Exhibit 10.1
 
THIS NOTE HEREOF HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  THIS
NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW FOR
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED UNLESS IT HAS BEEN SO REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
 
CONVERTIBLE PROMISSORY NOTE
 
Principal Amount: $176,471.00
Issue Date: December 7, 2009

 
FOR VALUE RECEIVED, the undersigned, Signature Exploration & Production Corp, a
Delaware corporation (the “Borrower” or the “Company”), hereby promises to pay
to the order of ________________________ (together with each of their said
heirs, personal representatives, successors and assigns, and any such bearer,
being hereinafter referred to collectively as  the “Holder”), on or before
December 7, 2010 (the “Maturity Date”), the principal sum of One Hundred Fifty
Thousand Dollars ($150,000.00) (this “Note”), together with interest thereon at
the rate set forth herein (the “Loan”).  For purposes of this Note, “Borrower”
shall mean all successors in interest and assignees, including, without
limitation, pursuant to a merger, consolidation, reorganization,
recapitalization or other similar restructuring event (collectively, a
“Reorganization”), and all endorsers, sureties and guarantors and any other
person liable or to become liable with respect to the Loan.

1. Original Issue Discount.   This Note is issued with an original issue
discount of 15% upon funding of $150,000 in cash by Holder to Borrower.
 
2. Payment of Principal and Interest.   The Borrower shall pay the Holder all
accrued interest shall be paid on the Maturity Date.
 
3. Conversion.  At any time while this Note is outstanding, the Holder may
convert any portion of this Note that is outstanding, whether such portion
represents principal or interest, into shares of common stock of the Company
(the “Conversion Shares”) at a price equal to $0.35 (the “Conversion
Price”).  The Holder shall submit a notice of conversion (the “Notice of
Conversion”) to the Company indicating the amount of the Note being converted,
the number of shares issuable upon such conversion, and where the Conversion
Shares should be delivered.  The Company must deliver the Conversion Shares to
the Holder no later than the third (3rd) business day after the date that Holder
submits the Notice of Conversion to the Company (such third business day is
hereinafter referred to as the “Share Delivery Date”).
 
4. Holder’s Conversion Limitations.  The Company shall not effect any conversion
of this Note, and a Holder shall not have the right to convert any portion of
this Note, to the extent that after giving effect to the conversion set forth on
the applicable Notice of Conversion submitted by the Holder, the Holder
(together with the Holder’s affiliates, and any Persons acting as a group
together with the Holder or any of the Holder’s affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).  For
purposes of the foregoing sentence, the number of shares of common stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of common stock issuable upon conversion of this Note with respect to
which such determination is being made, but shall exclude the number of shares
of common stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Note beneficially owned by the Holder or
any of its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other convertible securities or
warrants) beneficially owned by the Holder or any of its
 
 
 

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affiliates.  Except as set forth in the preceding sentence, for purposes of this
Section 4, beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  To the extent that the limitation contained in this Section 4
applies, the determination of whether this Note is convertible (in relation to
other securities owned by the Holder together with any affiliates) and of which
principal amount of this Note is convertible shall be in the sole discretion of
the Holder, and the submission of a Notice of Conversion shall be deemed to be
the Holder’s determination of whether this Note may be converted (in relation to
other securities owned by the Holder together with any Affiliates) and which
principal amount of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this restriction, the
Holder will be deemed to represent to the Company each time it delivers a Notice
of Conversion that such Notice of Conversion has not violated the restrictions
set forth in this paragraph and the Company shall have no obligation to verify
or confirm the accuracy of such determination.  In addition, a determination as
to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.   For purposes of this Section 4, in determining the number of
outstanding shares of common stock, the Holder may rely on the number of
outstanding shares of common stock as stated in the most recent of the
following: (i) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public announcement by
the Company, or (iii) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number
of shares of common stock then outstanding.  In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Note, by
the Holder or its affiliates since the date as of which such number of
outstanding shares of common stock was reported. The “Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of common
stock issuable upon conversion of this Note held by the Holder.  The Holder,
upon not less than 61 days’ prior notice to the Company, may waive the
Beneficial Ownership Limitation and the Beneficial Ownership Limitation shall no
longer apply as of the 61st day after such notice is delivered to the
Company.  The limitations contained in this paragraph shall apply to a successor
holder of this Note.
 
5. Warrant.  Simultaneously with the issuance of this Note, Borrower shall issue
to the Holder a 5-year warrant (the “Warrant”) to purchase such number of shares
of common stock of the Company equal to the number of Conversion Shares issuable
upon full conversion of the principal amount of this Note, exercisable at a
price equal to $0.50 (the “Exercise Price”), subject to full-ratchet
anti-dilution adjustment as more fully described in the form of Warrant to be
provided by Holder and signed by the Company.
 
