May 14, 2020 form of convertible promissory note issued to the other parties listed on Exhibit A to the May 14, 2020 Note Purchase Agreement

1. Definitions. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein. Unless the context otherwise requires, when used herein the following terms shall have the meaning indicated:

 

2. Purchase Agreement; Transfer.

 

(a) This Note is subject to the terms and conditions of, and entitled to the benefit of, the provisions of the Purchase Agreement.

 

(b) Subject to the restrictions on transfer described in the Purchase Agreement, the rights and obligations of the Company and Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(c) The Company shall have the right to redeem this Note at a purchase price equal to the Outstanding Balance as of the date of redemption (the “Option”); provided, that, the Option may be exercised by the Company solely to the extent (i) such redemption by the Company of this Note is on a pari passu basis with the Notes of all other holders of Notes, (ii) to the extent the Option is exercised prior to the first year anniversary of the date hereof, the purchase price shall be increased by an amount equal to (A) the product of (1) the Outstanding Principal Amount, multiplied by (2) 10%, less (B) any accrued but unpaid interest as of the date of the redemption (the “Premium”), and (iii) the Company delivers notice to the Holder pursuant to the provisions of Section 8.5 of the Purchase Agreement, and the Holder shall have 10 business days from receipt thereof to elect to convert such Note into Conversion Shares pursuant to Section 4(b) of the Note in lieu of having such Note redeemed by the Company. Upon exercise of the Option, the Company shall deliver to the Holder or its designated Affiliate the purchase price as increased by clause (ii) of this Section 2(d) and the Holder, upon receipt of such purchase price, shall return to the Company the original copy of this Note. The Company shall mark this Note received from the Holder in connection with its exercise of the Option as “cancelled”.

 

(d) For so long as Golden Post Rail, LLC, a Texas limited liability company (“GPR”) holds any Notes, the Company shall not issue any shares of Series D Preferred Stock to any Person (other than the Holder of this Note or the holders of any other Notes issued under the Purchase Agreement upon conversion of such Notes in accordance with their respective terms) without the prior written consent of the Requisite Holders.

 

3. Payment of Principal and Interest; Prepayment.

 

(a) Interest on this Note shall accrue from the date hereof and be payable, in arrears, on March 31, June 30, September 30 and December 31 of each calendar year, and the Outstanding Balance shall be payable, in arrears, upon demand by the Holder at any time on or after the Maturity Date, unless prepaid pursuant to Section 3(b) hereof or earlier converted pursuant to Section 4 hereof.

 

(b) The Company shall not prepay all or any portion of the principal amount or accrued but unpaid interest on any of the Notes without the prior written consent of the Requisite Holders (as defined below); provided, that, any such permitted prepayment shall be applied ratably and proportionately on all outstanding Notes on the basis of the original principal amount of outstanding Notes and made in accordance with Section 9 hereof.

 

 

4. Conversion.

 

(a) Voluntary Conversion at Company Sale. In the event that prior to the repayment in full of this Note or conversion of this Note in accordance with its terms, there is a Company Sale, the Holder, at the Holder’s sole discretion, shall either (i) be repaid the accrued but unpaid interest under this Note, plus 1.25 times the Outstanding Principal Amount, in cash or (ii) convert the Outstanding Balance of this Note into Conversion Shares at a price per share equal to the Conversion Price; provided, that any payment or conversion of the Note pursuant to this Section 4(a) shall occur immediately prior to consummation of the Company Sale.

 

(b) Voluntary Conversion. At any time for so long as the Note remains outstanding, the Holder, at the Holder’s sole option, may elect to convert the Outstanding Balance into Conversion Shares at a price per share equal to the Conversion Price. In the event the Holder wishes to convert this Note upon the Maturity Date, then the Holder shall notify the Company thereof at least three (3) days prior to the Maturity Date and the Company, upon receipt of such notice, shall not repay the Note or any portion of the Note on the Maturity Date and shall instead take such actions as necessary to cause the conversion thereof.

 

(c) Mechanics and Effect of Conversion.

 

(i) Upon conversion of this Note, the Note will be deemed fully satisfied and discharged and the Company will automatically be released from all of its obligations and liabilities hereunder; and

 

(ii) No fractional shares of the Company’s Conversion Shares will be issued upon conversion of this Note. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted Outstanding Balance that would otherwise be converted into such fractional share. Upon conversion of this Note pursuant to this Section 4, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company. The Company will, at its expense, as soon as practicable thereafter, issue and deliver to the Holder, at Holder’s principal office, a certificate or certificates for the securities to which the Holder is entitled upon such conversion, together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein.

 

5. Event of Default. The occurrence of any of following events shall constitute an “Event of Default” hereunder:

 

(a) The failure of the Company to pay any amounts due under the Notes or any of the other Transaction Documents when due;

 

(b) Any representation or warranty of the Company in the Transaction Documents is incorrect in any material respect;

 

(c) The Company’s failure to perform any of the covenants, agreements or obligations set forth in the Transaction Documents and such failure shall continue for ten (10) business days after the Company’s receipt of written notice to the Company of such failure; or

 

(d) (i) the filing of a petition in bankruptcy or under any similar insolvency law by the Company, (ii) the making of an assignment for the benefit of creditors, including execution by the Company of a general assignment for the benefit of creditors, (iii) the filing by or against the Company of a petition in bankruptcy or under any similar insolvency law or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of 90 days or more, or (iv) the dissolution of the Company.

 

6. Notice of Company Sale. The Holder shall be entitled to ten (10) business days’ prior written notice from the Company of any Company Sale.

 

7. Amendments in Writing; Waiver. Any term of this Note may be amended, modified or waived upon the written consent of the Company and the holders of a majority in aggregate principal amount of the Notes, which majority shall include GPR for so long as GPR holds any Notes (collectively, the “Requisite Holders”). No such waiver or consent in any one instance shall be construed to be a continuing waiver or a waiver in any other instance unless it expressly so provides. No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.

 

8. No Rights as a Stockholder. This Note does not by itself entitle the Holder to any voting rights or other rights as a stockholder of the Company. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Holder, shall cause the Holder to be a stockholder of the Company for any purpose.

 

9. Ranking. The Notes shall rank equally without preference or priority of any kind over one another, and all payments on account of principal and interest with respect to any of the Notes shall be applied ratably and proportionately on all outstanding Notes on the basis of the original principal amount of outstanding Notes. While the Notes are outstanding, the Company shall not issue any convertible debt security that is, or amend any existing convertible indebtedness such that it is, senior or pari passu to the Notes in right of payment without the Requisite Holders’ prior written consent.

 

10. Waivers. The Company hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note.

 

11. Costs. In the event any party is required to engage the services of any attorneys for the purpose of enforcing this Note, or any provision thereof, the prevailing party shall be entitled to recover its reasonable expenses and costs in enforcing this Note, including attorneys’ fees.

 

12. Counterparts. This Note may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement.