Document:

EX 10.2 Common Stock Purchase Warrant

Exhibit 10.2

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THOSE LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

Right to Purchase __________ Shares of the

Common Stock of Friendly Energy Exploration

Friendly Energy Exploration

Common Stock Purchase Warrant

For good and valuable consideration, the receipt of which is hereby acknowledged, Friendly Energy Exploration, a Nevada corporation (the “Company”), hereby grants to _________________ (the “Holder”), the right, but not the obligation, to purchase from the Company at any time or from time to time on or before 5:00 p.m., Pacific Standard Time on the Expiration Date, as defined below, _______________ (___________) fully paid and nonassessable shares of common stock of the Company (the “Common Stock”) at a purchase price per share equal to the Purchase Price, as defined below.  The number of such shares of Common Stock and the Purchase Price are subject to adjustment as provided in this Warrant.  The Expiration Date shall be _____________.

1.

Exercise of Warrant.  

Cash Exercise.  This Warrant may be exercised by the Holder hereof in full or in part at any time or from time to time until the Expiration Date by surrender of this Warrant and the subscription form annexed hereto (duly executed by the Holder), to the Company, and by making payment, in cash or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying (a) the number of shares of Common Stock designated by the Holder in the subscription form by (b) the Purchase Price of _______ per share.  On any partial exercise the Company will forthwith issue and deliver to or upon the order of the Holder hereof a modification of this Warrant, providing in the aggregate on the face or faces thereof for the purchase of the number of shares of Common Stock for which such Warrant may still be exercised.

2.

Delivery of Stock Certificates, etc., on Exercise

.  As soon as practicable after the exercise of this Warrant, and in any event within three business days thereafter, the Company at its expense (including the payment by it of any applicable issue or stamp taxes) will cause to be issued in the name of and delivered to the Holder hereof a certificate for the number of fully paid and nonassessable shares of Common Stock (or Other Securities) to which the Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash equal to such fraction multiplied by the then current fair market value (as reasonably determined by the Company) of one full share, together with any other stock or other securities or property (including cash, where applicable) to which the Holder is entitled upon such exercise.  "Other Securities" shall mean any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the Holder at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Sections 3 or 4.

3.

Adjustment.

(a)

Initial Purchase Price; Subsequent Adjustment of Price and Number of Purchasable Shares.  The initial purchase price for shares subject to this Warrant will be ______ per share (the “Initial Purchase Price”).  The Initial Purchase Price or, if such price has been adjusted, the price per share of Common Stock as last adjusted pursuant to the terms hereof is referred to as the “Purchase Price” herein.  Upon each adjustment of the Purchase Price, the Holder will thereafter be entitled to purchase, at the Purchase Price resulting from such adjustment, the number of shares of Common Stock obtained by multiplying the Purchase Price in effect immediately before such adjustment by the number of shares of Common Stock purchasable pursuant to this Warrant immediately before such adjustment and dividing the product by the Purchase Price resulting from such adjustment.

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(b)

Definitions.  For purposes of this Warrant, the following terms shall have the meanings set forth below:

(i)

"Exercise Price" shall mean the price, determined pursuant to this Section 3, at which shares of Common Stock shall be deliverable upon exercise of this Warrant.

(ii)

"Current Exercise Price" shall mean the Exercise Price immediately before the occurrence of any event, which, pursuant to this Section 3, causes an adjustment to the Exercise Price.

(iii)

"Convertible Securities" shall mean any indebtedness or shares of stock convertible into or exchangeable for Common Stock.

(iv)

"Options" shall mean any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities, including this Warrant.

(v)

"Common Stock Outstanding" shall mean the aggregate of all Common Stock outstanding and all Common Stock issuable upon exercise of all outstanding Options and conversion of all outstanding Convertible Securities.

(vi)

"Common Stock Equivalents" shall mean Convertible Securities and rights entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock without the payment of any consideration by such holder for such additional shares of Common Stock or Common Stock Equivalents.

