Document:

alamoex103.htm

Exhibit 10.3

TAYLOR TDS FIVE (5) WELL PROGRAM

 

SUBSCRIPTION AND 

CUSTOMER AGREEMENT

 

  

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TAYLOR TDS FIVE (5) WELL PROGRAM

A TURNKEY DRILLING PROGRAM

 

SUBSCRIPTION AND CUSTOMER AGREEMENT

 

Third Coast Energy & Development, LLC

 

1214 West 6th Street, Suite 202

 

Austin, Texas 78703

 

Gentlemen:

 

The undersigned understands that Third Coast Energy & Development, LLC, a Limited Liability Company (“Company”), is offering for sale units of fractional undivided working interests (“Units”) in the abovereferenced

drilling program (the “Program”). I further understand that these Units are being offered to Oil & Gas Industry Partners at a Turnkey price of $37,996 payable in one installment. The first and only

installment of $37,996 per Unit is due upon Subscription.

 

 

	 1.	Subscription. I hereby subscribe for and agree to purchase Eight (8) Units, and tender this Subscription and Customer Agreement, together with a check made payable to the order of “Third Coast Energy & Development, 
	 	LLC” denoting the “Taylor TDS Five (5) Well Program” at the bottom of your check, and amount payable of $303,968.00 ($37,996) times number of Units purchased). Tender of the check is being made with the understanding that it will be deposited into an escrow account pending minimum subscription of the offering, which is ten (10) Units.   

 

	 2. 	
Acceptance of Subscription. I understand and agree that the Company reserves the right, in its sole discretion and for any reason, to accept or reject the subscription, in whole or part, and that the subscription shall be deemed 

	 	accepted when and only when it is signed by a duly authorized officer of the Company.  

 

	 3.	

Segregation of Funds. I understand that the funds tendered by me will be deposited into an escrow account and will be returned to me if: (a) this subscription has not been accepted and is subsequently rejected by the Company: 

	 	
or, (b) less than the minimum number of Units are subscribed and paid for by the close of the Subscription Period. I understand and agree that if this subscription is accepted, and the minimum number of Units are subscribed and paid for by the close of the Subscription Period, the funds tendered herewith shall be considered corporate assets of the Company in payment for the number of Units set forth on the signature page hereof, or such lesser

number as may be allocated to me. If I am allocated less than the number of Units subscribed and the full purchase price of the Units subscribed has been timely paid in full, the Company shall remit the balance of the full subscription amount paid, if any, without interest, to me within thirty (30) days after such partial acceptance of this subscription.

 

 

  

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	 4. 	
Representations and Warranties of the Subscriber. I understand that the Units will be offered and sold in reliance upon certain exemptions from the securities registration provisions of the Securities Act of 1933, and non‐public 

	 	offering exemptions of the securities acts of the states in which Units may be offered. As a condition to purchasing Units, and for the purposes of the above‐mentionedexemptions and/or qualifications to the extent applicable, and knowing that you will rely upon the statements made herein for such exemptions and in determining my suitability as an investor; I represent and warrant to you that:

 

  

    a. The offering of Units was made only through direct, personal contact between the undersigned and a representative of the Company and/or its authorized selling agents;

 

    b. I have received and read a copy of the Confidential Private Placement Memorandum, the Operating Agreement and the Addendum to the Operating Agreement for the Program;

 

    c. I have completed a Purchaser Suitability Questionnaire and understand that the Company will rely on the accuracy and completeness of the information set forth therein in determining whether to accept this offer and in complying with its obligations under applicable state and federal securities statutes and regulations;

 

    d. I have been advised that the Units have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or with any state securities regulatory agency and understand that the Units are being offered in reliance upon certain exemptions from registration under applicable state and federal securities statutes;

 

    e. I have had an opportunity to ask questions of, and receive answers to those questions, from officers and employees of the Company, concerning the terms and conditions of the Program, and the proposed business of the Company, and that all such questions have been answered to my full satisfaction;

 

    f. I have been advised that an investment in Units will involve a high degree of risk and that there are no assurances that I, if accepted as a purchaser of Units, will recover my investment or receive any return on my investment at any time;

 

    g. I have been advised that a purchaser of Units must be prepared to bear the economic risks of h an investment for an indefinite period because:

 

       (1) of the nature of oil and/or gas exploration and development;

