”).  Interest will be computed on the basis of a 360-day year of twelve 30-day months for the actual number of days elapsed and shall be payable in arrears on the last day of each December, March, June and September until the outstanding principal hereunder is paid in full or converted into Units in accordance with Article II below.  Until such time as the Company reaches positive cash flow for a minimum of two successive fiscal quarters or, if earlier, until the first anniversary of the Issuance Date, interest may be paid in-kind, at the option of the Company, through the issuance of a 12% secured convertible promissory note in substantially the form hereof.  Under all other circumstances, interest will be paid in cash.

 

(c) From and after the occurrence of an Event of Default (as defined below) and until such Event of Default is cured, the interest rate shall be increased to eighteen percent (18%) per annum (the “Default Rate”).  Interest due and payable at the Default Rate shall be payable in cash only.

 

(d) The Company may prepay all or any portion of the outstanding principal amount of this Note without penalty at any time by delivering written notice (the “Prepayment Notice”) to the Holder specifying the proposed payment amount and the proposed payment date (the “Prepayment Date”).  The Prepayment Date shall be at least five business days after the date on which the Prepayment Notice is delivered.  The Holder shall have the right to convert all or a portion of the outstanding principal amount of this Note in accordance with its terms at any time prior to the Prepayment Date.

 

Section 1.02                      Advances Prior to the Issuance Date; Conversion of Certain Promissory Notes.  As of the Issuance Date, the Holder has made certain advances to the Company in the amounts and on the dates set forth in Appendix A to the Subscription Agreement.  Pursuant to the Subscription Agreement, certain of those advances (the “Prior Loans”), as set forth in Appendix A to this Note, have been applied toward the purchase price of this Note and, to the extent the Prior Loans were evidenced by promissory notes, such promissory notes have been delivered to the Company for cancellation.  The issuance of this Note satisfies all obligations of the Company with respect to the Prior Loans.  Solely for purposes of Rule 144(d) under the Securities Act, to the extent this Note replaces any promissory note evidencing the Prior Loans, this Note shall tack back to the date of the such promissory note, as set forth in Appendix A to this Note.

 

Section 1.03                      Absolute Obligation/Ranking.  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 then outstanding principal amount of this this Note (if any) on the Maturity Date as herein prescribed.  This Note is a direct debt obligation of the Company.  This Note ranks pari passu with all other promissory notes issued pursuant to the Subscription Agreement (the “Other Notes”) and senior to all obligations of the Company, currently outstanding or hereafter created, unless prohibited by law, except for the Permitted Liens.  The Company shall be able to issue notes hereafter without consent of the Holder, provided that such notes rank junior to this Note.

 

Section 1.04                      Paying Agent and Registrar.  Initially, the Company will act as paying agent and registrar. The Company may change any paying agent or registrar by giving the Holder not less than five 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.

 

Section 1.05                      Transfer; Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Subscription Agreement.  The Holder of this Note shall not offer, sell, enter into contract to sell, pledge, grant any option, right or warrant to sell, or otherwise dispose or enter into any transaction any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership (collectively, “Transfer”) of this Note.  Any shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), issued upon conversion of this Note, and any shares of Common Stock issued upon exercise of any warrant issued upon conversion of this Note, may be Transferred without the consent of the Company; provided, however, that any such Transfer shall comply with (a) the provisions of Section 2.08 below, (b) the provisions of the Subscription Agreement and (c) all applicable federal and state securities laws and regulations, including the Securities Act.

 

  

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Section 1.06                      Reliance on Note Register.  Unless otherwise notified by the Holder of this Note in accordance with Article V below, the Company and any agent of the Company may treat the person in whose name this Note is duly registered as the owner hereof for the purpose of receiving payment as herein provided by Section 1.01 and for all other purposes, whether or not this Note is overdue.

 

Section 1.07                      Other Rights. In addition to the rights and remedies given it by this Note and the Subscription Agreement, the Holder shall have all those rights and remedies allowed by applicable laws. The rights and remedies of the Holder are cumulative and recourse to one or more right or remedy shall not constitute a waiver of the others.

