Document:

f8k01_x101-ptel.htm

 

Exhibit 10.1 - Securities Purchase Agreement for Series C

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set forth below, is entered into by and between PEGASUS TEL, INC., a Delaware corporation (the “Company”), and the undersigned (individually and collectively, the “Buyer”).

 

W I T N E S S E T H:

 

 

WHEREAS, the Company and the Buyer are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Section 4(2) promulgated under the Securities Act of 1933, as amended (the “Act”); and

 

WHEREAS, the Company is authorized to issue up to ten million (10,000,000) shares of preferred stock, par value $0.0001 per share (the “Preferred Stock, in one or more classes with rights and designations as determined and established by the Company’s Board of Directors; and

 

WHEREAS, on June 13, 2011, by unanimous written consent, the Board of Directors of the Company resolved to create a class of Preferred Stock designated as Series C which Convertible Preferred Stock with all rights and distinctions as set forth in that certain Certificate of Designations prepared and provided to the Board;

 

WHEREAS, on June 13, 2011, the proper officer of the Company caused to be filed the Certificate of Designations with the Secretary of State of the State of Delaware; and

 

WHEREAS, on March 12, 2012, by unanimous written consent, the Board of Directors of the Company resolved to amend the terms of the class of Preferred Stock designated as Series C which Convertible Preferred Stock with all rights and distinctions as set forth in that certain Amendment to Certificate of Designation or Amended and Restated Certificate of Designation prepared and provided to the Board;

 

WHEREAS, on March 12, 2012, the proper officer of the Company caused to be filed the Amendment to Certificate of Designation or Amended and Restated Certificate of Designation with the Secretary of State of the State of Delaware; and

 

WHEREAS, the Buyer wishes to purchase one million (1,000,000) of the Company’s shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Shares”), upon the terms and subject to the conditions of this Agreement;

 

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NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.           AGREEMENT TO PURCHASE; PURCHASE PRICE.

 

a.           Purchase.  The Buyer hereby agrees to purchase from the Company one million (1,000,000) of the Shares. The purchase price for the Shares shall be $0.0001 (the par value) per Share for a total of One Thousand ($1,000.00) Dollars and shall be payable in United States Dollars (the “Purchase Price”).

 

b.           Form of Payment; Escrow Arrangements; Offering Termination Date.  The Buyer shall pay the Purchase Price for the Shares by check or wire directly to the Company.

 

2.           BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

 

The Buyer represents and warrants to, and covenants and agrees with, the Company as follows:

 

a.           The Buyer is purchasing the Shares for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof;

 

b.           The Buyer is (i) an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the Act by reason of Rule 501(a)(3), and/or (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and (iv) able to afford the entire loss of its investment in the Shares;

 

c.           All subsequent offers and sales of the Shares by the Buyer shall be made pursuant to registration under the Act or pursuant to an exemption from registration;

 

d.           The Buyer understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of the Buyer set forth herein in

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order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Shares;

 

e.           The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by the Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries.

 

f.           The Buyer understands that its investment in the Shares involves a high degree of risk;

 

g.           The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares;

 

h.           This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally.

 

3.           COMPANY REPRESENTATIONS, ETC.

 

The Company represents and warrants to the Buyer that:

 

a.           Company Status.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary other than those jurisdictions in which the failure to so qualify would not have a material and adverse effect on the business, operations, properties, prospects or condition (financial or otherwise) of the Company.

 

b.           Authorized Shares.  The Company has authorized and reserved for issuance, free from preemptive rights, the Shares and the shares of Common Stock issuable upon the conversion of the Shares (the “Conversion Shares,” and together with the Shares, the “Securities”).  The Shares have been, duly authorized and will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder.

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c.           Securities Purchase Agreement.  This Agreement and the transactions contemplated hereby have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement, when executed and delivered by the Company, will be, a valid and binding agreement of the Company enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally.

 

d.           Non-contravention.  The execution and delivery of this Agreement by the Company, the issuance of the Securities, and the consummation by the Company of the other transactions contemplated by this Agreement do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the articles of incorporation or by-laws of the Company, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or (iv) to its knowledge, order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have a material adverse effect on the transactions contemplated herein. The Company is not in violation of any material laws, governmental orders, rules, regulations or ordinances to which its property, real, personal, mixed, tangible or intangible, or its businesses related to such properties are subject.

 

e.           Approvals.  No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market is required to be obtained by the Company for the issuance and sale of the Shares to the Buyer as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.

