Document:

ex10.3

  
 Exhibit 10.3
  
 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER HIE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY HIE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAYBE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
 

 	 	
	 Principal Amount: $52,500.00
	 Issue Date: May 14, 2012

	 Purchase Price: 552,500.00
	  

 

 

 CONVERTIBLE PROMISSORY NOTE
 

 FOR VALUE RECEIVED, SOURCE GOLD CORP., a Nevada corporation (hereinafter called the "Borrower"). hereby promises to pay to the order of ASHER ENTERPRJSES, INC., a Delaware corporation, or registered assigns (the "Holder") the sum of $52,500.00 together with any interest as set forth herein, on February 1 8, 2013 (the "Maturity Date" ), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the "Interest Rate") per annum from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid ("Default Interest'"). Interest shall commence accruing on the dale that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the "Common Stock") in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. 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 and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business day" shall mean any day other than a Saturday_ Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized tern used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").
 

 This Note is free from all ta.xes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject 10 preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
 

 

 

 
 

 

 The following terms shall apply to this Note:
 

 ARTICLE I. CONVERSION RIGHTS
 

 1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non – assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion"); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934. As amended (the "Exchange Act"), and Regulations I3D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon at the election of the Holder, not less than 61 days' prior notice to the Borrower and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the dale specified in the notice of conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the Borrower by the Holder in accordance with Section 1.4 below: provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date"). The tern "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder's option, Default Interest, if any. on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.
 

 

 

 

 

 
 

 1.2 Conversion Price.
 

 (a) Calculation of Conversion Price. The conversion price (the "Conversion Price") shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 51% multiplied by the Market Price (as defined herein) (representing a discount rate of 49%). "Market Price" means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or. if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets" by the National Quotation Bureau Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above. the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
 

 (b) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
 

 

 

 

 

 
 

 1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares free from preemptive rights to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five limes the number of shares that is actually issuable upon full conversion of the Note (based all the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount''). The Reserved Amount shall be increased from time to time in accordance with the Borrower's obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance such shares will be duly and validly issued, fully paid and non- assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price the Borrower shall at the same time 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 Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees mat its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with me terms and conditions of this Note.
 

 If, at any time me Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.
 

 1.4 Method of Conversion.
 

 (a) Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e- mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower,
 

 (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 not be required to physically surrender this Note to the Borrower unless me entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dales of such conversions or shall use such other method, reasonably satisfactory to me Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if ally portion of this Note is converted as aforesaid. the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the 110lder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.
 

 

 

 

 
 

 (c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
 

 (d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline") (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terns hereof and the Purchase Agreement.
 

 (e) Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.
 

 (f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST') program. upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission ('"DWAC") system.
 

 

 

 

 
 

 (g) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.
 

 1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower 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 the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule 144'") or (iv) such shares arc transferred to an "affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares OfColll111on Stock issuable upon conversion of this Note have been registered under the 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 conversion of this Note 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:
 

 "NEITHER THE ISSUANCE AND SALE OF THE: SECURITIESREPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICAIILE STATE SECURITIES LAWS. THE SECURITlES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMEND Ell, OR (8) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE f10LDER), IN A GENERALLY ACCEJ'TABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (Il) UNLESS SOLD PURSUANT TO RULE 144 OR RULE t44A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECUIUTIES MAY BE PLEDGED IN CONNECTION WITH A DONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
 

 

 

 

 
 

 The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower 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 Act. which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the 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. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of
 Default pursuant to Section 3.2 of the Note.
 

 1.6 Effect of Certain Events.
 

 (a) Effect of Merger Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article 111) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any individual, corporation limited liability company partnership, association, trust or other entity or organization.
 

 (b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion or all of the Notes there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization. or other similar event, as a result or which shares or Common Stock or the Borrower shall be changed into the same or a different number or shares or another class or classes or stock or securities of the Borrower or another entity, or in case or any sale or conveyance or all or substantially all of the assets or the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder or this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares or Common Stock immediately theretofore issuable upon conversion, such stock. securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation. provisions for adjustment of the Conversion Price and or the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record dale. The consummation of, such merger, consolidation, exchange of shares Recapitalization reorganization or other similar event or sale of assets (during which time the Holder shall be: entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
 

 

 

 

 
 

 (c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off) (a "Distribution"), then the Holder of this Note shall be entitled. upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
 

 (d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then immediately upon the Dilutive Issuance the Conversion Price will be: reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.
 