      

       (2) the Units are not registered under applicable securities statutes, and the Company does not intend that they be registered; and

 

       (3) the Units will be subject to substantial restrictions on transfer as set forth below in this Subscription Agreement;

 

  

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    h. The undersigned hereby makes, constitutes and appoints Third Coast Energy & Development, LLC, 1214 West 6th Street, Suite 202, Austin, Texas 78703, and its successors, with full powers of substitutions and re‐substitution, and his true and lawful agent and attorney‐in‐fact, on his behalf and in his name, place and stead, to execute, acknowledge, swear to and/or file with any appropriate official (as the case may be), and to take any similar or incidental actions with respect to the Program,(i) counterparts of the Operating Agreement, (ii) Division Orders, (iii) oil and gas sales contracts, (iv) assumed name certificates and similar instruments, (v) drilling and completion contracts, (vi) purchaser orders and (vii) all other instruments necessary to conduct the activities of the Program in accordance with terms set forth in the Confidential Private Placement Memorandum. This Power of Attorney and similar powers of attorney from other subscribers may be exercised by the above‐named agent and attorney‐in‐fact for the undersigned and (to the extent authorized by them) for such other subscribers (or any of them) by instrument and executing such instrument with a single signature, or in such other manner, including by facsimile signature, as it may deem appropriate. This Power of Attorney will be binding on any assignee or vendee of the undersigned’s interest in Units, or any portion thereof, including the distributive rights relating hereto. Notwithstanding the powers granted to his agent and attorney‐in‐fact by the foregoing power of attorney, the undersigned agrees to

execute on his own behalf any appropriate instrument which his agent and attorney‐in‐fact is authorized to execute for him if requested or required to do so.

 

    i. The funds to be tendered for the purchase of Units subscribed will not represent funds borrowed by me from any person or lending institution except to the extent that I have a source of repaying such funds other than from the sale of the Units, and such Units will not have been pledged or otherwise hypothecated for any such borrowing;

 

    j. I am aware that the Company and affiliated persons or organizations may in the future be engaged in businesses which are competitive with that of the interests referred to in the Confidential Private Placement Memorandum and agree and consent to such activities, even though there are or may be conflicts of interest inherent therein;

 

    k. I understand that the Confidential Private Placement Memorandum was prepared by the Company only for the use of suitable or accredited investors and agree not to reproduce, copy or otherwise distribute or make the Confidential Private Placement Memorandum or information contained therein available to any other person (other than my purchaser representative and legal and tax advisors), and, in the event I decide not to participate, I agree

to return the Confidential Private Placement Memorandum and all other written information;

 

    1. I have all requisite authority to enter into this Subscription and Customer Agreement and to perform all of the obligations required to be performed by the undersigned as a purchaser of Units;

 

    m. The undersigned is the sole party in interest and is not acquiring the Units as an agent or otherwise for any other person, is a legal resident of the state which is set forth on the signature page to this Subscription and Customer Agreement, and, if the undersigned subscriber is a corporation, Company, trust or other form of business organization, it has its principal office within such state, and was not formed for the specific purpose of purchasing Units;

 

    n. I have relied solely on the information contained in the Confidential Private Placement Memorandum, Operating Agreement and Addendum to the Operating Agreement and the attachments thereto and the answers to questions with respect thereto furnished to me by the Company, and further, I hereby warrant that no representations or warranties have been made to me by the Company or its agents as to the tax consequences of this investment, or as to any profits, losses or cash flow which may be received or sustained as a result of this investment, other than those contained in the Confidential Private Placement Memorandum, Operating Agreement and Addendum to the Operating Agreement and that my decision to invest in the Program has been based solely upon the information found within the Confidential Private Placement Memorandum, Operating Agreement and Addendum to the Operating Agreement and no other oral statements made by the Company, its agents or employees;

 

    o. I have knowledge and experience in financial and business matters and am capable of evaluating the merits and risks of an investment in the Program, and am able to bear the economic risks of my purchase, and, furthermore, I have had the opportunity to consult with my own attorney, accountant and/or purchaser representative regarding an investment in the Program; and

 

    p. I understand that the projections of potential production results and the reserve estimates included in the Confidential Private Placement Memorandum and/or in the exhibits thereto are merely estimates of possible results and not predictions of actual results, understand that such projections have been based on a very favorable level of production for a specified period of time, which sustained level of production I understand cannot be assured by the Company, and accordingly, I have not relied on such projections as a representation, warranty or promise of future results of an investment in this Program.