(c)

Adjustments to Exercise Price.  Subject to Section 3(c)(13) below, the Exercise Price in effect from time to time shall be subject to adjustment in certain cases as follows:

(i)

Issuance of Additional Shares of Common Stock

.  In case the Company shall at any time after the date of this Warrant issue or sell any Common Stock, Options, Convertible Securities, or Common Stock Equivalents (hereinafter the "Additional Shares of Common Stock") without consideration or for a consideration per share less than the Current Exercise Price, then such Current Exercise Price shall simultaneously with such issuance or sale be adjusted to an Exercise Price (calculated to the nearest cent) determined by multiplying such Current Exercise Price by a fraction,

(a)

the numerator of which shall be (x) the number of shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such issuance or sale, plus (y) the number of shares of Common Stock which the aggregate consideration received (or by the express provisions hereof is deemed to have been received) by the Company for the total number of Additional Shares of Common Stock so issued or sold would purchase at such then Current Exercise Price, and

(b)

the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date of such issuance or sale after giving effect to such issuance or sale of Additional Shares of Common Stock.  For the purpose of the calculation described in this Section 3, the number of shares of Common Stock outstanding shall include, in addition to the number of shares of Common Stock actually outstanding, (A) the number of shares of Common Stock issuable upon the exercise of this Warrant if fully exercised on the day immediately preceding the issuance or sale or deemed issuance or sale of Additional Shares of Common Stock, and (B) the number of shares of Common Stock which would be obtained through the exercise or conversion of all Options and Convertible Securities outstanding on the day immediately preceding the issuance or sale or deemed issuance or sale of Additional Shares of Common Stock.

For purposes of this Section 3, the following provisions shall also be applicable:

(ii)

Cash Consideration

.  In case of the issuance or sale of Additional Shares of Common Stock for cash, the consideration received by the Company therefor shall be deemed to be the amount of cash received by the Company for such shares.

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(iii)

Non-Cash Consideration

.  In case of the issuance (otherwise than upon conversion or exchange of Convertible Securities) or sale of Additional Shares of Common Stock for consideration other than cash or for consideration a part of which shall be other than cash, the fair value shall be determined reasonably and in good faith by the consent or vote of the Board of Directors of the Company.

(iv)

Options and Convertible Securities

.  In case the Company shall in any manner issue or grant any Options or any Convertible Securities, the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities at the time such Convertible Securities first become convertible or exchangeable shall (as of the date of issue or grant of such Options or, in the case of the issue or sale of Convertible Securities other than where the same are issuable upon the exercise of Options, as of the date of such issue or sale) be deemed to be issued and to be outstanding for the purpose of this Section 3 and to have been issued for the sum of the amount (if any) paid for such Options or Convertible Securities and the amount (if any) payable or upon conversion or exchange of such Convertible Securities at the time such Convertible Securities first become convertible or exchangeable; provided, however, that, subject to the provisions of Section 3(c)(5), no further adjustment of the Current Exercise Price shall be made upon the actual issuance of any such Common Stock or Convertible Securities or upon the conversion or exchange of any such Convertible Securities.

(v)

Change in Conversion Rate

.  If the rate at which any Convertible Securities referred to in Section 3(c)(4) are convertible into or exchangeable for shares of Common Stock shall change at any time (other than under or by reason of provisions designed to protect against dilution), the Current Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price that would have been in effect at such time had such Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time same were initially granted, issued or sold.  If the additional consideration (if any) payable upon the conversion or exchange of any Convertible Securities referred to in Section 3(c)(4), or the rate at which any Convertible Securities referred to in Section 3(c)(4) are convertible into or exchangeable for shares of Common Stock, shall be reduced at any time under or by reason of provisions with respect thereto designed to protect against dilution, then in case of the delivery of shares of Common Stock upon conversion or exchange of any such Convertible Securities, the Exercise Price then in effect hereunder shall, upon issuance of such shares of Common Stock, be adjusted to such amount as would have been obtained had such Convertible Securities never been issued and had adjustments been made only upon the issuance of the shares of Common Stock delivered as aforesaid and for the consideration actually received for such Convertible Securities and the Common Stock.

(vi)

Termination of Option or Conversion Rights

.  Upon the termination or expiration of any right to purchase Common Stock under any Option or of any right to convert or exchange Convertible Securities, the Current Exercise Price shall, upon such termination, be changed to the Exercise Price that would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued, and the shares of Common Stock issuable thereunder shall no longer be deemed to be Common Stock Outstanding.

(vii)

Stock Splits; Dividends; Distributions and Combinations

.  If the Company shall at any time or from time to time after the date of this Warrant fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents, then, following such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Exercise Price shall be appropriately decreased so that the number of shares of Common Stock issuable on exercise of this Warrant shall be increased in proportion to such increase in the number of outstanding shares of Common Stock (including for this purpose, Common Stock Equivalents).  If the number of shares of Common Stock outstanding at any time after the date of this Warrant is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Exercise Price shall be appropriately increased so that the number of shares of Common Stock issuable upon exercise of this Warrant shall be decreased in proportion to such decrease in the number of outstanding shares of Common Stock.