 

f.           No Trading Market.  There is no trading market for the Securities.

 

4.           CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

 

a.           Transfer Restrictions.  The Buyer acknowledges that (1) the Securities have not been registered under the provisions of the Act and may not be transferred unless (A) subsequently registered thereunder, as provided for herein, or (B) the Buyer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the

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Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; and (2) any sale any Security made in reliance on Rule 144 promulgated under the Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of that Security under circumstances in which the seller, or the person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the Act, may require compliance with some other exemption under the Act or the rules and regulations of the SEC thereunder.

 

b.           Restrictive Legend.  The Buyer acknowledges and agrees that the Securities and, until such time as they are registered under the Act as hereinafter contemplated, the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer thereof):

 

THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

c.           Filings.  The Company undertakes and agrees to make all necessary filings in connection with the sale of the Securities to the Buyer under any United States laws and regulations, or by any domestic securities exchange or trading market, and to provide a copy thereof to the Buyer promptly after such filing.

 

d.           Available Conversion Shares.  The Company shall have at all times authorized and reserved for issuance, free from preemptive rights, shares of Common Stock equal to the Conversion Shares.

 

5.           GOVERNING LAW:  MISCELLANEOUS.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware.  A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.  This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.  This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement.  This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

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6.           NOTICES.  Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given, (i) on the date delivered, (a) by personal delivery, or (b) if advance copy is given by fax, (ii) seven business days after deposit in the United States Postal Service by regular or certified mail, or (iii) three business days mailing by international express courier, with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days advance written notice to each of the other parties hereto.

 

COMPANY:                PEGASUS TEL, INC.

118 Chatham Road

Syracuse, New York 13203

Attention:                     Joseph Passalaqua, President

 

with a copy to:

 

The Law Offices of Sec Attorneys, LLC

Jerry Gruenbaum, Esq.

2 Corporate Drive, Suite 234

Shelton, Connecticut 06484

 

BUYER:   At the address set forth on the signature page of this Agreement.

 

7.           SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or one of its officers thereunto duly authorized as of the date set forth below.

 

 

	 	 Total-Invest International B.V. 	 	 Address:	 Lange Stammerdijk 31
	 	 Print Name of Buyer	 	 	 1109 BL Amsterdam
	 	 	 	 	 The Netherlands
	 	 	 	 	 
	 By:	/s/JM Erkelens	 	 Fax No.	 
	 	(Signature of Authorized Person)	 	 	 
	 	 	 	 	 
	 	 JM Erkelens, Managing Director	 	 Jurisdiction	 The Netherlands
	 	 Printed Name and Title	 	 	 of incorporation or organization
	 	 	 	 	 
	 	  Chamber of Commerce # 32038850	 	 	 
	 	 Taxpayer identification number	 	 	 
	 	 or social security number, as applicable	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 This Agreement has been accepted as of the date set forth below.	 	 	 
	 	 	 	 	 
	 	 PEGASUS TEL, INC.	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	 /s/Joseph Passalaqua	 	 	 
	 	Joseph Passalaqua, President 	 	 	 
	 	 	 	 	 
	Dated:	March 12, 2012 	 	 	 

 

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Exhibit 10.15

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS.

 

 

10% CONVERTIBLE NOTE

 

Due February 8, 2013

 

No: 2012 CN - 00

US$ _________ February 8, 2012

For value received, Circle Star Energy Corp., a Nevada corporation (the “Company”), promises to pay to [name], [address] (the “Holder”), the principal sum of $[amount], on February 8, 2013 (the “Stated Maturity Date”), unless payable earlier under the terms set forth in Section 1.

 

 

This 10% Convertible Note, due February 8, 2013 (this “Note”), is one of an authorized issue of Notes each designated as “10% Convertible Note, due February 8, 2013” (collectively, the “Notes”) and issued subject to an Inter-Creditor Agreement (the “Inter-Creditor Agreement”) made effective as of February 8, 2012, between the Company and each Holder of Notes.  The Inter-Creditor Agreement specifies certain terms and conditions and the rights of the registered Holders of the Notes, and are incorporated by reference in this Note and to each of which the Holder, by acceptance hereof, agrees.  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Inter-Creditor Agreement.  To the extent there is any discrepancy between this Note and the Inter-Creditor Agreement, the terms of the Inter-Creditor Agreement shall prevail.