 The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants rights or options (not including employee stock option plans), whether or not immediately exercisable. to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options") and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence the "price per share for which Common Stock is issuable upon the exercise of such Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additiona1 consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options. the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.
 

 

 

 

 
 

 Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells My Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities. plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
 

 (e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants. securities or other property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are 10 be determined for the grant, issue or sale of such Purchase Rights.
 

 (f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare 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 Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.
 

 1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded. in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the "Maximum Share Amount"'), which shall be 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note this will be considered an Event of Default under Section 3.3 of the Note.
 

 

 

 

 
 

 

 1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares. if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a I-folder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure to convert this Note.
 

 1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the I folder of the Note to prepay the outstanding Note (principal and accrued interest). in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional Prepayment Notice") shall be delivered to the Holder of the Note at its registered addresses and shall state: (I) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the dale fixed for prepayment (the "Optional Prepayment Date''), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (I) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Optional Prepayment Amount") equal to 140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an
 Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1 .9.
 

 

 

 

 
 

 

 Notwithstanding anything to the contrary contained in this Note, at My lime during the period beginning on the date which is ninety-one (91) days following the issue date and ending on the date which is one hundred fifty (150) days following the issue dare, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest). in full in accordance with this Section 1 .9. Any Optional Prepayment Notice shall be delivered 10 the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Dale. I f the Borrower exercises its right t o prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Second Optional Prepayment Amount") equal to 145%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest. if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date. The Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1 .9.
 

 Notwithstanding anything to the contrary contained in this Note. at any time during the period beginning on the date which is one hundred fifty-one (151) days following the issue date and ending on the date which is one hundred eighty (180) days following the issue date, the Borrower shall have the right. exercisable on not less than three (3) Trading Days prior written notice 10 the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1 .9. Any Optional Prepayment Notice shall be delivered to the Bolder of the Note at its registered addresses and shall stale: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the Third Optional Prepayment Amount") equal to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest. if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1 .9. 
 

 After the expiration of one hundred eighty (180) following the date or the Note, the Borrower shall have no right of prepayment.
 

 

 

 

 

 
 ARTICLEL II. CERTAIN COVENANTS
 2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent (a) pay, declare or SCI apart for such payment, any dividend or other distribution (whether in cash. property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by n majority of the Borrower's disinterested directors.
 

 2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.
 

 2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, create, incur, assume guarantee, endorse. contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.
 

 2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on specified use of the proceeds of disposition.
 

 2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's written consent, lend money, give credit or make advances to any person. firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.
 

 

 

 

 
 

 

 ARTICLE III. EVENTS OF DEFAULT
 

 If any of the following events of default (each, an " Event of Default" ) shall occur:
 

 3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity. upon acceleration or otherwise.
 

 3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note. The Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice o f Conversion. It is an obligation o f the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower's transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.
 

 3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.
 

 3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement. statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
 

 3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
 

 3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
 

 

 

 

 
 

 

 3.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
 

 3.8 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
 

 3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
 

 3.10 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
 

 3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due. Provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its debts as they become due.
 

 3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).
 

 3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
 

 3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.
 

 3.15 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
 

 

 

 

 

 
 

 3.16 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by: (1) the Borrower. and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder. 
 

 Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THECONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO; (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED B Y (Z) TWO (2). Upon the Occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1 .7 or upon acceleration). 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3.15 exercisable through the delivery of  written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder. an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1 .3 and 1 .4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the "Dc fault Sum") or (ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the " Conversion Dale" for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise al1 other rights and remedies available at law or in equity.
 

 

 

 

 

 
 

 If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such an10unt is due and payable. then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there arc sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.
 

