Document:

ex10-03.htm

 

Exhibit 10.03

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

 

 

	  	
US $20,000.00

 

WORTHINGTON ENERGY, INC.

6% CONVERTIBLE REDEEMABLE SECURED NOTE

DUE SEPTEMBER 27, 2013

FOR VALUE RECEIVED the Company promises to pay to the order of Prolific Group, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Twenty Thousand dollars exactly (U.S. $20,000.00) on September 27, 2013 and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on September 27, 2012. The Company acknowledges that it has received $15,600 in cash proceeds as well as directing the payment of $1,400 in cash proceeds to counsel for the Holder for the documentation and negotiation of this transaction along with $3,000 previously owed to such
counsel, for a total of $20,000 paid by Holder to the Company. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note.  The principal of, and interest on, this Note are payable at 16192 Coastal Highway, Lewes, DE, 19958, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time.  The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.  The
forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer.  Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1.           This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

  

 

  

 

2.           The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3.           This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws.  Any attempted transfer to a non-qualifying party shall be treated by the Company as void.  Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary.  Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.           (a)           The Holder of this Note is entitled, at its option, at any time after October 15, 2012, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a conversion price ("Conversion Price") for
each share of Common Stock equal to 70% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange") with a floor of $0.00001 per share, for any of the five trading days including the day upon which a Notice of Conversion is received by the Company, provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time, or the trading day on which a Notice of Conversion is received by the Company provided such Notice of Conversion is delivered by fax or other electronic
communication to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time. The Conversion Price may be adjusted downward if, within 3 business days of the transmittal of the Notice of Conversion to the Company, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion.  Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion.  Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank.  Accrued but
unpaid interest shall be subject to conversion.  No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.

(b)         Interest on any unpaid principal balance of this Note shall be paid at the rate of 6% per annum.  Interest shall be paid by the Company in Common Stock ("Interest Shares").  The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above.  The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

  

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(c)         At any time the Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full. The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to convert this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.

(d)         Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e)         In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion
Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

5.           No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6.           The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

  

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7.           The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8.           If one or more of the following described "Events of Default" shall occur:

(a)          The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)          Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or

(c)          The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note; or

(d)          The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for  bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)          A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(f)           Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g)          One or more money judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($10,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h)          Bankruptcy, reorganization, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted voluntarily by or involuntarily against the Company; or

(i)           The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;

  

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(j)           If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or

(j)           The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 5 business days of its receipt of a Notice of Conversion.

Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of
the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

 

9.           In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10.         Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

11.         The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer.  Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.

12.         The Company will issue irrevocable transfer agent instructions reserving 15,000,000 pre-reverse shares of Common Stock for conversion under this Note.  The reserve shall be replenished as needed to allow for conversions of this Note.  Upon full conversion of this Note, the reserve representing this Note shall be cancelled. The Holder will send the Company a notice of conversion upon every conversion from this collateral reserve conversion showing the amount of principal and interest paid down and the number of shares converted as a
result.  Any shares remaining after the amounts due under this Note has been fully converted will be returned to the Company or applied to the conversion of outstanding notes issued by the Company. The Holder may also use these shares to convert any other convertible debt instruments that are outstanding with the Company. The Holder may need to send the Company transfer agent and its broker an initial conversion notice for the total amount of the shares being escrowed so they may be deposited this initial conversion notice shall have no effect upon the actual shares being converted.

  

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13.         This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto.  The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York.  This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

Dated:  ________________________________                                          

 

 

	  	
WORTHINGTON ENERGY, INC.

	  	  
	  	
By: __________________________________

	  	  
	  	
Title: _________________________________

  

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EXHIBIT A

NOTICE OF CONVERSION

 (To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Worthington Energy, Inc.  (“Shares”) according to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

 

Date of Conversion: __________________________________________________________________________________

 

Applicable Conversion Price: ___________________________________________________________________________

 

Signature: _________________________________________________________________________________________

[Print Name of Holder and Title of Signer]

 

Address: __________________________________________________________________________________________ 

 

                 __________________________________________________________________________________________

 

SSN or EIN: ______________________________________

 

Shares are to be registered in the following name: _____________________________________________________________

 

Name: _____________________________________________________________________________________________

 

Address: ___________________________________________________________________________________________

 

Tel: __________________________________

 

Fax: __________________________________

 

SSN or EIN: _____________________________

 

Shares are to be sent or delivered to the following account:

 

Account Name: _______________________________________________________________________________________

 

Address: ____________________________________________________________________________________________

 

 

7ex10-04.htm

 

Exhibit 10.04

WORTHINGTON ENERGY, INC.