 

 

  

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	 5.	
Survival and Indemnification. All representations, warranties and covenants contained in this agreement and the indemnification contained in this paragraph 5. shall survive: (a) the acceptance of the Subscription and Customer 

	 	Agreement by the Company; (b) changes in the transactions, documents and instruments described in the Confidential Private Placement Memorandum which are not material or which are to the benefit of the Subscriber; and (c) the death or disability of a Subscriber. The undersigned acknowledges the meaning and legal consequences of the representations, warranties and covenants in paragraph 4. hereof and that the Company and/or its agents has relied upon such representations, warranties and covenants in determining the undersigned Subscriber’s qualification and suitability to purchase Units in the Program. The undersigned hereby agrees to indemnify, defend, and hold harmless the Company, its officers, directors, employees, agents and controlling persons, from any and all losses, claims, damages, liabilities, expenses (including attorneys’ fees and disbursements), judgments or amounts paid in settlement of actions arising out of or resulting from the untruth of any representation herein or the breach of any warranty or covenant herein. Notwithstanding the foregoing, however, no representation, warranty, covenant or acknowledgment made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to it under the federal securities acts or state securities acts. The obligations to the Company to sell the number of Units specified herein to the undersigned are subject to the condition that the representations and warranties of the undersigned contained in paragraph 4. hereof shall be true and correct on and as of the acceptance of the Subscription and Customer Agreement in all respects with the same effect as though such representations and warranties have been made on and as of that date.

 

 

	 6.	
Limitation on Transfer of Units In Compliance With Securities Laws. The undersigned hereby further acknowledges that the Units so subscribed for are being acquired for his own account or investment and not with a view 

	 	toward resale or redistribution in a manner which would require registration under the Securities Act of 1933, as amended, or any state securities laws, and that he does not presently have any reason to anticipate any change in his circumstances or other particular events which would cause him to sell his interest, and that he is the sole party and interest acquiring this investment and that no parties other than the undersigned, as record holder of the Units, will have any beneficial interest in such Units. Furthermore, if this subscription is accepted in whole or in part, the undersigned agrees that he will not sell nor attempt to sell all or part of the Units allocated to the undersigned unless such Units have first been registered under the Securities Act of 1933, as amended, and all applicable state securities statutes, or the undersigned first furnishes an opinion of counsel satisfactory to the Company, stating that exemptions from such registration requirements are available and that the proposed sale is not, and will not, place the Company or any of its officers, directors or employees, in violation of any applicable federal or state securities law, or any rule or regulation promulgated hereunder.

 

	 7.	

Binding Effect. Except as otherwise provided herein, this Subscription and Customer Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal 

	 	representatives and assigns, and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by and be binding upon such heirs, executors, administrators, successors, legal representatives and assigns.

 

 

	 8.	

Limitation of Liability In Small Business Issuances. The Company qualifies as a “small business issuer” as defined in Section 33N of the Texas Securities Act, Article 581, Vernon’s Annotated Texas Statutes (the “Act”). Because 

	 	this offering of securities by the Company is for an aggregate amount that does not exceed $5,000,000, Section 33N(3) of the Act limits the maximum amount that may be recovered against any person rendering services to the Company relating to this offering of securities, including the Company’s accountants, oil and gas consultants and experts, attorneys or any firm or entity employing those persons, to three (3) times the fee paid by the Company to such person or persons for services related to this offering of securities, unless a trier of fact finds that the person or persons engaged in intentional wrongdoing in providing the services to the Company. The undersigned, by his execution of this Subscription and Customer Agreement, hereby acknowledges receipt of the above disclosures concerning the limitation of liability created by Section 33N of the Act.

 

 

  

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	 9.	

ARBITRATION OF DISPUTES.

	 	
 

THE UNDERSIGNED ACKNOWLEDGES, BY HIS EXECUTION OF THIS SUBSCRIPTION AND CUSTOMER

AGREEMENT, THAT IT CONTAINS A PRE‐DISPUTE ARBITRATION CLAUSE. BY SIGNING THIS

ARBITRATION AGREEMENT, THE PARTIES AGREE AS FOLLOWS:

 

    a. ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT,

    INCLUDING THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE

   ARBITRATION FORUM IN WHICH A CLAIM IS FILED.