 

ARTICLE II

CONVERSION

 

Section 2.01                      Conversion into Units of Securities. Until such time as all principal hereunder is paid in full, the Holder shall have the right to convert the outstanding and unpaid principal amount of this Note, upon written notice to the Company, into units of the Company’s securities (the “Stage I Units” or “Units”) at a conversion price of $0.08 per Unit (the “Conversion Price”).  Each Unit shall consist of one share (a “Stage I Common Share”) of the Company’s Common Stock and one three-year common stock warrant (a “Warrant”) to purchase one share (a “Warrant Share”) of Common Stock at an exercise price of $0.10 per share (the  “Exercise Price”), subject to adjustments as described below.

 

Section 2.02                      Certain Adjustments.

 

(a) Stock Dividends and Splits. If the Company, at any time while this Note is outstanding: (i) pays a dividend or distribution on the outstanding shares of Common Stock and such dividend or distribution is payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of this Note or any Other Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon conversion of this Note shall be proportionately adjusted such that the aggregate Conversion Price of this Note shall remain unchanged. Any adjustment made pursuant to this Section 2.02(a) 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 reclassification.

 

(b) Calculations; Fractional Shares.  All calculations under this Section 2.02 shall be made to the nearest cent.  No fractional shares of Common Stock shall be issued upon conversion of this Note.  In lieu of issuing any fractional share of Common Stock, the number of shares of Common Stock to be issued upon any conversion of this Note shall be rounded down to the nearest whole share.  For purposes of this Section 2.02, 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 treasury shares, if any) issued and outstanding.

 

  

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(c) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to Section 2.02(a), the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and any resulting adjustment to the number of shares underlying this Note and setting forth a brief statement of the facts requiring such adjustment.

 

Section 2.03                       Conversion Amount.  The number of Units to be issued upon conversion of this Note shall be equal to (i) the then outstanding principal amount of this Note (the “Conversion Amount”), divided by (ii) the applicable Conversion Price then in effect on the Conversion Date (as defined below).

 

Section 2.04                       Conversion Limit.  Notwithstanding anything to the contrary set forth in this Note, at no time may a Holder of this Note convert this Note into Common Stock if the number of shares of Common Stock to be issued pursuant to such conversion would cause the number of shares of Common Stock owned by such Holder at such time to exceed, when aggregated with all other shares of Common Stock owned by such Holder and its affiliates at such time, the number of shares of Common Stock which would result in such Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of such Holder, or any other persons whose beneficial ownership of Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) and Section 16 of the 1934 Act, beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a Holder of this Note providing the Company with 61 days’ notice (a “Waiver Notice”) that such Holder would like to waive this Section 2.04 with regard to any or all shares of Common Stock issuable upon conversion of this Note, this Section 2.04 shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice.  Notwithstanding anything to the contrary set forth in this Note, the Holder’s right to convert this Note into Common Stock shall be limited at all times by the availability of authorized and unissued shares of Common Stock.  If the number of authorized and unissued shares of Common Stock available for issuance upon conversion of this Note is insufficient to allow for the conversion of this Note in full, then to the extent there are shares of Common Stock then available for issuance, the Holder shall have the right to convert this Note in part into Common Stock, and the Company shall issue to the Holder, pursuant to Section 2.07, a new convertible promissory note in substantially the form hereof representing any remaining outstanding principal amount.

 

Section 2.05                       Effect of Conversion. Upon conversion of this Note in full in the manner provided by Section 2.07 below, this Note shall be deemed fully satisfied and cancelled.

 

Section 2.06                       Authorized Shares.  The Company covenants that, for so long as the conversion rights hereunder are exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares (to the extent available), free from preemptive rights, to provide for the issuance of Stage I Common Shares upon the full conversion of this Note and Warrant Shares upon the full exercise of any Warrants issuable to the Holder upon conversion of this Note (the “Reserved Amount”). Upon the occurrence of any event that would result in an adjustment to the number of Units issuable upon conversion of this Note pursuant to Section 2.02 above, the Company shall, to the extent possible, make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding principal balance of this Note. If at any time while this Note is outstanding the number of authorized and unissued shares of Common Stock is insufficient to achieve the necessary reserve at such time, the Company shall use its reasonable efforts to obtain any necessary shareholder consent to increase the authorized number of shares of Common Stock in order to accommodate the reserve contemplated by this Section 2.06.  In the event that such approval has not been obtained at any time while the Company has an annual shareholder meeting or special shareholder meeting, the Company shall include a proposal to increase the authorized number of shares of Common Stock to accommodate the reserve contemplated by this Section 2.06.

 

  

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Section 2.07                       Method of Conversion.

