Document:

istar_8k-ex1001.htm

 

Exhibit 10.1

 

PROMISSORY NOTE

	
$200,000.00

	
October 13, 2010

For value received, INTERNATIONAL STAR, INC. (“Promisor”), promises to pay to the order of BEAIRD OPERATING COMPANIES, L.L.C. (“Payee”), at 330 Marshall, Suite 1112, Shreveport, Louisiana, 71101 (or at such other place as Payee may designate in writing), as follows:

$200,000.00 plus 12% simple interest per year on the outstanding principal balance, on the date 14 months after the date of execution of this promissory note (“Note”) when all outstanding principal and any accrued but unpaid interest shall be due and payable in full (the “Due Date”), subject to the provisions contained herein below.

At any time while any amount owed under this Note remains unpaid, Payee shall have the option to: (a) demand payment in accordance with the terms set forth above; or (b) as an alternative, convert Payee’s warrants to purchase 20,000,000 (twenty million) shares of Promisor’s common stock (the “Warrants”) into common stock according to the terms of the Warrant Agreement between Promisor and Payee dated the date hereof, in full satisfaction of the Note; or (c) as a further alternative, Payee may leave the amount owed hereunder intact and exercise the Warrants by paying Promisor $200,000.00 for same.

This Note and ALL obligations contained herein shall be secured by a priority security interest/lien in the form of a 49% (forty-nine percent) interest in:  (a) the mineral rights of all mining claims which Promisor owns or has an interest in, whether now or in the future, in the Detrital Wash properties located in Mohave County, Arizona, and (b) all future claims of Promisor in the revenues generated by or from such properties.  At Promisor’s option, said security interest may be converted to a priority security interest/lien on 49% of Promisor’s share of proceeds from any joint venture or licensing agreement which Promisor enters in order to develop the above-referenced mining claims, PROVIDED THAT, at the time of the proposed conversion of the security interest, the joint venture partner or licensee is a solvent company and such joint venture partner or licensee estimates in good faith that the fair market value of the claims that are subject to the joint venture or licensing agreement is equal to or greater than twice the amount of the then outstanding principal balance.  Promisor agrees to execute whatever documentation is determined reasonable by Payee in order to evidence and perfect any and all of the liens/security interests securing this Note.

If all amounts owed under this Note are not fully paid on or before the Due Date, and Payee does not convert to repayment by way of the Warrants, the unpaid principal balance loan will be subject to a 1.5 x liquidation preference (e.g., principal due would increase to $300,000.00 if the unpaid principal balance is $200,000 after Due Date) and will accrue simple interest after the Due Date at 12% per annum of the liquidation preference amount.  After the Due Date, Payee, in its discretion, may:  (i) deem any such outstanding balance fully satisfied upon Payee’s subsequent conversion of all of the Warrants as described above, (ii) reduce the outstanding balance owed upon exercise of the Warrants in an amount equal to the exercise price of some or all of the Warrants exercised and maintain any additional balance as outstanding debt owed, or (iii) maintain the entire outstanding balance as debt owed by paying cash only upon exercise of any Warrants.

  

  

  

All payments shall be applied first in payment of accrued interest and any remainder in payment of principal.  This Note may be prepaid, in whole or in part, at any time without penalty.

If any payment obligation under this Note is not paid when due, Promisor promises to pay all costs of collection, including reasonable attorney fees not to exceed 20% (twenty percent) of the amount sought to be collected, whether or not a lawsuit is commenced as part of the collection process.

If any of the following events of default occur, this Note shall become due immediately, without demand or notice:

	
(1)  

	
the dissolution of Promisor;

	
(2)  

	
the filing of bankruptcy proceedings involving Promisor as a Debtor;

	
(3)  

	
the application for appointment of a receiver for Promisor;

	
(4)  

	
the making of a general assignment for the benefit of Promisor’s creditors;

	
(5)  

	
the insolvency of Promisor;

No renewal or extension of this Note, delay in enforcing any right of Payee under this Note, or assignment by Payee of this Note shall affect the liability of Promisor.  All rights of Payee under this Note are cumulative and may be exercised concurrently or consecutively at Payee’s option.

This Note shall be construed in accordance with the laws of the State of Louisiana.