 

    b. ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING: A PARTY’S ABILITY TO HAVE A

    COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED.

 

    c. THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND OTHER

    DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT PROCEEDINGS.

 

    d. THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR AWARD.

   

    e. THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO

    WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.

 

    f. THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING A CLAIM

    IN ARBITRATION. IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY BE

    BROUGHT IN COURT.

 

    g. THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY

    AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.

 

NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE‐DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN

COURT A PUTATIVE CLASS ACTION; OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION

UNTIL: (a) THE CLASS CERTIFICATION IS DENIED; OR (b) THE CLASS IS DECERTIFIED; OR (c) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN.

 

IN THE EVENT THAT A DISPUTE ARISES BETWEEN THE UNDERSIGNED SUBSCRIBER AND THE COMPANY OR ANY OF THEIR LEGAL REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS, AGENTS, EMPLOYEES OR ANY OTHER SECURITIES BROKER‐DEALER EMPLOYED BY THEM AS A SELLING AGENT, SAID DISPUTE ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF THE SUBSCRIPTION HEREBY MADE, THE

UNDERSIGNED HEREBY EXPRESSLY AGREES THAT SAID DISPUTE SHALL BE RESOLVED THROUGH ARBITRATION RATHER THAN LITIGATION. THE UNDERSIGNED HEREBY AGREES TO SUBMIT THE DISPUTE

FOR RESOLUTION TO EITHER THE AMERICAN ARBITRATION ASSOCIATION, IN AUSTIN, TEXAS OR THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, IN AUSTIN, TEXAS, WHICHEVER ASSOCIATION MAY

ASSERT JURISDICTION OVER THE DISPUTE, WITHIN FIVE (5) DAYS AFTER RECEIVING A WRITTEN REQUEST TO DO SO FROM ANY OF THE AFORESAID PARTIES. IF THE UNDERSIGNED FAILS TO SUBMIT THE DISPUTE TO ARBITRATION AS REQUESTED, THEN THE REQUESTING PARTY MAY COMMENCE AN ARBITRATION PROCEEDING. THE FEDERAL ARBITRATION ACT SHALL GOVERN THE PROCEEDING AND ALL ISSUES RAISED BY THIS AGREEMENT TO ARBITRATE.

 

 

[The remainder of this page has been intentionally left blank.]

 

 

  

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    The foregoing representations and warranties are true and accurate as of the date hereof and willbe true and correct as of the date that the undersigned acquires Units, if this subscription is accepted. In witness hereof, the undersigned subscriber has executed this Agreement on this 4th day of March, 2010.

 

THIS SUBSCRIPTION AND CUSTOMER AGREEMENT CONTAINS A PRE‐DISPUTE ARBITRATION CLAUSEWHICH BEGINS ON PAGE 6, PARAGRAPH 9.

 

 

	ACCEPTED:  	PURCHASER‐SUBSCRIBER:	 
	THIRD COAST ENERGY & DEVELOPMENT, LLC 	/s/ A B Millmaker	 
	
A Limited Liability Company

	Signature	 
	 	A B Millmaker	 
	 	Print Name 	 
	 	 	 	 
	By: /s/ Curtis Menchaca	10497 Town and Country Way, Suite 310	 
	     Curtis Menchaca, Managing Partner 	Mailing Address	 
	      	 	 	 
	 	 	 	 
	 	Houston, TX 77024	 
	 	City, State, Zip Code	 
	 	 	 
	 	 	 
	 	

  

ACKNOWLEDGMENT OF PRE‐DISPUTE

ARBITRATION AGREEMENT

	 
	 	 	 
	 	 	 
	 	/s/ A B Millmaker 	 
	 	
Signature

	 

 

  

 

 

 

7alamoex104.htm

Exhibit 10.4

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

 

 

ALAMO ENERGY CORP.