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(viii)

Other Dividends.  If the Company shall declare a distribution payable in securities of other companies, evidence of indebtedness issued by the Company or other companies, assets (excluding cash dividends) or options or rights not referred to in Section 3(c)(4), then, in each such case for the purpose of this subsection 3, the holder of this Warrant shall be entitled to receive, without the payment of any additional consideration, a proportionate share of any such distribution as though it were the holder of the number of shares of Common Stock of the Company issuable upon the exercise of this Warrant as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

(ix)

Recapitalizations.  If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger, sale of the voting stock of the Company or a sale of assets transaction provided for elsewhere in this Section 3), provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant the number of shares of stock or other securities or property of the Company or otherwise, to which a holder of Common Stock deliverable upon such exercise would have been entitled on such recapitalization.  In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights of the holder of this Warrant after the recapitalization to the end that the provisions of this Section 3 (including adjustment of the Exercise Price then in effect and the number of shares purchasable upon exercise of this Warrant) shall be applicable after that event as nearly equivalent as may be practicable.

(x)

Successive Changes.  The above provisions of this Section 3 shall similarly apply to successive issuances, sales, dividends or other distributions, subdivisions and combinations on or of the Common Stock after the date of this Warrant.

(xi)

Other Events Altering Exercise Price.  Upon the occurrence of any event not specifically described in this Section 3(c) as reducing the Exercise Price that, in the reasonable exercise of the business judgment of the Board of Directors of the Company reached in good faith, requires, on equitable principles, the reduction of the Exercise Price, the Exercise Price will be so equitably reduced.

(xii)

No Impairment.  The Company will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the holder of this Warrant against impairment.

(xiii)

Excluded Events.  Notwithstanding any other provision in this Section 3(c) which is inconsistent with or contrary to the terms of this Paragraph 13, the Exercise Price shall not be adjusted by virtue of (a) the issuance of capital stock to employees, consultants, officers or directors of the Company pursuant to stock purchase or stock option plans or agreements approved by the Board (and not exceeding 20% of the Company's Common Stock Outstanding), (b) the issuance of securities in connection with acquisition transactions, (c) the issuance of securities to financial institutions, suppliers or lessors in connection with commercial credit arrangements, equipment financings or similar transactions, (d) exercise of this Warrant, or (e) the repurchase of Common Stock shares from the Company's employees, consultants, advisors, service providers, officers or Directors at such person's cost (or at such other price as may be agreed to by the Company's Board of Directors).

(xiv)

Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Exercise Price pursuant to this Section 3, the Company, at its expense and upon request by the holder of this Warrant, shall compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based.  The Company shall, upon the written request at any time of the holder of this Warrant, furnish or cause to be furnished to such holder a like certificate setting forth (a) such adjustment and readjustment, (b) the Current Exercise Price, and (c) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the exercise of this Warrant.

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4.

Further Assurances.  The Company will take all action that may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock, free from all taxes, liens and charges with respect to the issue thereof, on the exercise of all or any portion of this Warrant from time to time outstanding.

5.

Notices of Record Date, etc.

In the event of:

(a)

any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend on, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)

any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to or the sale, consolidation or merger of the Company with, to or into any other person, or

(c)

any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then and in each such event the Company will mail or cause to be mailed to the Holder, at least 20 days prior to such record date, a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up, and (iii) the amount and character of any stock or other securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made.  Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or a favorable vote of stockholders if either is required.  Such notice shall be mailed at least 20 days prior to the date specified in such notice on which any such action is to be taken or the record date, whichever is earlier.

6.

Reservation of Stock, etc., Issuable on Exercise of Warrants.  The Company will at all times reserve and keep available out of its authorized but unissued shares of capital stock, solely for issuance and delivery on the exercise of this Warrant, a sufficient number of shares of Common Stock (or Other Securities) to effect the full exercise of this Warrant and the exercise, conversion or exchange of any other warrant or security of the Company exercisable for, convertible into, exchangeable for or otherwise entitling the Holder to acquire shares of Common Stock (or Other Securities), and if at any time the number of authorized but unissued shares of Common Stock (or Other Securities) shall not be sufficient to effect such exercise, conversion or exchange, the Company shall take such action as may be necessary to increase its authorized but unissued shares of Common Stock (or Other Securities) to such number as shall be sufficient for such purposes.

