Document:

Unassociated Document

 

EXHIBIT W

 

<Included as Exhibit 10.2>

 

  

  

  

 

10.2 - Form of Common Stock Purchase Warrant

 

[Form of] Common Stock Purchase Warrant

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

VIZSTAR, INC.

A NEVADA CORPORATION (THE “COMPANY”)

CLASS A WARRANT CERTIFICATE

 

	
No.

	
Number of Class A Warrants

	
1

	
16,000,000

 

THIS CLASS A WARRANT CERTIFICATE CERTIFIES that, for value received, _______________________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after issuance (the “Initial Exercise Date”) and on or prior to the close of business on the first anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from the Company, one fully paid and nonassessable share of common stock, $.0001 par value (the “Common Stock”) per Class A Warrant (hereinafter defined as “Warrant” and the “Warrant Shares” underlying such Warrant). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $0.0001, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein.

 

1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 8 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part to an affiliate of the Holder, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

 

2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

  

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3. Exercise of Warrant.

 

(a) Except as provided in Section 4 herein, exercise of the purchase rights represented by this Warrant may be made upon five (5) days notice by the Holder to the Company following the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or by means of a cashless exercise pursuant to Section 3(c). Certificates for shares purchased hereunder shall be delivered to the Holder within five (5) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised as set forth above. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the fifth Trading Day after the date of exercise, then the Holder will have the right to rescind such exercise.

 

(b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

(c) This Warrant may also be exercised by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the average of the high and low trading prices per share of Common Stock on the trading day preceding the date of such election;

(B) = the Exercise Price of the Warrants; and

(X) = the number of shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

 

4. Conditions Precedent to Exercise of Warrants. This Warrant is intended to provide a mechanism for the Holder to maintain Holder’s pro rata interest in the Company for one year following the Closing under a Stock Purchase Agreement between the Company and the Holder. As such, this Warrant may only be exercised if the Company issues additional shares of its common stock to any person during the one year period following the Initial Exercise Date. Further, Holder may only exercise this Warrant to maintain Holder’s 53.85% ownership interest in the Company. For example, if the Company issues 46,150 shares of its common stock to a third party during the term of the Warrant, the Holder could exercise a portion of this Warrant and obtain 53,850 more shares for cash consideration of $53.85.

 

5. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

 

  

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6. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

7. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

8. Transfer, Division and Combination.

 

(a) Subject to compliance with any applicable securities laws and the conditions set forth hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 8(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 8.

 

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

 

(e) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

 

  

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9. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon exercise as set forth in Section 3, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on such date.

 

10. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

12. Adjustments of Exercise Price and Number of Warrant Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

 

  

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13. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event, or (b) cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 13. For purposes of this Section 13, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 13 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

 

14. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount for any period of time deemed appropriate by the Board of Directors of the Company.

 

15. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

 

16. Notice of Corporate Action. If at any time:

 

(a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

 

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

 

  

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(c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 18(d).

 

17. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal market upon which the Common Stock may be listed.

 

18. Miscellaneous.

 

(a) Jurisdiction. This Warrant shall constitute a contract under the laws of Nevada, without regard to its conflict of law, principles or rules.

 

(b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

  

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(d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered by first class mail or overnight delivery to the Holder’s address of record.

 

(e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(f) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or Holder of Warrant Shares.

 

(h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

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

 

	
Dated: June ___, 2010

	 
	 	 
	
 

	

VIZSTAR, INC.

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  

 

  

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NOTICE OF EXERCISE

 

To: The Company

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

[ ] in lawful money of the United States; or [ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(c).

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

The Warrant Shares shall be delivered to the following:

 

	  	
PURCHASER

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  
	  	  	  
	  	
Dated:

	  

 

  

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

Dated: ______________, _______

 

Holder’s Signature:______________________________

 

Holder’s Address:_______________________________

 

Signature Guaranteed: ___________________________________________

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

  

10Unassociated Document

Exhibit 10.3 - Convertible Note dated December 16, 2009

 

	
$100,000.00

	
Dated as of: December 16, 2009

 

CONVERTIBLE NOTE

 

SECTION 1. PROMISE TO PAY: For value received, Celestial Jets, Inc. (“Celestial”), with offices at 425 Madison Avenue, New York, NY 10017, promises to pay to the order of Celestial Jets, LLC (the “Lender”) at its office at 25 Ellicott Place, Staten Island, New York 10301, or at such other place as the holder hereof may designate in writing, in lawful money of the United States, the principal sum of One Hundred Thousand Dollars, plus interest on the principal sum outstanding from the date hereof until paid, all as set forth below.