 

The Inter-Creditor Agreement contains provisions for the holding of meetings of registered Holders of the Notes issued and the making of resolutions at such meetings and the creation of instruments in writing signed by the registered holders of a specified majority of Notes issued and outstanding under the terms of the Inter-Creditor Agreement.  Such resolutions and instruments will be binding on and may affect the rights and entitlements of all holders of the Notes, subject to the provisions of the Inter-Creditor Agreement.

 

This Note is subject to the following terms and conditions.

 

1.           Maturity and Interest.  Unless converted as provided in Section 2 or payable earlier at the election of the Holder, this Note will automatically mature and be due and payable on the Stated Maturity Date or, at the election of the Holder, on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal amount at the election of the Holder of the Note (based on the ratio of the Holder’s Principal Amount relative to the aggregate Principal Amount of all Notes); (ii) the sale or partial sale of JHE Holdings, LLC, a Texas limited liability company, wholly-owned by the Company (“JHE”); (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined herein).  The events described in clauses (i), (ii) and (iii) are each a “Triggering Event” and the Company agrees to provide each Note holder notice of a Triggering Event within five calendar days.

 

  

  

  

 

Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to ten percent (10%) per annum, payable monthly in arrears on the first Business Day of each calendar month beginning on March 1, 2012.

 

The principal amount and Interest will be payable in lawful money of United States at the address of the Holder.

 

2.           Conversion; Payment; Etc.

 

(a)           This Note shall be convertible at any time, in whole or in part, at the option of the Holder, into such number of fully paid and nonassessable shares of Common Stock of the Company (“Common Stock”), and at the Holder’s option accrued interest, on (i) the Stated Maturity Date or (ii) any Triggering Event at a conversion price of $1.50 per Common Share.

 

(b)           The conversion price shall be subject to adjustment from time to time as hereinafter provided in this Section 2(b):

 

(i) If the Company at any time divides the outstanding shares of its Common Stock into a greater number of shares (whether pursuant to a stock split, stock dividend or otherwise), and conversely, if the outstanding shares of its Common Stock are combined into a smaller number of shares, the conversion price in effect immediately prior to such division or combination shall be proportionately adjusted to reflect the reduction or increase in the value of each such common share.

 

(ii) If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of the Company’s Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for such Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, Holder shall have the right to purchase and receive upon the basis and upon the terms and conditions specified in this Note and in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, other securities or assets as would have been issued or delivered to Holder if Holder had exercised this Note and had received such shares of Common Stock immediately prior to such reorganization, reclassification, consolidation, merger or sale.  The Company shall not effect any such consolidation, merger or sale unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed to the Holder at the last address of the Holder appearing on the books of the Company the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase.

 

  

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(c)           No fractional shares of the Company’s capital stock will be issued upon conversion of this Note.  In lieu of any fractional share to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share.  Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company.  At its expense, the Company will, as soon as practicable thereafter, issue and deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion, together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein.  Upon conversion of this Note and the deliveries required pursuant to this Section 2 in connection with such conversion, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount and accrued interest.

 

Notwithstanding any other provision hereof, no Holder shall convert this Note or any portion thereof, if as a result of such conversion the holder would then become a “beneficial owner” (as determined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of 9.99% or more of the issued and outstanding Common Stock.  For greater certainty, the Note shall not be convertible by the Holder to the extend that, if, after giving effect to such conversion, the holder of such securities, together with its affiliates, would in aggregate beneficially own, or exercise control or direction over that number of voting securities of the Company which is 9.99% or greater of the total issued and outstanding voting securities of the Company, immediately after giving effect to such conversion.

 

(d)           Payment of Interest on Conversion.  Upon conversion of the entire principal amount of this Note into the Company’s capital stock, any interest accrued on this Note that is not by reason of Section 2 hereof simultaneously converted into Common Stock shall be immediately paid to the Holder.

 

(e)           Payment.  All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.  This Note may be prepaid at any time without the prior written consent of the Holder.