NOTE AND WARRANT PURCHASE AGREEMENT

This Note and Warrant Purchase Agreement (the "Agreement") is made as of October 8, 2012 among Worthington Energy, Inc., a Nevada corporation (the "Company"), with its principal office at 220 Montgomery Street #1094, San Francisco, CA 94104, and the individual or entity whose signature appears on the last page of this Agreement "Investor".

The Investor understands that the Company proposes to offer and sell to a limited number of sophisticated investors up to an aggregate of $250,000 principal amount of unsecured promissory notes (individually a “Note” and collectively the “Notes”) and warrants (individually a “Warrant” and collectively the “Warrants”) to purchase shares of Common Stock in the Company.

1.             Purchase and Sale of the Notes.

 

a.            The Notes and the Warrants

i.           The Notes.  Subject to the terms and conditions of this Agreement, each Investor agrees to lend to the Company the principal amount as set forth opposite the Investors name on the last page of this Agreement (the "Loan Amount"), provided that each Investor loan is in a minimum amount of $25,000.00 or greater.  The Investors Loan Amount shall be evidenced by a Note in the form of Exhibit A.  The securities into which the Notes are convertible are referred to as the "Note Stock".   The number of shares of Note Stock for
which the Notes are convertible is set forth in the Note.

ii.           The Warrants.  Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase and the Company agrees to issue to each Investor at the Closing a Warrant in the form of Exhibit B to purchase shares of Common Stock of the Company as set forth in the Warrant and exercisable at price set forth in the Warrant.  The securities for which the Warrants are exercisable into are referred to as the “Warrant Stock”.

 

 

iii.           The Securities.  The Note Stock, the Note, the Warrants and the Warrant Stock shall collectively be referred to as the "Securities".

b.            Initial Closing.

The purchase and sale of the Notes shall take place at the offices of the Company at 220 Montgomery Street #1094, San Francisco, CA 94104 ("Closing").  At the Closing, the Company shall deliver to the Investor the Note ­ and the Warrant which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the ag­gregate amount of the purchase price therefore payable to the Company's order.

2.             The Company's Representations and Warranties.  The Company represents and warrants to the Investor as follows:

  

  

  

a.            Organization and Standing.  The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.  The Company is duly qualified to conduct business in the State of California as a foreign corporation.

b.            Authorization.  The execution, delivery and perfor­mance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights.  The execution, delivery and performance of this Agreement and compli­ance with the provisions
hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.

c.            Securities. When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.

 

3.             Representations, Warranties of Investor and Restrictions on Transfer

a.            Representations and Warranties of Investor.  The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:

 

i.           This Agreement constitutes the Investor’s valid and legally binding obligation, enforceable in accordance with its terms.

ii.          The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act").  The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

iii.          The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities.  The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.

 

iv.          The Investor realizes that the acquisition of the Securities will be a highly speculative investment.  The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment.  The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks.  The Investor understands all of the risks related to the acquisition of the Securities.  By virtue of the
Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.

  

  

  

 

v.           The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available.  Moreover, the Investor understands that the Company is under no obligation to register the Securities.  The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of secur­ities purchased in a private placement subject to the satisfaction of certain conditions.  The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities
unless they are registered or such registration is not required in the opinion of counsel for the Company.

b.           Legends.  In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

  The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied.  The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.

c.           Removal of Legends and Transfer Restrictions.  The legend relating to the Act endorsed on a stock certificate or Note pursuant to paragraph 3(b) of this Agreement and the stop transfer instruc­tions with respect to such Securities shall be removed and the Company shall issue a stock certificate or Note without such legend to the holder of such Securities if such Shares or Note are regis­tered under the Act and a prospectus meeting the requirements of Section 10
of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restric­tion such as Rule 144.  Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.

  

  

  

4.             Miscellaneous.

a.           Governing Law.  This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.

b.           Survival.  The representations and warranties con­tained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.

c.           Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

d.           Entire Agreement.  This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.

e.           Notices, etc.  All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address
as the Company shall have furnished to the Investor in writing.

f.           California Corporate Securities Law.  THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.

 

g.           Titles and Subtitles.  The titles of the paragraphs and subparagraphs of this Agreement are for convenience of refer­ence only and are not to be considered in construing this Agreement.

h.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

i.           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities.  Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securit­ies pur­chased under this Agreement at the time outstanding (including securities into which such securities are
convertible), each future holder of all such securities, and the Company.

 

  

  

  

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.

