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EXHIBIT 4 - FORM OF CONVERTIBLE NOTE
NEITHER THIS NOTE NOR ANY SECURITIES TO BE ISSUED UPON THE CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AND CONSEQUENTLY
THIS NOTE AND ANY SUCH SECURITIES MAY NOT BE TRANSFERRED IN THE ABSENCE OF
EFFECTIVE REGISTRATION UNDER SAID ACT OR THE AVAILABILITY OF AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF, AND MAY BE REQUIRED TO BE
HELD INDEFINITELY. THE COMPANY MAY REQUIRE, AS A CONDITION TO EFFECTING THE
REGISTRATION OF TRANSFER OF THIS NOTE OR ANY SECURITIES ISSUED UPON CONVERSION
HEREOF, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH TRANSFER DOES NOT VIOLATE SUCH REGISTRATION REQUIREMENTS. ANY SECURITIES
ISSUED UPON THE CONVERSION HEREOF MAY BEAR A COMPARABLE LEGEND.
PIEDMONT MINING COMPANY, INC.
CONVERTIBLE NOTE
$ Charlotte, North Carolina
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December ___, 1996
FOR VALUE RECEIVED, money borrowed, PIEDMONT MINING COMPANY, INC., a
North Carolina corporation (the "Company"), does hereby promise to pay to
Name:
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Address:
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Taxpayer Identification Number:
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or registered assigns, at the Company's principal office at 4101-G Stuart
Andrew Boulevard, Charlotte, North Carolina 28217 (or such other address of its
principal office as the Company may specify by notice to the registered holder
hereof), the principal sum of
___________________________________________ DOLLARS ($__________)
together with interest on the outstanding principal amount hereof from the date
hereof at the rate of 5% per annum, on June 30, 1997 (the "Maturity Date"),
upon surrender of this Convertible Note (this "Note") for payment at such place
for payment. If on the Maturity
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Date the Company shall have set aside sufficient funds in trust for payment to
the registered holder hereof of all of the principal of and interest on this
Note accrued to the Maturity Date, then no interest shall accrue hereon after
the Maturity Date unless such funds shall not be paid upon the surrender hereof
for payment. The Company may also discharge its obligation to pay further
interest hereon that would otherwise accrue after a specified date following
the Maturity Date by setting aside in trust sufficient funds for payment to the
registered holder hereof of all of the principal of and interest on this Note
accrued to such specified date, and giving notice to the registered holder at
least five days prior to such specified date of the availability of such funds
for payment, provided that such payment is made upon surrender hereof on or
after such specified date.
REGISTERED HOLDER; TRANSFER. The Company may treat the person in whose name
this Note is registered as set forth above as the holder of this Note for all
purposes, and shall not be affected by any notice to the contrary. No transfer
of this Note shall be effective as to the Company unless and until this Note
and an appropriate instrument of transfer, duly endorsed and accompanied by
such further assurances as the Company may reasonably request, is surrendered
to the Company for registration of transfer, whereupon the Company shall issue
a new Note in the form of this Note, in the same unpaid principal amount,
registered in the name of the transferee and dated as of the date to which
interest has been paid (or if no interest has yet been paid, dated as of the
same date as the Note surrendered for transfer). TRANSFER OF THIS NOTE IS ALSO
SUBJECT TO THE RESTRICTIONS ON TRANSFER IMPOSED BY APPLICABLE SECURITIES LAWS
AND AS SET FORTH ON THE FACE OF THIS NOTE.
PREPAYMENT. This Note may be not be prepaid by the Company prior to April 1,
1997 without the consent of the registered holder hereof. On or after April 1,
1997, the Company may prepay this Note in whole or in part by giving the
registered holder hereof at least 10 days' prior notice of the date of such
prepayment and the amount thereof and, on such prepayment date, setting aside
in trust for such prepayment the amount of such prepayment against surrender of
this Note for prepayment. If such notice has been duly given and sufficient
funds for such prepayment have been set aside in trust for such prepayment on
the prepayment date upon surrender of this Note for prepayment, then no
interest shall accrue on the amount being prepaid from and after the prepayment
date. If this Note is prepaid in part, such prepayment shall be applied first
to interest and then to principal, and a new Note in the form hereof, in the
remaining principal amount and dated the date to which interest has been paid,
shall be issued to the registered holder hereof when this Note is surrendered
for such partial prepayment.