 

3.           Event of Default. Each of the following events shall be an “Event of Default” in respect of the Notes:

 

(a)  failure to pay principal on any of the Notes when due;

 

(b)  failure to pay interest on any of the Notes when due if such failure continues for a period of 5 Business Days;

 

(c)  failure to observe or perform any other covenant or condition contained in the Inter-Creditor Agreement;

 

(d)  proceedings are commenced for the winding-up, liquidation or dissolution of the Company or JHE, unless the Company or JHE, as applicable, in good faith actively and diligently contests such proceedings, decree, order or approval, resulting in a dismissal or stay thereof within 60 days of commencement;

 

  

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(e)  a decree or order of a court of competent jurisdiction is entered adjudging the Company or JHE, as applicable, to be bankrupt or insolvent, or a petition seeking reorganization, arrangement or adjustment of or in respect of the Company or JHE, as applicable, is approved under applicable law relating to bankruptcy, insolvency or relief of debtors;

 

(f)  the Company or JHE makes an assignment for the benefit of its creditors, or petitions or applies to any court or tribunal for the appointment of a receiver or trustee for itself or any substantial part of its property, or commences for itself or acquiesces in any proceeding under any bankruptcy, insolvency, reorganization, arrangement or readjustment of debt law or statute or any proceeding for the appointment of a receiver or trustee for itself or any substantial part of its property, or suffers any such receivership or trusteeship;

 

(g)  a resolution is passed for the winding-up or liquidation of the Company or JHE, as applicable;

 

(h)  breach of any term, or failure to observe or perform any covenant or condition, of any Note or the Inter-Creditor Agreement; and

 

(i)  failure on the part of the Company or JHE, as applicable, to cause each document required by law or reasonably requested by the Holders to be filed, registered or recorded in order to create in favor of the Holders a valid, legal and perfected security interest in and lien on the JHE Assets or grant the Kansas Royalty Interest under the terms of the Inter-Creditor Agreement.

The Holder shall have the right, at its sole option, to declare this Note immediately due and payable irrespective of the Maturity Date specified herein, upon an Event of Default.

4.          Change of Control.  The Holder shall have the right, at its sole option, to declare this Note immediately due and payable irrespective of the Maturity Date specified herein, ten business days prior to the effective date of any Change of Control Transaction undertaken without the prior written consent of the Holder, which consent the Holder shall have no obligation to give.  A “Change of Control Transaction” means (i) any sale of equity securities or securities convertible into equity securities of the Company; (ii) any merger, consolidation, statutory share exchange or acquisition transaction involving the Company or any material subsidiary of the Company; (iii) any sale of substantially all of the assets of the Company or any material subsidiary of the Company; or (iv) any similar transaction involving the issuance, cancellation or restructuring of equity securities of the Company unless, following the completion of such transaction, the then existing shareholders of Company own or control, directly or indirectly, at least 50% of the voting power or liquidation rights of Company or the successor of such merger, consolidation or statutory share exchange.  In the event of a contemplated Change of Control Transaction, the Company shall provide the Holder at least Fifteen business days prior to the effective date of any Change of Control Transaction, except as may otherwise be prohibited by law.

 

  

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5.           Transfer; Successors and Assigns.

 

(a)           The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  This Note may be transferred, or divided into two or more Notes of smaller denomination, subject to the following conditions.  The Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Note of such Holder’s intention to do so, describing briefly the manner of the proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel.  If in the opinion of the Company’s counsel the proposed transfer may be effected without constituting a violation of the applicable U.S. state or federal securities laws, then the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Note, provided that an appropriate legend may be endorsed on this Note respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel satisfactory to the Company to prevent further transfers which would be in violation of  such securities laws or adversely affect the exemptions relied upon by the Company.  To such effect, the Company may request that the intended transferee execute an investment letter satisfactory to the Company and its counsel.

 

(b)           A register of the issuance and transfer of this Note shall be kept at the office of the Company, and this Note may be transferred only on the books of the Company maintained at its office.  Each transfer shall be in writing signed by the then registered Holder hereof or the Holder’s legal representatives or successors, and no transfer hereof shall be binding upon the Company unless in writing and duly registered on the register maintained at the Company’s office.  Upon transfer of this Note, the transferee, by accepting the Note, agrees to be bound by the provisions, terms, conditions and limitations of this Note.

 

(c)           If in the opinion of the counsel referred to in this Section 5, the proposed transfer or disposition of the Note described in the Holder’s written notice given pursuant to this Section 5 may not be effected without registration or without adversely affecting the exemptions relied upon by the Company, the Company shall promptly give written notice to the Holder and the Holder will limit its activities and restrict its transfer accordingly.

 

6.           Governing Law.  This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Nevada, without giving effect to principles of conflicts of law.

 

  

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7.           Notices.  Any notice required or permitted by this Note shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by a nationally-recognized delivery service (such as Federal Express or UPS), or seventy-two (72) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party’s address as set forth herein or as subsequently modified by written notice.