 

(a) Conversion Notice.  Subject to Section 2.01, this Note may be converted by the Holder by (a) submitting to the Company a conversion notice in the form attached hereto as Exhibit A (a “Conversion Notice”) and (b) surrendering the Holder’s Note at the principal office of the Company.  The conversion of this Note shall be effective on the later of (i) the date on which the Company receives the Conversion Notice, if the Company receives the Conversion Notice on a Business Day before 6:00 p.m., New York City time, (ii) the next Business Day following the date on which the Company receives the Conversion Notice, if the Company receives the Conversion Notice on a Business Day at or after 6:00 p.m., New York City time, or on a day that is not a Business Day, and (iii) upon surrender of this Note (in any case, the date on which the conversion is effective shall be referred to herein as the “Conversion Date”).

 

(b) Surrender of Note Upon Conversion.  Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall surrender this Note to the Company for cancellation.  To the extent there is any remaining outstanding principal amount, the Company shall issue to the Holder a new convertible promissory note in substantially the form hereof representing such amount.

 

(c) Delivery of Units upon Conversion.  Subject to the Company’s receipt of the Conversion Notice and the Holder’s surrender of this Note, the Company shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder, within five Business Days following the Conversion Date, certificates for the Stage I Common Shares, together with the Warrants, in accordance with the terms hereof.  The Holder shall be treated for all purposes as the record holder of any Stage I Common Shares and Warrants as of the Conversion Date.

 

(d) Delivery of Stage I Common Shares by Electronic Transfer.  In lieu of delivering physical certificates representing the Stage I Common Shares issuable upon conversion of this Note, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of the Holder and its compliance with the terms and conditions of this Note, the Company shall use its reasonable efforts to cause its transfer agent to electronically transmit the Stage I Common Shares issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.

 

Section 2.08 Concerning the Stage I Common Shares and Warrant Shares.

 

(a) Legend/Conversion Requirements.  The Stage I Common Shares issuable upon conversion of this Note and the Warrant Shares issuable upon exercise of Warrants may not be sold or transferred unless (i) the Company or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that (A) the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (B) such shares are sold or transferred pursuant to Rule 144 under the Securities Act (or a successor rule) (“Rule 144”) without any restriction as to the number of securities as of a particular date that can then be immediately sold or (C) such shares are sold or transferred outside the United States in accordance with Rule 904 of Regulation S under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold or (ii) such shares are registered for sale by the Holder under an effective registration statement filed under the Securities Act.  Except as otherwise provided in this Agreement (and subject to the removal provisions set forth below), until such time as the Stage I Common Shares and the Warrant Shares have been registered under the Securities Act and applicable state securities laws, or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that have not been so included in an effective registration statement or that have not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

  

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) WITHIN THE UNITED STATES AFTER REGISTRATION OR IN ACCORDANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITHIN THE UNITED STATES IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION.

 

(b) Removal of Legend.  The legend set forth above shall be removed and the Company shall issue to the Holder a new certificate therefor free of any transfer legend if (i) the Company or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Securities Act and the shares are so sold or transferred or (ii) in the case of Common Stock issuable upon conversion of this Note (to the extent such securities are deemed to have been acquired on the same date), such securities are registered for sale by the Holder under an effective registration  statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold.  The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the effective date of any registration statement under the Act registering the resale of the Common Stock issuable upon conversion of the Notes if required by the Company’s transfer agent to effect the removal of the legend hereunder.

 

ARTICLE III

EVENTS OF DEFAULT

 

Section 3.01                       Events of Default.  An event of default (“Event of Default”) shall exist if any of the following conditions or events shall occur and be continuing:

 

(a) failure by the Company to pay, within seven Business Days after the Holder’s written demand for payment is received by the Company, the entire outstanding principal amount of this Note and all accrued but unpaid interest on the Maturity Date or when otherwise due hereunder;

 

  

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(b) the Company defaults in the performance of, or compliance with, its obligations under the Subscription Agreement and this Note and such default has not been cured within seven Business Days after written notice of default is received by the Company;

 

(c) any representation or warranty made by the Company in the Subscription Agreement proves to be false or incorrect in any material respect as of the date when made or, in the case of representations and warranties that are expressly made as of a particular date, proves to be false or incorrect in any material respect as of such date, and such condition has not been cured for 60 Business Days after written notice of default is received by the Company;

 