CONVERSION PRIVILEGE. The registered holder hereof, if such registered holder
is then an "accredited investor" as defined in Regulation D under the
Securities Act of 1933 (an "Accredited Holder"), shall have the right to
convert all or any part of the outstanding principal of this Note and interest
accrued and unpaid hereon into shares of the Common Stock of the Company, at
any time on or after March 31, 1997 (the "Exercisability Date") and prior to
the Maturity Date, effective as of the close of business on the date this Note
is duly delivered to the Company for such conversion, by delivering to the
Company this Note
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with the Notice of Conversion appended hereto appropriately dated and signed by
the Accredited Holder. The number of shares of the Common Stock into which the
principal of or interest on this Note may be converted shall be determined by
dividing the aggregate amount of principal and interest so converted by the
"Per Share Price" (defined below). Promptly after the effectiveness of such
conversion, the Company shall issue to such Accredited Holder a certificate or
certificates for the shares of Common Stock issued upon such conversion, which
shares shall be validly issued, fully paid and nonassessable and free and clear
of any liens, encumbrances or adverse claims, other than restrictions on
transfer imposed by applicable securities laws. No fractional shares shall be
issued upon such conversion, and in lieu of a fraction of a share, the
Accredited Holder hereof shall receive cash in an amount equal to the amount of
principal or interest that would otherwise have been converted into such
fraction of a share. The Company shall reserve, for issuance upon the exercise
of this conversion privilege, the number of shares of Common Stock issuable
upon such conversion.
The "Per Share Price" shall be $.40 per share of Common Stock.
If during the period from the date hereof through the day next
preceding the Exercisability Date the Company shall issue any shares of its
Common Stock (other than pursuant to director or employee stock option plans)
for cash to any purchaser who is not a director or officer of the Company or an
affiliate or associate (as the terms "affiliate" and "associate" are defined in
Rule 405 under the Securities Act of 1933) of such a director or officer (an
"Unaffiliated Purchaser"), or shall issue any convertible debt securities to
any Unaffiliated Purchaser that are convertible into shares of the Common Stock
of the Company ("Convertible Securities"), and if, in conjunction with the
issuance of shares of the Common Stock or Convertible Securities to an
Unaffiliated Purchaser during such period, such Unaffiliated Purchaser also
receives, as part of the investment unit that includes Common Stock or
Convertible Securities, other securities of the Company or rights to purchase
additional shares of the Common Stock or other securities, then at the request
of the Accredited Holder hereof the Company shall negotiate in good faith with
the Accredited Holder hereof for the sale of units comparable to those sold to
Unaffiliated Purchasers and upon comparable terms to the extent of the amount
of the outstanding principal of and interest on this Note, in lieu of the
conversion privilege specified herein. If, in conjunction with the issuance of
shares of the Common Stock or Convertible Securities to an Unaffiliated
Purchaser during such period, such Unaffiliated Purchaser also receives
registration rights with respect to the Common Stock acquired or to be acquired
upon the exercise of conversion rights, the Company will negotiate in good
faith to provide, to the extent practicable, comparable registration rights to
the Accredited Holder hereof.
The Company further agrees that, from the date hereof through the
Maturity Date, it will not effect any stock split, stock dividend, or other
division or combination affecting the outstanding Common Stock, or any other
similar capital change, unless it shall have first offered to make appropriate
equitable adjustment, reasonably satisfactory to the Accredited
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Holder hereof, to the Per Share Price to appropriately and equitably take into
account such capital change and its effect on this conversion privilege.