 

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

$300,000.00 Houston, Texas

Dated as of March 4, 2010

Alamo Energy Corp., a Nevada corporation (the “Company”), for value received, hereby promises to pay to ____________________________, or its registered assigns (“Holder”), the sum of Three Hundred Thousand Dollars ($300,000) on the terms and conditions set forth in this Senior Secured Convertible Promissory Note (the “Note”).  Payment for all amounts due hereunder shall be made by mail to the registered address of Holder. The performance of the obligations of the Company hereunder are secured in accordance with the terms of an Amended and Restated Security Agreement of even date herewith and all other present and future security agreements between the Company and Holder. In connection with the issuance of the Note, the Company will issue warrants (the “Warrants”) to purchase shares of the Company’s $.001 par value common stock (the “Common Stock”).

The following is a statement of the rights of Holder of this Note and the conditions to which this Note is subject, and to which Holder hereof, by the acceptance of this Note, agrees:

1.           Maturity; Partial Prepayment.  The principal hereof and any unpaid accrued interest hereon, as set forth below, shall be due and payable on the earlier to occur of:  (i) November 18, 2012 (“Maturity Date”); and (ii) when declared due and payable by Holder upon the occurrence of an Event of Default (as defined below).

 

2.           Interest.  The Company shall pay interest at the rate of the lower of (i) eight percent (8%) per annum; or (ii) the maximum allowable rate under applicable laws (such rate, the “Interest Rate”) on the principal of this Note outstanding during the period beginning on the date of this Note and ending on the date that the principal amount of this Note is repaid in full.  Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed.  Interest accruing on this Note shall be due and payable at the Maturity Date or upon the occurrence of an Event of Default.  The Company shall pay the interest due on this Note by delivering to Holder cash.  All payments hereunder are to be applied first to reasonable costs and fees referred to herein, second to the payment of accrued interest, and the remaining balance to the payment of principal.

 

 

  

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3.           Events of Default.  If any of the events specified in this Section 3 shall occur (herein individually referred to as an “Event of Default”), Holder may, so long as such condition exists, declare the entire principal and unpaid accrued interest hereon immediately due and payable, by notice in writing to the Company:

(a)           Default in the payment of the principal or unpaid accrued interest of this Note when due and payable, which default is not cured within ten (10) days after the Holder has given the Company written notice thereof;

(b)           A material breach of any representation, warranty, or covenant under this Note, which failure or default is not cured within ten (10) days after the Holder has given the Company written notice thereof;

 

(c)           The institution by the Company of proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition or answer or consent seeking reorganization or release under the Federal Bankruptcy Act, or any other applicable Federal or state law, or the consent by it to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee or other similar official of the Company, or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action;

(d)           If, within 60 calendar days after the commencement of an action against the Company, without the consent or acquiescence of the Company (and service of process in connection therewith on the Company) seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such action shall not have been resolved in favor of the Company or all orders or proceedings thereunder affecting the operations or the business of the Company stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within 60 calendar days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company, such appointment shall not have been vacated;

(e)           If a judgment or judgments or order for the payment of money in excess of $50,000 in the aggregate shall be rendered against the Company and the same shall not, within thirty (30) days after the entry thereof, have been discharged or execution thereof stayed or bonded pending appeal (even if not fully covered by insurance) or unless such judgment is fully covered by collectible insurance and such insurer has within such period acknowledged such coverage in writing;

(f)           Any material breach of the Amended and Restated Security Agreement between the parties of even date herewith that remains uncured after notice of breach and failure to timely cure such breach; or

(g)           The Company shall fail to maintain the listing of its Common Stock on at least one of the OTC Bulletin Board or an equivalent replacement exchange, NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange, or the American Stock Exchange, LLC.

4.           Holder’s Rights Upon Event of Default.  Upon the occurrence and continuance of any Event of Default, Holder in its sole and absolute discretion shall have the right to:

(i)           convert all of the principal amount and unpaid accrued interest attributable to this Note into shares of Common Stock at a conversion price of $0.25 per share;

(ii)           declare all unpaid interest and principal immediately due and payable and exercise all other legal rights in connection therewith, without presentment, demand, or protest, all of which are hereby expressly waived; or

 

(iii)           in case any one or more Events of Default shall occur and be continuing and acceleration of the Note or any other indebtedness of the Company to Holder shall have occurred, Holder may, among other things, proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, or for an injunction against a violation of any of the terms hereof or thereof or in and of the exercise of any power granted hereby or thereby or by law. No right conferred upon Holder hereby shall be exclusive of any other right referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.

 

 

  

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5.           Conversion; Optional Reinvestment.