 ARTICLE IV. MISCELLANEOUS
 

 4. I Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power. right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
 

 4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail. registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received). Or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
 

 If to the Borrower, to:
 SOURCE GOLD CORP.
 2 Toronto Street - Suite 234
 Toronto, Ontario M5C 285
 Attn: LAUREN NOTAR, Chief Executive Officer
 facsimile:
 

 With a copy by fax only to (which copy shall not constitute notice):
 [enter name of law firm]
 Attn: [attorney name]
 [enter address line 1 ]
 [enter city, state, zip]
 facsimile: [enter fax number]
 

 

 

 

 
 

 

 If to the Holder:
 ASHER ENTERPRISES, INC.
 I Linden PL., Suite 207
 Great Neck, NY. 11021
 Attn: Curt Kramer, President
 facsimile: 516-498-9894
 

 With a copy by fax only to (which copy shall not constitute notice):
 Naidch Wurmen Birnbaum & Maday, LLP
 80 Cuttermill Road, Suite 4 I 0
 Great Neck, NY 11021
 Attn: Bernard S. Feldman, Esq.
 facsimile: 516-466-3555
 

 4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed. or if later amended or supplemented, then as so amended or supplemented.
 

 4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined in Rule 501 (a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
 

 4.5 Cost of Collection. If default is made in the payment of this Note, The Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.
 

 4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
 

 

 

 

 
 

 4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest. The Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the
 Holder in part for loss of the opportunity to convert this Note and to cam a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.
 

 4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
 

 4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it convents this Note into Common Stock. The Borrower shall, provide the Holder with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower. the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.
 

 4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled. in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, Preventing or curing any breach or this, Note and to enforce specifically the terms and provisions thereof, without the necessity or showing economic loss and without any bond or other security being required.
 

 

 

 

 
 IN WITNESS WHEREOF. Borrower has caused this Note to be signed in its name by its duly authorized officer this May 14. 2012.
 

 SOURCE GOLD CORP:
 

 By: /s/ Lauren Notar    
 LAUREN NOTAR
 Chief Executive Officer
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 EXHIBIT A
 NOTICE OF CONVERSION
 

 The undersigned hereby elects to convert $­__________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of SOURCE GOLD CORP., a Nevada corporation (the "Borrower") according to the conditions o f the convertible note of the Borrower dated as of May 14, 2012 (the "Note"), as of the dale written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
 

 Box Checked as to applicable instructions:
 

 [ ] The Borrower shall electronically transmit the Common SlOck issuable pursuant
  to this Notice of Conversion to the account of the undersigned or its nominee with
 DTC through its Deposit Withdrawal Agent Commission system (" OWAC
 Transfer").
 

 Name of DTC Prime Broker:
 Account Number:
 

 [ ] The undersigned hereby requests that the Borrower issue a certificate or
 certificates for the number of shares of Common Stock set forth below (which
 numbers are based on the Holder's calculation attached hereto) in the name(s)
 specified immediately below or, if additional space is necessary, on an attachment
 hereto:
 

 	 	
	 ASHER ENTERPRISES, INC.
	  

	 1 Linden PL., Suite 207
	  

	 Great Neck, NY. 11021
	  

	 Attention: Certificate Delivery
	  

	 (516) 498·9890
	  

	  
	  

	 Date of Conversion: 
	  _________________

	 Applicable Conversion Price: 
	 $________________

	 Number of Shares of Common Stock to be Issued
	  

	 Pursuant to Conversion of the Notes:
	  _________________

	 Amount of Principal Balance Due remaining
	  

	 Under the Note after this conversion:
	 _________________

  
 

 ASHER ENTERPRJSES, INC.
 