 

SECTION 2. INTEREST: The rate of interest under this Note shall be ten per cent (10%) per annum.

 

SECTION 3. PAYMENT AMOUNTS: On June 1, 2011, Celestial shall pay to the holder hereof all interest accrued on this Note through May 31, 2010, and no payments shall be due on this Note prior to June 1, 2011. On the first day of each month thereafter, Celestial shall pay to the Lender a monthly payment equal to the interest owed for the prior month. The entire remaining principal balance of this Note plus any unpaid interest and all other amounts owing under this Note or the Mortgage, unless previously converted pursuant to Section 5, will be due and payable in full on December 16, 2011 (the “Maturity Date”). Notwithstanding such Maturity Date, the full principal balance and all accrued but unpaid interest on Note shall be payable on demand upon the occurrence of any of the following events:

 

	  	
a.

	
any registration statement filed under the Securities Act of 1933 (the “Act”) with respect to any securities of Celestial or any successor entity becomes effective;

	  	  	  
	  	
b.

	
Celestial engages in any merger transaction in which Celestial is not the surviving entity.

 

Payments received hereunder shall be applied first to the payment of any advances, penalties or late charges owed by or made for the account of Celestial whether pursuant to this Note or otherwise and other amounts owed as the result of any default by Celestial, then to interest due on this Note, and then to the reduction of the principal sum due. Celestial agrees to pay forthwith a late charge of 5% of each payment that is not paid within 10 days of its due date. The late charge shall be calculated as a percentage of all principal and interest due.

 

SECTION 4. PREPAYMENT: This Note may not be prepaid in whole or in part except with the written consent of Lender.

 

  

  

  

 

SECTION 5. CONVERSION AND REGISTRATION RIGHTS:

 

	  	
a.

	
The Lender, by written notice to Celestial given at any time prior to the Maturity Date, shall have the right to convert this Note in one or more transactions in equity ownership interests in Celestial. Upon exercising the right to convert with respect to the entire principal balance of this Note, the Lender shall receive an equity ownership interest in Celestial equal to 9.000% of the aggregate of all equity interests in Celestial on a pro forma basis after the completion of the conversion, and assuming that all other convertible notes issued by Celestial that have not been previously exercised or converted are simultaneously converted into equity interests in Celestial. If Lender exercise the right to convert only a part of the principal balance of this Note, then Lender shall be entitled to receive a pro rata share of the equity interests that Lender would be entitled to receive upon the conversion of this entire Note.

	  	  	  
	  	
b.

	
If, prior to exercising the right to convert, Celestial engages in any business combination in which Celestial is not the surviving entity, then Celestial shall be obligated to create in Lender a legally enforceable right to covert this Note into equity interests in the resulting entity or entities in such business combination equal in amount to the equity interests in such resulting entity or entities that Lender would have been entitled to receive if this Note had been converted in full into equity interests in Celestial immediately prior to such business combination. In the event of successive business combinations, Lender shall be given the right to obtain the same equity interest in the ultimate resulting entity or entities as if this Note had been converted into equity interests in Celestial immediately prior to the first such business combination. Celestial or any such resulting entity shall be required to include in any merger agreement or other comparable agreement provisions protecting the rights of the holder of this Note that are set forth in this Section 5.

	  	  	  
	  	
c.