(a)           Optional Conversion.  Holder, at its sole discretion, may elect to convert the outstanding principal balance and unpaid accrued interest on this Note into shares of Common Stock at any time; provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Company (including, without limitation, the Warrants issued by the Borrower) subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The Holder of this Note may waive the limitations set forth herein by sixty-one (61) days written notice to the Company. The number of shares of Common Stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (a) the outstanding principal and unpaid accrued interest due on this Note on the date of conversion, by (b) the conversion price of $0.50 per share (“Conversion Price”). The Common Stock received by Holder pursuant to the conversion of the Note shall be referred to as the “Conversion Shares.”

(b)           Identical Terms.  The Common Stock received by Holder pursuant to the conversion of the Note hereunder shall have identical rights, preferences and privileges as those shares of Common Stock currently held by stockholders in the Company.

(c)           Conversion Procedure.  If this Note is to be converted, written notice shall be delivered by Holder to the Company, notifying the Company of the conversion to be effected, specifying the principal amount of the Note to be converted, the amount of accrued interest to be converted. Holder will surrender this Note within 10 business days after receiving the Conversion Shares hereunder.  Promptly upon receipt of this Note, the Company will issue a new note on the same terms as provided herein for any amount of this Note not being converted.

(d)           Delivery of Stock Certificates.  As promptly as practicable after the conversion of this Note but in no event later than fifteen (15) calendar days after the date of delivery of the notice to the Company under Section 5(c), the Company at its expense will issue and deliver to Holder a certificate or certificates for the number of full shares of the Common Stock issuable upon such conversion.  Upon conversion of the Note, the Company shall take all such actions as are necessary in order to insure that the Conversion Shares issuable with respect to such conversion shall be validly issued, fully paid and nonassessable.

(e)           Mechanics and Effect of Conversion.  No fractional shares of Common Stock shall be issued upon conversion of this Note.  In lieu of the Company issuing any fractional shares to Holder upon the conversion of this Note, the Company shall pay to Holder the amount of outstanding principal and interest that is not so converted, such payment to be in the form as provided below.  Upon conversion of this Note, the Company shall be forever released from all of its obligations and liabilities under this Note (to the extent of the amounts converted), except that the Company shall be obligated to pay Holder, within 10 business days after the date of such conversion, any interest accrued and unpaid or unconverted to and including the date of such conversion, and no more.

 

 

 

  

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(f)           Notices of Record Date, etc.  In the event of:

(i)           any taking by the Company of a record of holders of any class of securities of the Company for the purpose of determining holders thereof who are entitled to receive any dividend (other than a cash dividend payable out of earned surplus at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right;

 

(ii)           any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to any other person or any consolidation or merger involving the Company; or

 

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

the Company will mail to Holder at least 20 calendar days prior to the earliest date specified therein, a notice specifying:

(A)           The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and

(B)           The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining stockholders entitled to vote thereon.

 

 

  

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(g)           Reservation of Stock Issuable Upon Conversion.  The Company shall, before the conversion of this Note into Common Stock pursuant to the terms set forth herein, increase the number of authorized but unissued shares of Common Stock as necessary, and at all times reserve and keep available out of such duly authorized but unissued shares of Common Stock, such number of its duly authorized Common Stock as shall be sufficient to effect the conversion of the Note pursuant to the terms set forth herein.  If at any relevant time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of the entire outstanding principal amount of this Note, in addition to such other remedies as shall be available to Holder, the Company will use its best efforts to forthwith take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

(h)           Effect of Certain Events on the Conversion Price.  In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Conversion Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Conversion Price then in effect. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 5(h).  If, at any time when this Note is issued and outstanding, the Company issues or sells, or in accordance with this Section 5(h) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Company in such Dilutive Issuance; provided that only one adjustment will be made for each Dilutive Issuance.

For the purposes of this Section 5(h), the Company shall be deemed to have issued or sold shares of Common Stock if the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share.

 

(i)           Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in Section 5(h), the Company, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of this Note.

 

  

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    6.           Prepayment.  Upon ten (10) calendar days’ prior written notice to Holder, the Company may at any time prepay in whole or in part, the principal sum, plus accrued interest to date of such prepayment, of this Note; provided that, after the date of such notice and prior to the proposed prepayment date, Holder may elect to convert such amounts into shares of Common Stock of the Company at the Conversion Price pursuant to Section 5.