7.

Transfer of Warrant.  This Warrant may only be transferred in compliance with applicable law.

8.

No Rights as a Shareholder.  This Warrant shall not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company.

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9.

Notices.  Any notices and other communications required or permitted under this Warrant shall be effective if in writing and delivered personally or sent by telecopier, major overnight courier service or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

		
	If to Holder:

	

______________________

______________________

______________________

	If to the Company:

	

Friendly Energy Exploration

6005 N. Highway 279

Brownwood, TX 76801

Attn: Mr. Douglas Tallant

Unless otherwise specified herein, such notices or other communications shall be deemed effective (a) on the date delivered, if delivered personally, (b) one business days after being sent, if sent by a major overnight courier service such as Federal Express or DHL, (c) one business day after being sent, if sent by telecopier with confirmation of good transmission and receipt, and (d) seven business days after being sent, if sent by registered or certified mail, postage prepaid.  Each of the parties hereto shall be entitled to specify another address by giving notice as aforesaid to the other.

10.

Securities Laws.  By acceptance of this Warrant, the Holder represents to the Company that this Warrant is being acquired for the Holder’s own account and for the purpose of investment and not with a view to, or for sale in connection with, the distribution thereof, nor with any present intention of distributing or selling the Warrant or the Common Stock issuable upon exercise of the Warrant.  The Holder acknowledges and agrees that this Warrant and the Common Stock issuable upon exercise of this Warrant (if any) have not been (and at the time of acquisition by the Holder, will not have been or will not be) registered under the Securities Act or under the securities laws of any state, in reliance upon certain exemptive provisions of such statutes.  The Holder further recognizes and acknowledges that because this Warrant and the Common Stock issuable upon exercise of this Warrant are unregistered, they may not be eligible for resale, and may only be resold in the future pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to a valid exemption from such registration requirements.

11.

Legend.  Unless theretofore registered for resale under the Securities Act, each certificate for shares issued upon exercise of this Warrant shall bear the following or a similar legend:

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any applicable state securities laws.  The securities have been acquired for investment and may not be resold, transferred or assigned in the absence of an effective registration statement for the securities under the Securities Act of 1933, as amended, or an opinion of counsel acceptable to the Company that such disposition is in compliance with the Securities Act and any applicable state securities laws.

12.

Miscellaneous.  This Warrant and any terms hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.  This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada; provided, however, that if any Nevada law or laws require or permit the application of the laws of any other jurisdiction to this Warrant, such Nevada law or laws shall be disregarded with the effect that the remaining laws of the State of Nevada shall nonetheless apply.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized.

Dated:  ______________________

Friendly Energy Exploration

By:

______________________

Douglas Tallant, President

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FORM OF EXERCISE

Friendly Energy Exploration

(To be signed only on exercise of Warrant)

TO:

Friendly Energy Exploration 

A.

The undersigned Holder of the attached original, executed Warrant hereby elects to exercise its purchase right under such Warrant with respect to shares of Common Stock, as defined in the Warrant, of Friendly Energy Exploration, a Nevada corporation (the “Company”).

B.

The undersigned Holder is hereby paying the aggregate purchase price for such shares of Common Stock (the “Exercise Shares”) (i) by the enclosed certified or official bank check payable in United States dollars to the order of the Company in the amount of $___________, or (ii) by wire transfer of United States funds to the account of the Company in the amount of $______________, which transfer has been made before or simultaneously with the delivery of this Form of Exercise; or (iii) by electing to exercise the attached Warrant for __________ of the shares purchasable under the Warrant pursuant to the net exercise provisions of Section 1(b) of the Warrant.

C.

Please issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned Holder.

____________________________________________

By:

_____________________________________

Its:

_____________________________________

Dated:

_____________________________________

8EX 10.3 Unsecured Convertible Promissory Note

Exhibit 10.3

THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SUCH SALE, TRANSFER OR ASSIGNMENT IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR SATISFIES THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR IS EFFECTED PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM SUCH REGISTRATION.