 By:_____________________
 Name: Curt Kramer
 Title: President
 Date: _____________
 1 Linden PL., Suite 207
 Great Neck, NY. 11021Exhibit101-USRevolvingLoanExtensionAgreement2012-2_22857963_2

Exhibit 10.1

EXTENSION AGREEMENT

Goldman Sachs Lending Partners LLC
200 West Street
New York, New York 10282-2198

June 13, 2012

SITEL, LLC 
c/o SITEL Worldwide Corporation
Two American Center
3102 West End Avenue, Suite 1000
Nashville, TN 37203
Attention: Mr. Neal Miller, Treasurer
Telecopier No.: 615-301-7377
Telephone No.: 615-301-7150

Goldman Sachs Credit Partners L.P.,
as Administrative Agent
200 West Street
New York, New York 10282-2198

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of January 30, 2007, among SITEL, LLC, a Delaware limited liability company (“U.S. Borrower”), ClientLogic Holding Limited, a company incorporated in England and Wales under company number 3530981 (“UK Borrower”), SITEL CANADA CORPORATION, an Ontario corporation (“Canadian Borrower”, and Canadian Borrower, collectively with U.S. Borrower and UK Borrower, the “Borrowers”), the other Credit Parties party thereto, the Lenders from time to time party thereto, Goldman Sachs Credit Partners L.P., as Joint Lead Arranger, Joint Bookrunner, Administrative Agent (together with its permitted successor(s) in such capacity, “Administrative Agent”) and Collateral Agent (together with its permitted successor(s) in such capacity, “Collateral Agent”),  and General Electric Capital Corporation, as Syndication Agent (in such capacity, “Syndication Agent”) (as amended as of December 9, 2008, as amended as of April 21, 2009, as amended as of February 18, 2010, as amended as of May 12, 2011, as amended as of April 5, 2012 and as it may be further amended, restated, supplemented or otherwise modified through the date hereof, the “Credit Agreement”).  Capitalized terms used but not defined herein shall have the meanings assigned to them in the Credit Agreement.

Each Lender party to this letter agreement (this “Extension Agreement”, and each such Lender, an “Extending Lender”) hereby severally agrees to convert on June 13, 2012 the Original U.S. Revolving Commitments set forth on such Lender’s applicable Extension Election and Original 

U.S. Revolving Loans thereunder to an Extended U.S. Revolving Commitment and related Extended U.S. Revolving Loans with the terms set forth on Annex I hereto.  Each Extended U.S. Revolving Commitment and related Extended U.S. Revolving Loans provided pursuant to this Extension Agreement shall be subject to the terms and conditions set forth in the Credit Agreement.  Each Extending Lender also agrees that the provisions set forth on Annex I attached hereto shall be applicable to its Extended U.S. Revolving Commitments and related Extended U.S. Revolving Loans.

Each Extending Lender hereby:

1.  confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements delivered pursuant thereto and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Extension Agreement;

2.  agrees that it will, independently and without reliance upon the Administrative Agent, the other Agents, or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto;

3.  appoints and authorizes the Agents to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents or any other instrument or document furnished pursuant thereto as are delegated to the Agents by the terms thereof, together with such powers as are reasonably incidental thereto;

4.  agrees that its Extended U.S. Revolving Commitments resulting from the effectiveness of this Extension Agreement (if any) shall be referred to as “Tranche A Extended U.S. Revolving Commitments”;

5.  authorizes the Agents to execute such amendments to the Loan Documents as are considered to be necessary or advisable pursuant to Section 1.17 of the Credit Agreement;

6.  agrees that it will continue to perform, in accordance therewith, all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender;

7.  to the extent required by Section 1.11 of the Credit Agreement, in the case of each Non-US Lender, attaches the forms prescribed by the Internal Revenue Service of the United States, certifying as to its entitlement to a complete exemption from United States withholding taxes with respect to all payments to be made under the Credit Agreement and the other Loan Documents; and 

8.  (a) acknowledges and agrees that the Fourth Amendment complies in all respects with the Credit Agreement (prior to giving effect to the Fourth Amendment), including Section 11.1 thereof, and consents and agrees to the amendments and other agreements made in the Second Amendment, (b) acknowledges and agrees that this Extension Agreement complies in all respects with the Credit 

Agreement, including Sections 1.17 and 11.1 thereof, and (c) consents in accordance with the Credit Agreement, including Sections 1.17 and 11.1 thereof, to the extensions and other agreements contemplated herein.