Anything to the contrary herein notwithstanding, the Company shall not
be obligated to issue any shares of the Common Stock upon the exercise of this
conversion privilege if such issuance would be in violation of applicable
securities laws. If the Company is so prevented from issuing such shares, it
will use its best efforts to take appropriate action to permit such issuance in
compliance with applicable securities laws as soon as practicable, provided it
can do so without unreasonable effort or expense.
NOTICES. All notices to be given hereunder shall be in writing. Any notice to
be given by the Company to the holder hereof shall be directed to the
registered holder hereof at such registered holder's address set forth on the
face of this Note, or such other address of which such registered holder has
most recently notified the Company hereunder, and shall be effective at the
earliest of: (a) mailing thereof, postage prepaid, to the registered holder at
such address; (b) delivery thereof to such registered holder's address,
directed to such registered holder; or (c) actual receipt by such registered
holder. Any notice to be given by the holder hereof to the Company shall be
addressed to it at its principal office at the address specified above or as
hereafter changed by notice to the registered holder hereof, and shall be
deemed effectively given only upon actual delivery to the Company at such
address or actual receipt by the Chairman or President of the Company.
COLLECTION COSTS. If this Note is not paid when due, then the Company shall
also pay or reimburse the holder hereof for all costs of collection, including
reasonable attorney's fees.
GOVERNING LAW. This Note is made and delivered in, and is payable in, North
Carolina and shall be governed by and construed in accordance with the laws of
the State of North Carolina, including Article 8 of the North Carolina Uniform
Commercial Code.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed in its name under seal as a sealed instrument, as of the day and year
first above written.
PIEDMONT MINING COMPANY, INC.
[CORPORATE SEAL]
By:
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Title:
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NOTICE OF CONVERSION
The undersigned, being the registered holder of the foregoing Note,
hereby surrenders such Note for conversion, to the extent set forth below, into
shares of the Common Stock of Piedmont Mining Company, Inc. (the "Company")
effective at the close of business on the date such Note and this Notice of
Conversion is duly delivered to the Company, in accordance with the terms of
the Conversion Privilege set forth therein.
The undersigned hereby elects to convert (check one):
[ ] all of the principal of and interest on the foregoing Note
[ ] the following amount (if less than all) of the principal of and interest on the foregoing Note (first
interest and then principal): $_____________
into Common Stock of the Company in accordance with such Conversion Privilege.
Please issue to the undersigned a certificate or certificates for the
shares of the Common Stock into which the principal of and interest on the Note
is so converted, together with payment in cash in lieu of any fraction of a
share that would otherwise be issued upon such conversion. If this conversion
is with respect to less than all of the principal of and interest on the Note,
please issue to the undersigned a new Note in the form of the Note surrendered
in the remaining principal amount, dated the date to which interest has been
paid.
The undersigned hereby represents that the undersigned is an
"accredited investor" (as defined in Regulation D under the Securities Act of
1933) and is acquiring the Common Stock for purposes of investment for the
account of the undersigned, and not with a view to or in connection with any
distribution of the Common Stock. The undersigned is familiar with the
business, affairs and prospects of the Company, either alone or with the
undersigned's purchaser representative(s) has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating
the merits and risks of investment in the Common Stock, and understands that
investment in the Common Stock is subject to a high degree of risk. The
undersigned understands that the Common Stock issued upon conversion of the
Note has not been registered under the federal Securities Act of 1933, and
consequently it may not be transferred in the absence of effective registration
under said Act or the availability of an applicable exemption from the
registration requirements thereof, and may be required to be held by the
undersigned indefinitely. The Company may require, as a condition to effecting
the registration of transfer of such Common Stock, an opinion of counsel
satisfactory to the Company to the effect that such transfer does not violate
such registration requirements. The certificates for the Common Stock issued
to the undersigned may bear an appropriate legend as to the foregoing
restrictions, and the Company may lodge appropriate stop transfer orders with
its transfer agent.
Date: Signature of Registered Holder:
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