6. Acknowledgement by the Holder.  The Holder hereby represents and warrants to
the Borrower that the Holder has sufficient knowledge and experience of
financial and business matters so that the Holder is able to evaluate the merits
and risks of purchasing this Note and the Holder has had substantial experience
in previous private and public purchases of securities.  The Holder is an
“accredited investor” as that term is defined in Rule 501 of Regulation D under
the Securities Act.
 
7. Anti-dilution Adjustment.  If at any time this Note is outstanding, the
Company issues common stock or securities convertible into or exercisable for
common stock at a price per share that is lower than the Conversion Price (a
“Dilutive Issuance”), or adjusts the price per share at which any of its
outstanding securities can be converted into or exercised for common stock to a
price that is lower than the Conversion Price (a “Dilutive Adjustment”), the
Conversion Price shall automatically be adjusted to equal the lower price
granted in such Dilutive Issuance or Dilutive Adjustment (the “Adjusted
Conversion Price”).  The Company must provide written notice to the Holder of a
Dilutive Issuance or a Dilutive Adjustment (the “Adjustment Notice”) within
three (3) trading days of such occurrence, provided however that the Adjusted
Conversion Price shall be deemed to be in effect automatically upon any Dilutive
Issuance or Dilutive Adjustment regardless of whether the Company provides the
Adjustment Notice. The Company must honor any conversions requested by the
Holder at the Adjusted Conversion Price following any Dilutive Issuance or
Dilutive Adjustment.
 
 
 

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7a. No adjustment to the Conversion Price will be made (i) upon the exercise of
any warrants, options or convertible securities granted, issued and outstanding
on the date of issuance of this Note; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted to or exercised by any employee
or consultant directly or under any employee benefit plan, stock option plan or
restricted stock plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options is approved the Board
of Directors of the Company; or (iii) upon the exercise of the Warrants.

8. Piggyback Registration Rights.  If at any time this Note is outstanding, the
Company files a registration statement with the United States Securities and
Exchange Commission (the “Registration Statement”), the Company must include the
shares underlying this Note and the Warrant in such Registration Statement.  The
Company shall notify the Holder of its intent to file such Registration
Statement at least thirty (30) days prior the filing of the Registration
Statement and provide the Holder an opportunity to review and comment on such
Registration Statement.
 
9. Event of Default.  Any of the following shall constitute an “Event of
Default” under this Note, and shall give rise to the remedies provided in
Section 10 herein:
 
(a)  
The failure by the Borrower to pay the Indebtedness or otherwise to satisfy when
due, as contemplated in Section 2;

 
(b)  
The failure by the Borrower to deliver the Conversion Shares by the Share
Delivery Date, as contemplated in Section 3;

 
(c)  
The failure by the Borrower to provide the Adjustment Notice or honor
conversions at the Adjusted Conversion Price following a Dilutive Issuance or
Dilutive Adjustment, as contemplated in Section 7;

 
(d)  
The failure by the Borrower to timely file and keep current periodic reports
with the SEC;

 
(e)  
If the Borrower:  (i) makes a general assignment for the benefit of creditors;
(ii) is adjudicated a bankrupt or insolvent; (iii) files a voluntary petition in
bankruptcy; (iv) takes advantage, as against its creditors, of any bankruptcy
law or statute of the United States of America or any state or subdivision
thereof now or hereafter in effect; (v) has a petition or proceeding filed
against it under any provision of any bankruptcy or insolvency law or statute of
the United States of America or any state or subdivision thereof, which petition
or proceeding is not dismissed within 30 days after the date of the commencement
thereof; (vi) has a receiver, liquidator, trustee, custodian, conservator,
sequestrator or other such person appointed by any court to take charge of its
affairs or assets or business and such appointment is not vacated or discharged
within 30 days thereafter; or (vii) takes any action in furtherance of any of
the foregoing;

 
(f)  
Any merger, liquidation, dissolution or winding up of the Borrower or its
business or any sale of all or substantially all of the Borrower’s capital stock
or assets; provided, however, the merger or sale of the Borrower with a
successor entity that acknowledges and expressly assumes in writing the
Borrower’s obligations hereunder shall not be considered an “Event of Default”
for purposes hereof; or

 
(g)  
The Borrower attempts to effectuate or effectuates a reverse stock split of its
common stock without first obtaining the prior written consent of the Holder.

 
10. Remedies on Default.  If any Event of Default shall occur and be continuing
for a period of seven (7) calendar days, the Holder shall, in addition to any
and all other available rights and remedies, have the right, at the Holder’s
option unless such Event of Default shall have been cured or waived in writing
by the Holder (which waiver shall not be deemed to be a waiver of a subsequent
default), to:  (a) declare the entire unpaid principal balance of this Note,
together with all interest accrued thereon and all other sums due by the
Borrower hereunder (the “Default Amount”),; and (b) pursue any and all available
remedies for the collection of such principal and interest to enforce its rights
as described herein; and in such case the Holder may also recover all costs of
suit and other expenses in connection therewith, including reasonable attorney’s
fees for collection and the right to equitable relief (including, but not
limited to, injunctions) to enforce the Holder’s rights as set forth herein.
 