 

8.           Amendments and Waivers.  Any term of this Note may be amended only with the written consent of the Company and the Holder and under the terms and conditions set forth in the Inter-Creditor Agreement. Any amendment or waiver effected in accordance with this Section 8 and the Inter-Creditor Agreement shall be binding upon the Company, the Holder and each transferee of the Note.

 

Company hereby waives presentment for payment, notice of dishonor, protest and notice of protest.  If this Note is not paid when due, the Company agrees to pay all costs of collection, including reasonable attorneys’ fees.

 

THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEVADA.

 

CIRCLE STAR ENERGY CORP.

 

 

By:                                                                                 

Its:                                                                                  

Address: ______________________________

 

  

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ASSIGNMENT/TRANSFER FORM

	
TO:

	
CIRCLE STAR ENERGY CORP.

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

 

	 	 
	Name	 
	 	 
	Address	 
	 	 
	Social Insurance Number, Social Security Number or Tax Identification Number	 

 

US$____________ of the principal amount of 10% Convertible Note, due February 8, 2013 (the “Note”), registered in the name of the undersigned represented by the within certificate and do hereby irrevocably constitute and appoint ___________ attorney to transfer the said Note on the books of the Company with full power of substitution in the premises.

The undersigned understands that, as a condition to any transfer of a Note, the Company may request a legal opinion, in form and substance reasonably satisfactory to the Company and its legal counsel, stating that such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended.

DATED the ______ day of ________, 20___.

Signature of Transferor:

____________________________

(Signature of Transferor)

Guaranteed by:

____________________________

Authorized Signature Number

NOTICE:

The signature to this transfer must correspond in every particular with the name as shown on the face of this certificate and the endorsement must be signature guaranteed, in either case, by a Chartered Bank, or by a medallion signature guarantee from a member recognized under the Signature Medallion Guarantee Program or from a similar entity in the United States. The stamp affixed thereon by the guarantor must bear the actual words “signature guarantee”, OR “signature medallion guarantee” or in accordance with industry standards.

 

  

  

  

 

CONVERSION FORM

 

TO:           CIRCLE STAR ENERGY CORP.  (the “Company”)

 

The undersigned hereby exercises the right to convert US$____________ of the principal amount of 10% Convertible Note, due February 8, 2013 (the “Note”), registered in the name of the undersigned represented by the within certificate, into shares of common stock in the capital of the Company (“Common Stock”) at the conversion price of US$1.50 per share.

 

The undersigned holder understands that unless the Common Stock issuable upon the conversion of the Note are registered under the 1933 Act and the securities laws of all applicable states of the United States and the undersigned has provided a written opinion of counsel satisfactory to the Company to such effect, the certificate representing the Common Stock issued upon Conversion of this Note will bear the following restrictive legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT IN ACCORDANCE WITH RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS”.

 

If the full principal amount of the Note represented by the Note certificate is not being converted, a new Note certificate will be issued and delivered with the Common Share certificates.

 

Please issue a certificate for the Common Stock being purchased as follows in the name of the undersigned.

 

DATED at ______________________________ this _________ day of _________________, ______.

 

	
                                                                                        

Signature Witnessed (see instructions to Holder)

	
                                                                                                                                                                                                                     

Signature of Holder (to be the same as appears on the face of the Note Certificate) or authorized signing officer if a corporation

	
Name of Note Holder:

	                                                                                                                                                                                                                                     
	
Address (please print):

	
                                                                                                   

                                                                                                   

  

  

  

 

INSTRUCTIONS TO HOLDERS

 

TO CONVERT:

 

To convert the Note, the Note Holder must complete, sign and deliver the Conversion Form, and deliver the Note Certificate(s) to Circle Star Energy Corp. (the “Company”) at the address set forth below indicating the principal amount of the Note converted and the number of Common Stock to be acquired.  In such case, the signature of such registered holder on the Conversion Form must be witnessed.

 

GENERAL:

 

For the protection of the Holder, it would be prudent to use registered mail if forwarding documents by mail.

 

If the Conversion Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Note Certificate must also be accompanied by evidence of authority to sign satisfactory to the Company.

 

The address of the Company is:

 

CIRCLE STAR ENERGY CORP. (the “Company”)

 

Attn: Jonathon Pina, Chief Financial Officer

 

919 Milam Street, Suite 2300

 

Houston, TX 77002

 

USA

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