 FRIENDLY ENERGY EXPLORATION

UNSECURED CONVERTIBLE PROMISSORY NOTE

$_____________

______________, 2011

Friendly Energy Exploration, a Nevada corporation (the “Corporation”), for value received, promises to pay to the order of __________________, or its permitted assigns (“Holder”), the principal sum of __________________($__________), plus simple interest thereon from the date of this Note (the “Note”) until fully-paid at the rate of _______ percent (__________%) per annum payable in cash or stock or such lesser rate of interest as may be required by applicable laws regulating the legal rate of interest.  

1.

Maturity.  This Note shall mature automatically and the entire outstanding principal amount, together with all interest accrued under this Note, is payable over a five (5) year period from the date of issuance (“Maturity Date”), unless this Note, before such date, is converted into shares of capital stock of the Corporation pursuant to Section 5 hereof.

2.

Payment of Principal and Interest.  Interest payments shall be due and payable quarterly in arrears on the date that is 30 days after the end of each calendar quarter.  Payments of principal and any accrued but unpaid interest are to be made on or before the Maturity Date. All payments are to be made at the address of Holder set forth on the signature page of this Note or at such other place in the United States as Holder designates to the Corporation in writing. Interest under this Note shall be computed on the basis of a 360-day year and 30 day month. 

3.

Prepayment.

(a)

Subject to the Holder’s right to convert pursuant to Section 5, this Note may be prepaid at any time or from time to time, in whole and not in part, without penalty, upon 10 days advance written notice to the Holder.  

(b)

Each such prepayment shall include all interest then accrued but unpaid on this Note.

4.

Waiver of Presentment.  The Corporation hereby waives presentment of this Note, protest, dishonor and notice of dishonor.

5.

Conversion of Note.

(a)

Conversion into Stock.  At the option of the Holder, at any time, the principal amount of this Note and any accrued interest may be converted into fully-paid and nonassessable shares of Common Stock at the Conversion Price (as defined herein).  The number of such shares of Common Stock that Holder shall be entitled to receive, and shall receive, upon such conversion shall be determined by dividing the aggregate amount of principal and interest under this Note being so converted by the Conversion Price (as defined herein).  Holder agrees to execute and deliver the form of Notice of Conversion attached hereto.  Upon receipt by the Corporation of any such Notice of Conversion, the election to convert shall be irrevocable and the date the Notice of Conversion was executed by the Holder shall be the “Conversion Date”.

(b)

Conversion Price.  Subject to adjustment as provided below, the “Conversion Price” shall equal _____ ($______) per share.

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(c)

Stock Certificates.  Upon conversion into Common Stock, the Corporation shall issue and deliver to Holder, or to Holder’s nominee or nominees, a certificate or certificates representing the number of shares of Common Stock to which Holder shall be entitled as a result of conversion as provided herein.  

(d)

Adjustments to Conversion Price for Diluting Issues.

(i) Special Definitions. For purposes of this Subsection 5(d), the following definitions shall apply:

(A) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities, excluding rights or options granted to employees, directors or consultants of the Corporation pursuant to an option plan adopted by the Board of Directors to acquire up to that number of shares of Common Stock as is equal to twenty  (20%) percent of the Common Stock outstanding (provided that, for purposes of this Subsection 5(d)(i)(A), all shares of Common Stock issuable upon exercise of options granted or available for grant under plans approved by the Board of Directors shall be deemed to be outstanding.

(B) "Original Issue Date" shall mean the date on which the Note is first issued.

(C) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock.

(D) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Subsection 5(d)(iii) below, deemed to be issued) by the Corporation after the Original Issue Date, and other than shares of Common Stock issued or issuable:

(1)  as a dividend or distribution on all shares of Common Stock;

(2) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock in Subsection 5(d)(i)(D);

(3) upon the exercise of options excluded from the definition of "Option" in Subsection 5(d)(i)(A); or

(4) upon conversion of the Notes.

(E) "Rights to Acquire Common Stock" (or "Rights") shall mean all rights issued by the Corporation to acquire Common Stock whatever by exercise of a warrant, option or similar call or conversion of any existing instruments, in either case for consideration fixed, in amount or by formula, as of the date of issuance.

(ii) No Adjustment of Conversion Price. No adjustment in the number of shares of Common Stock issuable upon conversion of the Notes shall be made, by adjustment in the applicable Conversion Price thereof: (a) unless the consideration per share (determined pursuant to Subsection 5(d)(v)) below for an Additional Share of Common Stock issued or deemed to be issued by the Corporation is less than the applicable Conversion Price in effect on the date of, and immediately prior to, the issue of such additional shares, or (b) if prior to such issuance, the Corporation receives written notice from the holders of at least a majority of the then outstanding Notes (determined by principal amount) agreeing that no such adjustment shall be made as the result of the issuance of Additional Shares of Common Stock.