 
 

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11. Certain Waivers.  Except as otherwise expressly provided in this Note, the
Borrower hereby waives diligence, demand, presentment for payment, protest,
dishonor, nonpayment and default with respect to the Indebtedness evidenced
hereby.  The Borrower hereby expressly agrees that this Note, or any payment
hereunder, may be extended, modified or subordinated (by forbearance or
otherwise) from time to time, without in any way affecting the liability of the
Borrower.
 
12. Waivers and Amendments; Cumulative Remedies.  Neither any provision of this
Note nor any performance hereunder may be waived orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
waiver or discharge is sought.  No right or remedy conferred upon the parties
under this Note is intended to be exclusive of any other right or remedy
contained herein or in any instrument or document delivered in connection
herewith, and every such right or remedy shall be cumulative and shall be in
addition to every other such right or remedy contained herein and/or now or
hereafter existing at law or in equity or otherwise.
 
13. Governing Law.  This Note shall be deemed to be a contract made under the
laws of the State of New York and shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law.  If either party shall commence an action or
proceeding to enforce any provision of this Note, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
 
14. Consent to Jurisdiction and Service of Process.  The Borrower by execution,
and the Holder by acceptance, hereof each consent to the jurisdiction of any
federal district court in the State of New York having competent
jurisdiction.  The Borrower waives personal service of any summons, complaint or
other process in connection with any such action or proceeding and agrees that
service thereof may be made, as the Holder may elect, by certified mail directed
to the Borrower at the location provided for in Section 16 hereof, or, in the
alternative, in any other form or manner permitted by law.
 
15. Additional Documents.  From time to time the Holder will execute and deliver
to the Borrower such additional instruments as the Borrower may reasonably
request to effectuate the purposes of this Note.
 
16. Notices.  All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by United States first-class
mail, postage prepaid, or delivered personally by hand or by nationally
recognized overnight courier or sent via facsimile addressed to:
 
If to the Borrower:
       
__________________________________________
 
__________________________________________
 
__________________________________________
   
If to the Holder:
   
__________________________________________
 
__________________________________________
   

or at such other address as shall have been furnished to the other party in
writing.  All such notices and other written communications shall be
effective:  (a) if mailed, five days after mailing; (b) if delivered, upon
delivery; and (c) if sent via facsimile, upon confirmation of receipt.
 
 
 

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17. Wiring Instructions.  Any amount wired to the Borrower hereunder shall be
wired in accordance with the following wiring instructions:
 
Bank Name:                      __________________
Account Name:               __________________
Account Number:           __________________
Routing number:             __________________
 
18. Severability.  If any provision of this Note is prohibited or unenforceable
in any jurisdiction, it shall be ineffective in such jurisdiction only to the
extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision to the
extent it is not prohibited or unenforceable nor the remaining provisions
hereof, nor render unenforceable such provision in any other jurisdiction.
 
19. Assignment.  This Note shall inure to the benefit of, and shall be binding
upon, the Borrower and the Holder and their respective successors and permitted
assigns.  Neither party hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other party.
 
20. Counterparts.  This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.  A facsimile signature of any party
shall be considered to have the same binding legal effect as an original
signature.
 
21. No Stockholder Rights.  Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder in respect of meeting of stockholders for
the election of directors of the Borrower or any other matters or any rights
whatsoever as a stockholder of the Borrower; and no dividends shall be payable
or accrued in respect of this Note.
 
22. JURY WAIVER.  THE BORROWER BY EXECUTION, AND THE HOLDER BY ACCEPTANCE,
HEREOF EACH CONSENT THAT IN ANY CIVIL ACTION, COUNTERCLAIM, OR PROCEEDING,
WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS
NOTE, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS NOTE, THE PERFORMANCE OF
THIS NOTE, OR THE RELATIONSHIP CREATED BY THIS NOTE, WHETHER SOUNDING IN
CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT OF
COMPETENT JURISDICTION AND NOT TO A JURY.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY.  ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS NOTE WITH ANY COURT, AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES TO THIS NOTE OF THE WAIVER OF THEIR RIGHT TO A TRIAL BY
JURY.
 

 
 

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[SIGNATURE PAGE]
 

 
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note on and
as of the date first set forth above.
 

 
 
Signature Exploration & Production Corp, a Delaware corporation, as Borrower

By:    _______________________________
Name:
Title:

 
 

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