(d) the Company shall:  (i) make a general assignment for the benefit of its creditors; (ii) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator,  liquidator or similar official for itself or any of its assets and  properties; (iii) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (iv) file with or otherwise submit to any governmental authority any petition, answer or other document seeking: (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (v) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any proceeding under any such applicable law; or (vi) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction;

 

(e) any case, proceeding or other action shall be commenced against the Company for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in Section 3.01(d) above, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to the Company, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and properties of the Company, and any of the foregoing shall continue unstayed and in effect for any period of 60 Business Days;

 

(f) the Company defaults with respect to any indebtedness of the Company for borrowed money (other than indebtedness that is outstanding as of the Issuance Date) or under any agreement under which such indebtedness may be issued by the Company and such default has not been cured within the applicable period of grace, if any, specified with respect to such indebtedness or agreement, if the aggregate amount of indebtedness with respect to which such default shall have occurred exceeds $100,000;

 

(g) the Company defaults with respect to any contractual obligation of the Company under or pursuant to any contract, lease, or other agreement to which the Company is a party (other than contractual obligations that are in default as of the Issuance Date) and such default has not been cured within the applicable period of grace, if any, specified with respect to such contractual obligation, if the aggregate amount of the Company’s contractual liability arising out of such default exceeds or is reasonably estimated to exceed $100,000;

 

(h) except with respect to outstanding judgments against the Company as of the Issuance Date, final judgment for the payment of money in excess of $100,000 shall be rendered against the Company and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed;

 

  

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(i) except with respect to events of default by the Company with regard to Permitted Liens, as such term is defined in the Subscription Agreement, any event of default of the Company under any agreement, note, mortgage, security agreement or other instrument evidencing or securing indebtedness that ranks senior in priority to, or pari passu with, the obligations under this Note and the Subscription Agreement;

 

(j) any material default, whether in whole or in part, shall occur in the due observance or performance of any obligations or other covenants, terms or provisions to be performed under this Note or the Subscription Agreement which is not cured by the Company within five Business Days after receipt of written notice thereof.

 

Section 3.02                      Remedies Following an Event of Default.  If any Event of Default specified in Section 3.01(d) or Section 3.01(e) occurs, then the outstanding principal amount of this Note, together with any other amounts owing in respect thereof as of the date of the Event of Default, shall become immediately due and payable without any action on the part of the Holder, and if any other Event of Default occurs, the outstanding principal amount of this Note, together with any other amounts owing in respect thereof as of the date of the Event of Default, shall become, at the Holder’s election, immediately due and payable in cash. 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 enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

ARTICLE IV

COVENANTS

 

Section 4.01                      Voting Rights.  The Holder shall have no voting rights as the holder of this Note, except as provided by law and as expressly provided in this Note.

 

Section 4.02                      Negative Covenants.

 

(a) Incurrence of Indebtedness. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any indebtedness, other than: (i) the indebtedness expressly set forth on Schedule 5(p) to the Subscription Agreement, provided, that the terms of such indebtedness are not increased, amended, waived, modified, changed or extended in any material manner or respect on or after the Issuance Date; (ii) indebtedness evidenced by this Note and the Other Notes; (iii) unsecured indebtedness incurred by the Company that is made expressly subject to and subordinate in right of payment to the indebtedness evidenced by this Note and the Other Notes; and (iv) trade payables incurred in the ordinary course of business.

 

(b) Existence of Liens. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its subsidiaries (collectively, “Liens”) other than Permitted Liens.

 

  

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(c) Cash Dividend.  So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its subsidiaries to, directly or indirectly, pay cash dividends or distributions on any equity securities of the Company or of its subsidiaries.

 

(d) Restricted Payments.  Without the prior written consent of the Majority Holders, the Company shall not, and the Company shall not permit any of its subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any indebtedness (other than this Note, the Other Notes, trade payables incurred in the ordinary course of business), whether by way of payment in respect of principal of (or premium, if any) or interest on, such indebtedness.

 

(e) Restriction on Redemption. Until this Note has been converted, redeemed or otherwise satisfied in accordance with its terms, the Company shall not, directly or indirectly, redeem or repurchase its capital stock without the prior express written consent of the Majority Holders.

 

(f) Intellectual Property.  The Company shall not, and the Company shall not permit any of its subsidiaries to, directly or indirectly, encumber or allow any Liens on any of its copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of the Company and its subsidiaries connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, other than Permitted Liens.