If any one or more of the provisions of this Note are determined to be unenforceable, in whole or in part, for any reason, the remaining provisions shall remain fully operative and the objectionable provison shall be conformed to the minimum extent necessary to comply with applicable law.

All payments of principal and interest on this Note shall be paid in the legal currency of the United States.

Promisor waives presentment for payment, demand, notice of non-payment, protest, and notice of protest and nonpayment of this Note, and all pleas of division or discussion, and consents that time of payment may be extended without notice hereof.

Signed this 13th day of October, 2010.

  INTERNATIONAL STAR, INC. (PROMISOR)

  By: /s/ Sterling M. Redfern______________

        Name:  Sterling M. Redfern

        Title:  Presidentistar_8k-ex1002.htm

 

Exhibit 10.2

 

SECURITY AGREEMENT

 

 

This Security Agreement is made and entered into this 13th day of October, 2010, by and between Beaird Operating Companies, LLC (“Lender”), and International Star, Inc., a Nevada corporation (“Borrower”).

For the mutual covenants and promises herein, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged as received between the parties, the parties have agreed as follows:

	  	
1.

	
Secured Debts.  This Security Agreement will secure the following debts ("Secured Debts"), together with all extensions, renewals, re-financings, modifications, or replacements of these debts: Lender has made a loan to Borrower, and Borrower has accepted sums of money and borrowed from Lender in the sum of U.S. Two Hundred Thousand Dollars (U.S. $200,000) principal amount (the "debt"), evidenced by a corporate promissory note, of even date herewith.

	  	
2.

	
Security Interest.  To secure the payment and performance of the Secured Debt, Borrower gives to Lender a security interest in all of the property described in this Security Agreement that Borrower owns or has sufficient rights in which to transfer an interest now or in the future, wherever the property is or will be located, and all proceeds and products from the property (including but not limited to all parts, accessories, repairs, replacements, improvements, and accessions to the property).  Property is all the collateral given as security for the Secured Debts and described in this Security Agreement, and includes all obligations that support the payment or performance of the property.  “Proceeds” includes anything acquired upon the sale, lease, license, exchange or other disposition of the property; any rights and claims arising from the property; and any collections and distributions on account of the property.

Property also includes any original evidence of title or ownership whether evidenced by a certificate of title or ownership, a manufacturer’s statement of origin or other documents when the property is titled under state or federal law.  Borrower will deliver the title documents, if any, and properly execute such title documents as necessary to reflect Lender’s security interest.  This Security Agreement remains in effect until terminated in writing, even if the Secured Debts are paid and Lender is no longer obligated to advance any funds to Borrower under any credit or loan agreement.

	  	
3.

	
Property Description.   The property subject to this Security Agreement is described as follows:  a forty-nine per cent (49%) interest in the mineral rights of certain mining claims in the Detrital Wash properties located and situated in Mohave County, Arizona, and any future claims acquired by International Star, Inc.  As set forth in the promissory note referenced above, made a part hereof by reference, Lender has the right to convert its security interest to 49% of Borrower’s share of proceeds from any joint venture or licensing agreement which Borrower enters into in order to develop the mining claims referenced above.  This Security Agreement is intended to apply to such proceeds.

	  	
4.

	
Duties Toward Property.

	  	
a.

	
Protection of Secured Party’s Interest:  Borrower will defend the property against any other claim.  Borrower agrees to take such reasonable action as may be necessary to protect Lender’s security interest and to keep its claim in the property ahead of the claims of other creditors.  Borrower will not affirmatively do anything to harm Lender’s position.  Borrower will keep books, records, and accounts about its business and the property.  Lender may examine these and make copies at any reasonable time.  Borrower will prepare any reasonable report or accounting of the property as requested by Lender.  Lender will maintain the confidentiality of any information provided or made available to Lender under this paragraph, unless and until such information is publicly disclosed by Borrower.

  

  

  

	  	
b.