Each Credit Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Extension Agreement and consents to the supplement of the Fourth Amendment and/or the Credit Agreement effected pursuant to this Extension Agreement.  Each Credit Party hereby confirms that the Guaranty by such Credit Party will continue to guarantee, to the fullest extent possible in accordance with such Guaranty, the payment and performance of all applicable Obligations.  Each Credit Party hereby confirms that each relevant Collateral Document to which it is a party or otherwise bound and all Collateral of such Credit Party encumbered thereby will continue to secure, to the fullest extent possible in accordance with such Collateral Document, the payment and performance of all Obligations of such Credit Party.
Each Credit Party acknowledges and agrees that any of the Loan Documents to which it is a party or otherwise bound, as amended (including as amended and modified by this Extension Agreement), shall continue in full force and effect and that all of its obligations thereunder shall not be impaired or limited by the execution or effectiveness of this Extension Agreement.  Each Credit Party represents and warrants that, after giving effect to the amendments and other agreements made in this Extension Agreement, all representations and warranties made by it in each Loan Document to which it is a party or otherwise bound are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date.

The U.S. Borrower and each other Credit Party party hereto has duly authorized, executed (if applicable) and recorded (or caused to be recorded) in each appropriate governmental office all relevant filings and recordations to ensure that the Extended U.S. Revolving Commitments are secured in accordance with the Collateral Documents (other than with respect to modification agreements to Mortgages, if any, that shall be provided no later than 60 days (or such greater number of days as agreed to by Administrative Agent in its sole discretion) following the effective date of this Extension Agreement).

In order to induce Lenders to enter into this Extension Agreement and to supplement the Fourth Amendment and/or the Credit Agreement in the manner provided herein, the U.S. Borrower and each other Credit Party represents and warrants to the Administrative Agent and each Lender that the following statements are true and correct in all material respects:

1.  Each Credit Party which is party hereto has all requisite power and authority to enter into this Extension Agreement.

2.  The execution and delivery of this Extension Agreement by each Credit Party that is a party hereto have been duly authorized by all necessary action on the part of each such Credit Party.

3.  The execution, delivery and performance by each Credit Party of this Extension Agreement 

(including the extensions of maturity contemplated hereby) does not and will not (i) violate any applicable law or regulation, or any order or decree of any court or Governmental Authority except where such violation would not reasonably be expected to have a Material Adverse Effect, (ii) contravene any provision of such Person’s charter, bylaws or partnership or operating agreement, memorandum or articles of association (or equivalent) as applicable, (iii) conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound except where such conflict, breach or default would not reasonably be expected to have a Material Adverse Effect, (iv) result in the creation or imposition of any Lien upon any material property of such Person other than those in favor of Collateral Agent, on behalf of itself and Secured Parties, pursuant to the Loan Documents other than Liens permitted hereunder and (v) require the consent or approval of any Governmental Authority, other than those which have been (or will be within any applicable statutory time limits) duly obtained, made or complied with on or prior to the date hereof.

4.  No registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority is or will be required in connection with the execution and delivery by each Credit Party of this Extension Agreement.

5.  This Extension Agreement has been duly executed and delivered by each of the Credit Parties that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

6.  After giving effect to the amendments and other agreements made in this Extension Agreement, the representations and warranties contained in Section 3 of the Credit Agreement (after giving effect to this Extension Agreement) are and will be true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date.

7.  After giving effect to the amendments and other agreements made in this Extension Agreement, no event has occurred and is continuing that would constitute an Event of Default or a Default.

Upon the execution of a counterpart of this Extension Agreement by the U.S. Borrower and each other Credit Party and each Extending Lender, the delivery to the Administrative Agent of a fully executed copy hereof (including by way of counterparts and by electronic delivery) and the payment of any fees required in connection herewith, this Extension Agreement and the conversions, extensions and other agreements contemplated herein shall become effective as of June 13, 2012.  The parties hereto agree that (a) the aggregate principal amount of Original U.S. Revolving Commitments converted into Extended U.S. Revolving Commitments pursuant to this Extension Agreement is $10,000,000 and (b) the aggregate principal amount of Original U.S. Revolving Loans related to such Original U.S. Revolving Commitments converted into Extended U.S. Revolving 

Loans pursuant to this Extension Agreement is $2,906,666.67.