	
COMPANY:

	
WORTHINGTON ENERGY, INC.

	  	
a Nevada corporation

	  	  
	
 

	By: __________________________________________________
	  	  
	  	  

	
INVESTOR:

	  
	  	  
	
$_______

	
Stephen K. Rush and Nancy B. Rush   Amount of Investment

	  	  
	  	
_______________________

	  	  
	  	
________________________

	  	  

 

  

  

  

CONFIDENTIAL PURCHASER QUESTIONNAIRE

WORTHINGTON ENERGY, INC.

THIS QUESTIONNAIRE MUST BE ANSWERED FULLY AND RETURNED ALONG WITH YOUR COMPLETED SUBSCRIPTION AGREEMENT IN CONNECTION WITH YOUR PROSPECTIVE PURCHASE OF SECURITIES FROM WORTHINGTON ENERGY, INC. (THE “COMPANY”).

THE INFORMATION SUPPLIED IN THIS QUESTIONNAIRE WILL BE HELD IN STRICT CONFIDENCE.  NO INFORMATION WILL BE DISCLOSED EXCEPT TO THE EXTENT THAT SUCH DISCLOSURE IS REQUIRED BY LAW OR REGULATION, OTHERWISE DEMANDED BY PROPER LEGAL PROCESS OR IN LITIGATION INVOLVING THE COMPANY AND ITS CONTROLLING PERSONS.

Capitalized terms used herein without definition shall have the respective meanings given such terms as set forth in the Subscription Agreement between Worthington Energy, Inc. and the subscriber signatory thereto (the “Subscription Agreement”).

(1)           The undersigned represents and warrants that he, she or it comes within at least one category marked below, and that for any category marked, he, she or it has truthfully set forth, where applicable, the factual basis or reason the undersigned comes within that category.  The undersigned agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.

	
Category A  

	
The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.

	  	  
	  	
Explanation.  In calculating net worth you may include equity in personal property and may include real estate, provided, however, you can not include your principal residence),  cash, short-term investments, stock and securities.  Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.

	  	  
	
Category B  

	
The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.

	  	  
	
Category C  

	
The undersigned is a director or executive officer of the Company which is issuing and selling the Securities.

	 	 
	Category D  	The undersigned is a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Act”); a savings and loan associa­tion or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; any insurance company as defined in Section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors (describe entity).

 

  

  

  

 

	
Category E  

	
The undersigned is a private business development company as defined in section 202(a) (22) of the Investment Advisors Act of 1940 (describe entity)

	  	  
	  	  
	  	  

	
Category F  

	
The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Securities and with total assets in excess of $5,000,000. (describe entity)

	  	  
	  	  
	  	  
	  	  
	
Category G  

	
The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, where the purchase is directed by a “sophisticated investor” as defined in Regulation  506(b)(2)(ii) under the Act.

 

	
Category H  

	
The undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories.  If relying upon this Category alone, each equity owner must complete a separate copy of this Purchaser Questionnaire.  (describe entity)

  

  

  

 

	 	__________________________________________________________________________________________________
	 	 __________________________________________________________________________________________________
	 	 
	 	The undersigned agrees that the undersigned will notify the Company at any time on or prior to the applicable closing in the event that the representations and warranties in this Purchaser Questionnaire shall cease to be true, accurate and complete.

 

(2)           Suitability (please answer each question)

 

	 	(a)	For an individual, please describe your current employment, including the company by which you are employed and its principal business:
	 	_________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________

 

	 	
(b)

	
For an individual, please describe any college or graduate degrees held by you:

	 	_________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________

 

	 	
(c)

	For all subscribers, please list types of prior investments:
	 	_________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________
	 	 
	 	 

 

	 	
(d)

	
For all subscribers, please state whether you have you participated in other private placements before:

	 	_________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________
	 	 _________________________________________________________________________________________________________

	 	
YES

	  	 	
NO

	  

 

  

  

  

 

 

	 	
(e)

	
If your answer to question (d) above was “YES”, please indicate frequency of such prior participation in private placements of:

	 	  	

Public

Companies

 

	 	

Private

Companies

 

	 	
Frequently

	  	 	  
	 	
Occasionally

	  	 	  
	 	
Never

	  	 	  

 

	 	
(f)

	
For individuals, do you expect your current level of income to significantly decrease in the foreseeable future?

 

	 	
YES

	  	 	
NO

	  

	
  

	
(g)

	
For trust, corporate, partnership and other institutional subscribers, do you expect your total assets to significantly decrease in the foreseeable future?

 

	 	
YES

	  	 	
NO

	  

 

	 	
 
(h)

	
For all subscribers, do you have any other investments or contingent liabilities which you reasonably anticipate could cause you to need sudden cash requirements in excess of cash readily available to you?

 

	 	
YES

	  	 	
NO

	  

 

	
  

	
(i)

	
For all subscribers, are you familiar with the risk aspects and the non-liquidity of investments such as the Securities for which you seek to purchase?