	
Celestial agrees, for itself and for resulting entity that is the surviving entity in a business combination in which Celestial engages (Celestial or such resulting entity being referred to herein as the “Filer”), upon written demand by the holder hereof, to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) on Form S-1 under the Act with respect to the securities into which this Note may be converted (the “Securities”), so as to permit a non-underwritten public offering and resale of such Securities by Lender. The Filer will exercise its best efforts to assure that the Registration Statement satisfies all applicable requirements of the Act and the regulations of the Commission thereunder. The Filer agrees to diligently pursue making the Registration Statement effective. The Filer will notify Lender of the effectiveness of the Registration Statement within one (1) business day of receiving notice from the Commission. Such Registration Statement may be filed on a form other than Form S-1 only with the prior written consent of the holder hereof.

 

  

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d.

	
The Filer will maintain the Registration Statement and any post-effective amendment thereto filed under this Section 5 effective under the Act until the earliest of (i) the date that none of the Securities covered by such Registration Statement are issued and outstanding, (ii) the date that all of the Securities have been sold pursuant to such Registration Statement, (iii) the date Lender receives an opinion of counsel from the Filer, which counsel shall be reasonably acceptable to Lender, that the Securities may be sold under the provisions of Rule 144, (iv) the date that all Securities have been otherwise transferred to persons who may trade such Securities without restriction under the Act, and the Filer has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend, or (v) the date all Securities may be sold at any time, without volume or manner of sale limitations, pursuant to Rule 144(k) or any similar provision then in effect under the Act in the opinion of counsel to the Filer, which counsel shall be reasonably acceptable to Lender.

	  	  	  
	  	
e.

	
The Filer, at its expense, shall furnish to Lender with respect to the Securities registered under the Registration Statement such reasonable number of copies of the Registration Statement, prospectuses and preliminary prospectuses in conformity with the requirements of the Act and such other documents as Lender may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Securities by Lender, provided, however, that the obligation of the Filer to deliver copies of prospectuses or preliminary prospectuses to Lender shall be subject to the receipt by the Filer of reasonable assurances from Lender that Lender will comply with the applicable provisions of the Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses or preliminary prospectuses.

	  	  	  
	  	
f.

	
All fees, disbursements and out-of-pocket expenses and costs incurred by the Filer in connection with the preparation and filing of the Registration Statement and in complying with applicable securities and blue sky laws (including, without limitation, all attorneys’ fees of the Filer) shall be borne by the Filer. Lender shall bear the cost of fees and expenses of Lender’s counsel.

	  	  	  
	  	
g.

	
The Filer will advise Lender promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission delaying or suspending the effectiveness of the Registration Statement or of the initiation of any proceeding for that purpose, and the Filer will use commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

	  	  	  
	  	
h.

	
With a view to making available to Lender the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the Commission that may at the time permit Lender to sell the Securities to the public without registration, the Filer covenants and agrees, from and after the Registration Statement is declared effective, to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earliest of (A) such date as all of the Securities may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as all of the Securities shall have been resold; and (ii) file with the Commission in a timely manner all reports and other documents required of the Filer under the Act and under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended.

 

  

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i.

	
Lender will cooperate with the Filer in all respects in connection with the preparation of the Registration Statement, including timely supplying all information reasonably requested by the Filer (which shall include all information regarding Lender and the proposed manner of sale of the Securities required to be disclosed in any Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Securities and entering into and performing their obligations under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the managing underwriter or underwriters of such underwritten offering. Nothing in this Agreement shall obligate Lender to consent to be named as an underwriter in any Registration Statement.

	  	  	  
	  	
j.

	
The Filer shall prepare and file with the SEC such amendments and supplements to the Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all Securities covered by the Registration Statement; provided, however, that before filing a registration statement or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Filer will furnish to one counsel to be designated by Lender, copies of all such documents proposed to be filed.

	  	  	  
	  	
k.

	
The provisions of this Section 5 shall survive the conversion, payment or maturity of this Note.

 

SECTION 6. DEFAULT: An Event of Default shall include:

 

	  	
a)

	
any failure to pay, when due, any amount due hereunder;

	  	
b)

	
the failure to perform any of the terms, covenants or conditions of this Note;

	  	
c)

	
the filing by or against Celestial of any petition under the Bankruptcy Code or proceeding for receivership or under any insolvency, dissolution or conservation statute;

	  	
d)

	
the suspension of business, commencement of liquidation, assignment for the benefit of creditors, making of any offer of settlement, extension or composition, appointment of a committee of creditors or a liquidating agent, by or for Celestial; or

	  	
e)

	
the issuance of an attachment, injunction, execution, tax lien or filing of a judgment or other lien against Celestial.