 

(g) Preservation of Existence, Etc.  The Company shall maintain and preserve, and cause each of its subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

 

(h) Maintenance of Properties, Etc.  The Company shall maintain and preserve, and cause each of its subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

 

(i) Maintenance of Insurance.  The Company shall maintain, and cause each of its subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

 

(j) Transactions with Affiliates.  The Company shall not, nor shall it permit any of its subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof.

 

  

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(k) Distributions to Subsidiaries. So long as this Note is outstanding, the Company shall not make any payments, transfers or other distributions of cash, cash equivalents, any property or any other assets of the Company to any of its subsidiaries.

 

(l) Issuance of Convertible Securities. So long as this Note is outstanding, the Company shall not issue any securities that are convertible into shares of Common Stock at a variable conversion rate based on the market price of the Company’s Common Stock without the prior express written consent of the Majority Holders.

 

SECTION V

NOTICE AND PAYMENTS

 

Section 5.01                      Notice. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 20 of the Subscription Agreement.

 

Section 5.02                      Waiver of Notice. Except with respect to notices that are expressly required hereunder, to the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Subscription Agreement.

 

Section 5.03                      Payments. Except as otherwise provided in this Note, whenever any payment of cash is to be made by the Company to any person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing; provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day.

 

Section 5.04                      Effect of Payments.  After all principal under this Note and all accrued interest and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.01                      Intentionally Omitted.

 

Section 6.02                      Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Note shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof.  The Holder, by accepting this Note, and the Company each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Note.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Note.  The Holder, by accepting this Note, and the Company each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Holder, by accepting this Note, and the Company each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  THE HOLDER, BY ACCEPTING THIS NOTE, AND THE COMPANY EACH WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.  Each party shall bear its own expenses in any litigation conducted under this section.

 

  

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Section 6.03                      Security. The obligations of the Company to the Holder under this Note are secured pursuant to the Security Agreement.

 

Section 6.04                      Reissuance Of This Note.

 

(a) Lost, Stolen or Mutilated Note.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a replacement Note in accordance with Section 6.04(c) below.

 

(b) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 1.05  and in principal amounts of at least $10,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(c) Issuance of Replacement Note.  Whenever the Company is required to issue a replacement Note pursuant to the terms of this Note, such replacement Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such replacement Note, the then outstanding principal under this Note, (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date, and (iv) shall have the same rights and be subject to the same conditions as this Note.

 

Section 6.05                      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.

 

Section 6.06                      Entire Agreement and Amendments.  This Note, together with the Subscription Agreement, represents the entire agreement between the Company and the Holder 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 Company and the Majority Holders.

 

Section 6.07                      Construction; Headings.  This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.

 

  

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Section 6.08                      Payment of Collection, Enforcement and Other Costs.  In the event of any Event of Default, the Company shall pay all reasonable attorneys’ fees and court costs incurred by the Holder in enforcing and collecting this Note.

 

Section 6.09                      Non-circumvention.  The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

 

 

  

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

 

CLEAN COAL TECHNOLOGIES, INC.

 

By: /s/ Robin Eves                                                                

Name:  Robin Eves

Title:    President and Chief Executive Officer

 

 

 

  

  

  

 

EXHIBIT A

CLEAN COAL TECHNOLOGIES, INC.

CONVERSION NOTICE

 

Reference is made to the Series A 12% Secured Convertible Promissory Note (the “Note”) issued to the undersigned by CLEAN COAL TECHNOLOGIES, INC., a Nevada corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into Units (as defined in the Note) in accordance with the terms and conditions of the Note.

 

	
Date of Notice:

	  
	
Aggregate Conversion Amount to be converted:

	  
	
Conversion Price:

	  
	
Number of Units to be issued:

	  
	
Please issue the Units into which the Note is being converted in the following name and to the following address:

	
Issue to:

	  
	  	  
	  	  
	
Facsimile Number:

	  
	
Holder:

	  
	
By:

	  
	
Title:

	  
	
Dated:

	  
	
Account Number:

	  
	
  (if electronic book entry transfer)

	  
	
Transaction Code Number:

	  
	
  (if electronic book entry transfer)

	  

 

 

By executing and delivering this Conversion Notice to convert the Holder’s Note in full, the Holder hereby releases all security interest he/she/it may have pursuant to the Security Agreement.

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