           7.           Subscription Rights.  So long as this Note is outstanding, Holder shall have the right to participate on a pro rata basis in any offering of the Company’s securities on the same terms and conditions as the other subscribers to such offering.

 

    8.           Representations and Warranties. The Company hereby represents and warrants:

 

(a)           Due Organization and Qualification.  The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company is in no violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of this Note or the Warrants (the “Transaction Documents”), (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and to the Company’s knowledge no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(b)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(c)           No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected.

 

(d)           Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

 

  

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9.           Successors and Assigns; Assignment.  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.  Nothing in this Note, express or implied, is intended to confer upon any party, other than the parties hereto and their successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Note, except as expressly provided herein.  The Company may not assign this Note or any of the rights or obligations referenced herein without the prior written consent of Holder.

10.           Waiver and Amendment.  Any provision of this Note may be amended, waived or modified upon the written consent of the Company and Holder.

11.           Waiver of Notice.  The Company expressly waives presentment for payment, protest and demand, notice of protest, demand and dishonor and expressly agrees that this Note may be extended from time to time without in any way affecting the liability of the Company.  No delay or omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note.  The obligations of the Company under this Note shall not be subject to reduction, limitation, impairment, termination, defense, set-off, counterclaim or recoupment for any reason.

12.           Treatment of Note.  To the extent permitted by generally accepted accounting principles, the Company will treat, account and report the Note as debt and not equity for accounting purposes and with respect to any returns filed with Federal, state or local tax authorities.

13.           Notices.  Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or if sent by nationally recognized courier service or mailed by registered or certified mail, postage prepaid, to the respective addresses of the parties as set forth on the signature page hereof or if sent by facsimile to the respective facsimile numbers of the parties set forth on the signature page hereof.  Any party hereto may by notice so given change its address for future notice hereunder.  Notice shall conclusively be deemed to have been given and received when personally delivered or 3 business days after deposited in the mail or one business day after sent by courier or upon confirmation of facsimile delivery in the manner set forth above.

14.           No Stockholder Rights.  Nothing contained in this Note shall be construed as conferring upon Holder or any other person the right to vote or to consent or to receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matters or any rights whatsoever as a stockholder of the Company; and no dividends or interest shall be payable or accrued in respect of this Note or the interest represented hereby or the securities into which this Note is convertible hereunder until, and only to the extent that, this Note shall have been converted.

15.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, excluding that body of law relating to conflict of laws.

16.           Heading; References.  All headings used herein are used for convenience only and shall not be used to construe or interpret this Note.  Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

17.           Usury.  In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

18.           Attorney’s and Collection Fees.  Should the indebtedness evidenced by this Note or any part hereof be collected at law or in equity or in any bankruptcy, receivership or other court proceedings, or this Note be placed in the hand of attorneys for collection, the Company agrees to pay, in addition to principal and Interest due and payable hereon, all costs of collection, including reasonable attorneys’ fees and expenses, incurred by Holder in collecting or enforcing this Note.

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.

 

	 	
Alamo Energy Corp.,

a Nevada corporation

 

 

 

 

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Philip Mann	 
	 	Its: 	Chief Financial Officer	 
	 	 	 	 
	 	
10497 Town and Country Way, Suite 310

Houston, Texas 77024

 	 

 

Name of Holder:                    ____________________

Address:                                ____________________

____________________

Telephone:                            ____________________

Facsimile:                               ____________________

  

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NOTICE OF CONVERSION

(To be Signed Only Upon Conversion of Note)

To Alamo Energy Corp.:

The undersigned, holder of the $____,000 Senior Secured Convertible Note of Alamo Energy Corp., due _______________ (the “Note”), hereby agrees to surrender the Note for conversion into ________________shares of Common Stock of Alamo Energy Corp., to the extent of ________________________ dollars ($____________) unpaid principal amount of the Note, and________________________ dollars ($____________) unpaid accrued interest under the Note and requests that the certificates for such shares be issued in the name of, and delivered to, _________________________________________________, whose address is _________________________________________________________.  Conversion should be effected as of ___________________.

Dated: ________________________________________

 

 

 

	
 

	
 

	 	 
	 	 	
(signature must conform in all respects to name

of holder as specified on the face of the Note)

 

	 
	 	 	
Address:

 

 

	 
	 	 	
 

 

 

	 

 

9

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