	
Uses, Location and Protection of Property.  Borrower will keep the property in its possession and in good repair and will use the property only for the commercial uses intended.  Borrower will not change the specified uses of the property without Lender’s prior written consent, which shall not unreasonably be withheld.  Lender has the right of reasonable access to inspect the property using all due care upon entering the property.  Borrower will not permit waste on the property and will immediately inform Lender of any change of use, loss or damage to the property of a material nature.  Borrower will at all times be in compliance with any local, state or federal laws pertaining to the use or operation of the mining activities on the property and will carry sufficient liability insurance.  Notwithstanding the foregoing provisions, Borrower may determine in its discretion not to record or renew any mining claims for which Borrower, in consultation with its geologists, determines that the commercial value of such claims is not sufficient to justify the cost to record or maintain such claims.

	  	
c.

	
Selling, Leasing or Encumbering the Property.  Any disposition of the property contrary to this Security Agreement may adversely affect the rights of Lender.  Consequently, Borrower will not sell, offer to sell, lease, or otherwise transfer or encumber the property without prior written consent of Lender, which shall not unreasonably be withheld.  Borrower will not permit the Property to be the subject of any court order or decree affecting its rights in the property in any action by anyone other than Lender.  If the property includes chattel paper or instruments, either as original collateral or as proceeds of the property, Borrower will note Lender’s security interest on the face of the chattel paper or instruments.

	  	
5.

	
Authority to Perform.  Borrower authorizes Lender to do anything it deems reasonably necessary to protect the property, and to perfect and continue Lender’s security interest in the property.  If Borrower fails any of its duties under the Note, or this Security Agreement, Lender is authorized, without notice to Borrower, to perform the duties or cause them to be performed, including but not limited to:

	  	
a.

	
Pay and discharge taxes, liens, security interests, or other encumbrances at any time levied or placed on the property.

	  	
b.

	
Pay any rents or other charges under any lease affecting the property.

	  	
c.

	
Order and pay for the repair, maintenance and preservation of the property.

	  	
d.

	
Sign, when permitted by law, and file any financing statements on Borrower’s behalf and pay for filing or recording fees.

	  	
e.

	
Place a note on any chattel paper indicating Lender’s interest in the property.

	  	
f.

	
Take any action Lender deems necessary to realize on the property, including performing any part of a contract or endorsing it in Borrower’s name.

	  	
g.

	
Handle any suits or other proceedings involving the property in Borrower’s name.

	  	
h.

	
Prepare, file and sign Borrower’s name to any necessary reports or accountings.

	  	
i.

	
Make an entry on Borrower’s books or records showing the existence of this agreement.

Lender has no obligation to perform for Borrower.  But if Lender performs for Borrower, it will use reasonable care to preserve and protect the property.

  

  

  

	  	
6.

	
The note and security interest therein is assignable in whole or in part by Lender upon reasonable written notice to Borrower.

	  	
7.

	
7.     Borrower hereby represents and warrants to Lender that Borrower has all the authority necessary to enter into this security agreement.  The officer signing this security agreement and the note and loan agreement has all of the necessary corporate authority to bind Borrower to the terms and conditions of performance recited herein.

	  	
8.

	
Borrower authorizes Lender to file a financing statement, notice of security interest, or notice of lien covering the property.  Borrower will comply with, assist, or otherwise facilitate such filing for perfecting of Lender’s security interest.

	  	
9.

	
Any notices called for herein shall be deemed delivered if deposited in the U. S. mail with first class postage prepaid and addressed as follows:

 

	
If to Borrower:

	
International Star, Inc.

Post Office Box 7202

Shreveport, Louisiana 71137

 

	
If to Lender:

	
Beaird Operating Companies, LLC

330 Marshall, Suite 1112

Shreveport, Louisiana 71101

 

	  	
10.

	
In the event of Borrower’s default, Lender shall be entitled to costs of collection to enforce the terms of the security agreement, including reasonable attorney fees and court costs.  This agreement may be interpreted according to the commercial laws of the State of Louisiana and may be enforced in the proper court or courts of jurisdiction in that state.

	  

Dated the above date.  In witness the parties have executed this agreement.

	
BORROWER 

	
LENDER 

	  	  
	
International Star, Inc.

	
Beaird Operating Companies, LLC

	  	  
	
By: /s/ Sterling M. Redfern                                 

      Sterling M. Redfern

      President

	
By: /s/ J. B. Beaird                                      

      Name:  J. B. Beaird

      Title:  Manager

	  	  
	
By: /s/ Jacqulyn B. Wine                                   

       Jacqulyn B. Wine

       Secretary and Treasurer

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