 

The entire amount due and owing under this Note shall be immediately due and payable at the option of the Lender, without notice or demand except as expressly set forth herein, if any one or more of such Events of Default occurs, or if pursuant to any other provision of this Note, the Lender has the option to so require that this Note be repaid immediately in full.

 

  

4

  

 

SECTION 7. COLLECTION AND LITIGATION: Celestial agrees to pay any and all costs and expenses incurred by the holder hereof in the collection of this Note or the enforcement or interpretation of any of its provisions (including attorneys’ fees whether or not litigation is commenced). Celestial expressly waives any and every right to impose any counterclaim, setoff or defense in any action or proceeding brought hereunder, except for the defense of payment. This Note shall be governed by and construed in accordance with the laws of the State of New York. Celestial agrees to submit to the jurisdiction of the Supreme Court of the State of New York and agrees that personal jurisdiction over Celestial shall rest with such court for all purposes.

 

SECTION 8. TRANSFER OF NOTE: The Lender may transfer this Note and may deliver the security or any part thereof to the transferee or transferees, who shall thereupon become vested with all the powers and rights given to the Lender under the terms of any agreement executed by Celestial in connection with this Note; and the Lender shall thereafter be forever relieved and fully discharged from any liability or responsibility in the matter.

 

SECTION 9. WAIVER AND LIABILITY: Celestial and all endorsers hereof waive presentment and demand for payment, notice of dishonor, protest, and notice of protest. This Note and its provisions shall apply to and bind Celestial jointly and severally.

 

SECTION 10. NOTICES AND DEMANDS: (a) The making of any demand, oral or written, or the giving of any notice, in any one or more instances shall not establish a course of conduct nor constitute a waiver of the Lender’s rights. The Lender shall not be required to give any notice under this Note except as expressly provided in this Note.

 

(b) Any notices required or permitted to be given hereunder shall be: (i) personally delivered or (ii) given by registered or certified mail, postage prepaid, return receipt requested, or (iii) forwarded by nationally recognized overnight delivery service such as Federal Express or UPS, in each instance addressed to the addresses set forth at the beginning of this Note or such other addresses as the parties may for themselves designate by notice. All notices shall be in writing and shall be deemed given, in the case of notice by personal delivery, upon actual delivery, and in the case of appropriate mail or courier service, three days after deposit with the U.S. Postal Service or one day after delivery to the overnight service for overnight delivery. Notices may be given by the person or entity obligated to give such notice or by his, her or its attorney, representative or agent.

 

SECTION 11. WAIVER OR DELAY BY THE LENDER: The Lender shall not by any act, delay, omission or otherwise be deemed to have waived any rights or remedies hereunder. No waiver by the Lender shall be valid unless signed by the Lender. Any waiver by the Lender on any occasion shall not bar any right or remedy that the Lender would otherwise have had on any future occasion. The failure by the Lender to insist upon strict performance of each and all of the terms and conditions hereof shall not be construed or deemed to be a waiver of any such term or condition. No executory agreement unless signed by the Lender and no course of dealing or oral agreement between Celestial and the Lender shall be effective to waive, modify or discharge, in whole or in part, this Note or any provision hereof. All rights and remedies of the Lender shall be cumulative and may be exercised singly or concurrently.

 

  

5

  

 

SECTION 12. DEFENITION OF LENDER. The term “Lender” as used herein shall include any future holder of this Note.

 

SECTION 13. SEVERABILITY: If any provision of this Note is found to be unenforceable by any court, then the remainder of this Note shall remain fully enforceable against Celestial.

 

SECTION 14. WAIVER OF TRIAL BY JURY: Celestial and the Lender hereby expressly waive any and every right to trial by jury in any action on or related to this Note.

 

	  	
Celestial Jets, Inc.

	  	  	  
	  	
By:

	
/s/ Gary Clyburn, Jr.,

	  	  	
Gary Clyburn, Jr., President

 

  

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