(iii) Issue of Securities Deemed Additional Shares of Common Stock. If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or other Rights to Acquire Common Stock, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options, Rights or, in the case of Convertible Securities, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Subsection 5(d)(v) hereof) of such Additional Shares of Common Stock would be less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued:

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(A) No further adjustment in the Conversion Price shall be made upon the subsequent issue of shares of Common Stock upon the exercise of such Rights or conversion or exchange of such Convertible Securities;

(B) Upon the expiration or termination of any unexercised Option or Right, the Conversion Price shall not be readjusted, but the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option or Right shall not be deemed issued for the purposes of any subsequent adjustment of the Conversion Price; and

(C) In the event of any change in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any Option, Right or Convertible Security, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the Conversion Price then in effect shall forthwith be readjusted to such Conversion Price as would have obtained had the adjustment that was made upon the issuance of such Option, Right or Convertible Security not exercised or converted prior to such change been made upon the basis of such change, but no further adjustment shall be made for the actual issuance of Common Stock upon the exercise or conversion of any such Option, Right or Convertible Security.

(iv) Adjustment of Conversion Price upon Issuance of Additional Shares of Common Stock. If the Corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 5(d)(iii), but excluding shares issued as a dividend or distribution as provided in Subsection 5(f) or upon a stock split or combination as provided in Subsection 5(e)), without consideration or for a consideration per share less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Conversion Price shall be reduced, concurrently with such issue to a price equal to the price at which such Additional Shares of Common Stock were issued and sold.

Notwithstanding the foregoing, the applicable Conversion Price shall not be reduced if the amount of such reduction would be an amount less than $.005, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $.005 or more.

(v) Determination of Consideration. For purposes of this Subsection 5(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(A) Cash and Property: Such consideration shall:

(1) insofar as it consists of cash, be computed at the aggregate of cash received by the Corporation, excluding amounts paid or payable for accrued interest or accrued dividends;

(2) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and

(3) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board of Directors.

(B) Options, Rights and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 5(d)(iii), relating to Options, Rights and Convertible Securities, shall be determined by dividing:

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(1) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options, Rights or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options, Rights or the conversion or exchange of such Convertible Securities, by

(2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(e) Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Conversion Price then in effect immediately before that subdivision shall be proportionately decreased. If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Conversion Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

(f) Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time, or from time to time after the Original Issue Date shall make or issue, a dividend or other distribution payable in Additional Shares of Common Stock, then and in each such event the Conversion Price shall be decreased as of the time of such issuance, by multiplying the Conversion Price by a fraction:

(i)

the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance, and

(ii)

the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

(g) Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of the Notes shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Notes been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period given application to all adjustments called for during such period, under this paragraph with respect to the rights of the holders of the Notes.

(h) Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the conversion of the Notes shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets for below), then and in each such event the holder of each Notes shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such Notes might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

6.

No Rights as Stockholder.  This Note does not entitle Holder to voting rights or any other right as a shareholder of the Corporation before the conversion hereof.  

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7.

Loss, Theft or Destruction of Note.  Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss, theft or destruction of this Note and of indemnity or security reasonably satisfactory to the Corporation, the Corporation shall make and deliver a new Note that shall carry the same rights to interest (unpaid and to accrue) carried by this Note, stating that such Note is issued in replacement of this Note, making reference to the original date of issuance of this Note (and any successor hereto) and dated as of such cancellation, in lieu of this Note.

8.

Severability.  Every provision of this Note is intended to be severable.  If any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable.

9. 

Miscellaneous.

(a)

No Fractional Units or Scrip.  No fractional shares or scrip representing fractional units shall be issued upon the conversion of this Note.  In lieu of any fractional shares to which Holder otherwise would be entitled, the Corporation shall make a cash payment equal to the Conversion Price multiplied by such fraction. 

(b)

Issue Date.  The provisions of this Note shall be construed and shall be given effect in all respects as if this Note had been issued and delivered by the Corporation on the earlier of the date hereof or the date of issuance of any Note for which this Note is issued in replacement.  This Note shall be binding on any successor or assign of the Corporation.