After the effectiveness of this Extension Agreement in accordance with the preceding paragraph, this Extension Agreement may only be changed, modified or varied by written instrument in accordance with the requirements for the modification of Loan Documents pursuant to Section 11.1 of the Credit Agreement.

THIS EXTENSION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

This Extension Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

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Very truly yours,

GOLDMAN SACHS LENDING PARTNERS LLC, as an Extended U.S. Revolving Lender 

By:  /s/ Gabe Jacobson______________
        Authorized Signatory

ACCEPTED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE:

SITEL, LLC

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

CLIENTLOGIC HOLDING LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL CANADA CORPORATION

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer
SITEL WORLDWIDE CORPORATION

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

                        

SITEL OPERATING CORPORATION

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SERVICE ZONE HOLDINGS, LLC

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

CATALOG RESOURCES, INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL INTERNATIONAL HOLDINGS, INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

1293219 ONTARIO INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

1293220 ONTARIO INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL MEXICO S.A. DE C.V.

By:  /s/ David Beckman____________
Name: David Beckman
Title: Director

CLIENTLOGIC (UK) HOLDING LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

CLIENTLOGIC LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

CLIENTLOGIC (UK) LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL INTERNATIONAL LLC

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

NA LIQUIDATING COMPANY, INC. (F/K/A NATIONAL ACTION FINANCIAL SERVICES, INC.)

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL CUSTOMER CARE, INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL TELESERVICES CANADA, INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL (BVI) INTERNATIONAL, INC.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL EUROPE LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL UK LIMITED

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL NEW ZEALAND LIMITED

By:  /s/ Steven Barker ______________
Name: Steven Barker
Title: Director

CLIENTLOGIC B.V.

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SYSTEMS INTEGRATED TELEMARKETING NETHERLANDS B.V.

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL GMBH

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SRM INKASSO GMBH

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL IBERICA TELESERVICES, S.A.U.

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL BELGIUM NV

By:  /s/ Pedro Lozano de Castro______
Name: Pedro Lozano de Castro
Title: Managing Director EMEA

SITEL FINANCE CORP.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL PANAMA, S.A.

By:  /s/ Neal Miller________________
Name: Neal Miller
Title: Treasurer

SITEL PHILIPPINES CORPORATION

By:  /s/ Steven Barker ______________
Name: Steven Barker
Title: Director

GOLDMAN SACHS CREDIT PARTNERS L.P., as Administrative Agent

By:  /s/ Gabe Jacobson______________
        Authorized Signatory

ANNEX I TO EXTENSION AGREEMENT

1.  Scheduled final maturity date and commitment termination date of such Extended U.S. Revolving Commitments and related Extended U.S. Revolving Loans:  January 30, 2016

2.  Applicable Margin for such Extended U.S. Revolving Loans: Applicable Index Margin = 5.75% and Applicable LIBOR Margin = 6.75%

3.  Applicable Unused Line Fee Margin for such Extended U.S. Revolving Commitments and related Extended U.S. Revolving Loans: 0.50%

4.  Name of class of such Extended U.S. Revolving Commitments (and Extended U.S. Revolving Loans): Such Extended U.S. Revolving Commitments (and Extended U.S. Revolving Loans) shall, from and after the Effective Date, be part of the Tranche A Extended U.S. Revolving Commitments (and Tranche A Extended U.S. Revolving Credit Advances) class for all purposes of the Credit Agreement, including with respect to paragraph 5 below)

5.  Any Extension Series of Extended U.S. Revolving Commitments established on or after the Effective Date shall comply with the following requirement:  If any Extension Series of Extended U.S. Revolving Commitments is established on or after the Effective Date, the Lenders who hold Tranche A Extended U.S. Revolving Commitment or have made Tranche A Extended U.S. Revolving Credit Advances shall, at their option, be allowed to amend the terms of their Tranche A Extended U.S. Revolving Commitments and Tranche A Extended U.S. Revolving Credit Advances to conform to the terms of any such Extension Series (including, without limitation, with respect to maturity date and Weighted Average Yield)

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