 

	 	
YES

	  	 	
NO

	  

	
  

	
(j)

	
For all subscribers, do you understand that there is no guarantee of financial return on this investment and that you run the risk of losing your entire investment?

	 	
YES

	  	 	
NO

	  

(3)           Manner in which title is to be held: (circle one)

	 	
(a)

	
Individual Ownership

	 	
(b)

	
Community Property

	 	
(c)

	
Joint Tenant with Right of Survivorship (both parties must sign)

	 	
(d)

	
Partnership

 

  

  

  

 

	 	
(e)

	
Tenants in Common

	 	
(f)

	
Company

	 	
(g)

	
Trust

	 	
(h)

	
Other

(4)           FINRA Affiliation.

Are you affiliated or associated with an FINRA member firm (please check one):

 

	 	
YES

	  	 	
NO

	  

If Yes, please describe how you are affiliated/associated:

_________________________________________________________

_________________________________________________________

_________________________________________________________

*If subscriber is a Registered Representative with an FINRA member firm, have the following acknowledgment signed by the appropriate party:

The undersigned FINRA member firm acknowledges receipt of the notice required by the FINRA Conduct Rules.

_________________________________

Name of FINRA Member Firm

By: ______________________________

Authorized Officer

Date: ____________________________

(5) For Trust Subscribers

A. Certain trusts generally may not qualify as accredited investors except under special circumstances.  Therefore, if you intend to purchase the securities of the Company in whole or in part through a trust, please answer each of the following questions.

Is the trustee of the trust a national or state bank that is acting in its fiduciary capacity in making the investment on behalf of the trust?

	
Yes o

	
 No o

Does this investment in the Company exceed 10% of the trust assets?

  

  

  

 

	
Yes o

	
 No o

B. If the trust is a revocable trust, please complete Question 1 below.  If the trust is an irrevocable trust, please complete Question 2 below.

1.           REVOCABLE TRUSTS

Can the trust be amended or revoked at any time by its grantors:

 

	
Yes o

	
 No o

If yes, please answer the following questions relating to each grantor (please add sheets if necessary):

Grantor Name: _________________________

Net worth of grantor exceeds $1,000,000 (including spouse, if applicable, real estate (excluding personal residence), automobiles, cash, short-term investments, stock and securities.  Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property) ?

 

	
Yes o

	
 No o

 

OR

Income (exclusive of any income attributable to spouse) was in excess of $200,000 for 2010 and 2011 and is reasonably expected to be in excess of $200,000 for 2012?

 

	
Yes o

	
 No o

OR

Income (including income attributable to spouse) was in excess of $300,000 for 2010 and 2011 and is reasonably expected to be in excess of $300,000 for 2012?

	
Yes o

	
 No o

2.           IRREVOCABLE TRUSTS

If the trust is an irrevocable trust, please answer the following questions:

  

  

  

Please provide the name of each trustee:

Trustee Name: ________________________________________

Trustee Name: ________________________________________

Does the trust have assets greater than $5 million?

 

	
Yes o

	
 No o

Do you have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company?

	
Yes o

	
 No o

Indicate how often you invest in:

Marketable Securities

	 	
Often o

	
Occasionally o

	
Seldom o

	
Never o

 

Restricted Securities

	 	
Often o

	
Occasionally o

	
Seldom o

	
Never o

 

Venture Capital Companies

 

	 	
Often o

	
Occasionally o

	
Seldom o

	
Never o

This completes the questions applicable to Trust Investors.  Please sign below.

[Remainder of page intentionally left blank]

  

  

  

The undersigned has been informed of the significance to the Company of the foregoing representations and answers contained in this Confidential Purchaser Questionnaire and such representations and answers have been provided with the understanding that the Company and the Placement Agent will rely on them.

	  	
Individual

	  	  
	
Date___________________________________________________________          

	 
	  	
Name of Individual

	  	
(Please type or print)

	  	  
	  	
_______________________________

	  	
Signature of Individual

	  	  
	  	  
	  	
_______________________________

	  	
Name of Joint Owner

	  	
(Please type or print)

	  	  
	  	  
	  	
_______________________________

	  	
Signature (Joint Owner)

	  	  
	  	  
	  	
Partnership, Corporation or

	  	
Other Entity

	
Date___________________________________________________________          

	 
	  	
Print or Type Entity Name

	  	  
	  	
By: Name:_______________________

	  	
Print or Type Name

	  	  
	  	
Title: ___________________________

	  	  
	  	
_________________________________

	  	
Signature

	  	  
	  	
Title: ____________________________

	  	  
	  	
_________________________________

	  	
Signature

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