(c)

Governing Law.   This Note shall constitute a contract under the laws of the State of Nevada and for all purposes shall be construed in accordance with and governed by the laws of the State of Nevada, without regard to the conflicts of laws provisions thereof.

(d)

Compliance With Usury Laws.  The Corporation and Holder intend to comply with all applicable usury laws.  In fulfilling this intention, all agreements between the Corporation and Holder are expressly limited so that the amount of interest paid or agreed to be paid to Holder for the use, forbearance, or detention of money under this Note shall not exceed the maximum amount permissible under applicable law.

If for any reason payment of any amount required under this Note shall be prohibited by law, then the obligation shall be reduced to the maximum allowable by law.  If for any reason Holder receives as interest an amount that would exceed the highest lawful rate, then the amount which would constitute excessive interest shall be applied to the reduction of the principal of this Note and not to the payment of interest.  If any conflict arises between this provision and any provision of any other agreement between the Corporation and Holder, then this provision shall control.

(e)

Legal Representation.  Holder agrees and represents that such party has been represented by such party's own legal counsel with regard to all aspects of this Note, or if such party is acting without legal counsel, that such party has had adequate opportunity and has been encouraged to seek the advice of such party's own legal counsel prior to the execution of this Agreement.

(f)

Jurisdiction. 

Any action whatsoever brought upon or relating to this Note shall be instituted and prosecuted in the state courts located in Nevada, or the federal district court therefore, and each party waives the right to change the venue.  The parties hereto further consent to accept service of process in any such action or proceeding by certified mail, return receipt requested, 

(g)

Restrictions.  Holder acknowledges that all shares of Common Stock acquired upon the conversion of this Note shall be subject to restrictions on resale imposed by state and federal securities laws.

5

(h)

Assignment.  Subject to restrictions on resale imposed by state and federal securities laws, Holder may assign this Note or any of the rights, interests or obligations hereunder, by operation of law or otherwise, in whole or in part, to any person or entity so long as such assignee agrees to be bound by the terms and conditions of the Agreement (including the representations and warranties of the purchasers therein). Effective upon any such assignment, the person or entity to whom such rights, interests and obligations are assigned shall have and exercise all of Holder’s rights, interests and obligations hereunder as if such person or entity were the original Holder of this Note.

(i)

Notices.  Any notice, request or other communication required or permitted hereunder shall be given upon personal delivery, overnight courier or upon the fifth (5th) day following mailing by registered mail (or certified first class mail if both the addresser and addressee are located in the United States), postage prepaid and addressed to the parties hereto as follows:

To the Corporation:

Friendly Energy Exploration

6005 N. Highway 279

Brownwood, TX 76801

Attention:  Douglas Tallant

To Holder:

At the address set forth on the signature page hereto or to such other single place as any single addressee designates by written notice to the other addressee.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, Friendly Energy Exploration has caused this Unsecured Convertible Promissory Note to be executed by its officer thereunto duly authorized.

The “Corporation”

FRIENDLY ENERGY EXPLORATION,

a Nevada corporation

___________________________________________________

                                                            By:  Douglas Tallant, 

Its:   Chief Executive Officer

Accepted and Agreed to:

“Holder”

___________________________________

Print Name of Entity

___________________________________

Signature and Title

Address:

___________________________________

___________________________________

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NOTICE OF CONVERSION

Friendly Energy Exploration

6005 N. Highway 279

Brownwood, TX 76801

This Notice is provided to inform you that the undersigned irrevocably elects to convert the Unsecured Convertible Promissory Note (the “Note”) of Friendly Energy Exploration, a Nevada corporation (the “Corporation”), as provided in Section 5 of the Note, effective as of the date written below.  

The conversion price of the Note shall be determined in accordance with Section 5.  The number of shares to which the undersigned will be entitled shall be determined by dividing (i) the principal of and accrued interest on this Note set forth below by (ii) the conversion price.

Effective as of the Conversion Date, this Note is cancelled and terminated as to the amount of the principal and interest set forth below.  The undersigned will receive a stock certificate of Friendly Energy Exploration representing the number of shares of stock into which the Corporation Common Stock is converted.

		
	Date:________________

	 

	 
	Signature

	 
	 

	 
	 

	Print Name

		
	Principal amount:___________________

	Address:

	 
	_____________________________________

	Accrued interest:____________________

	_____________________________________

	 
	_____________________________________

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