Document:

Unassociated Document

    RUBICON FINANCIAL
INCORPORATED

    INDEMNITY AGREEMENT

    

    This Indemnity Agreement (this
“Agreement”), dated as of July 15, 2009 is made by and between Rubicon
Financial Incorporated, a
Delaware corporation (the
“Company”), and Todd
Torneo, a director and/or
officer of the Company
(the “Indemnitee”).

    

    RECITALS

    

    A.   The Company is aware
that competent and experienced persons are increasingly reluctant to serve as
directors or officers of corporations unless they are protected by comprehensive
liability insurance and/or
indemnification, due to increased exposure to litigation
costs and risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no reasonable relationship to the
compensation of such directors and officers;

    

    B.   Based upon their
experience as business managers, the Board of Directors of the Company (the
“Board”) has concluded that, to retain and
attract talented and experienced individuals to
serve as officers and directors of the Company, and to encourage such individuals to take the
business risks necessary for the success of the Company, it is
necessary for the Company contractually to indemnify officers and directors and to
assume for itself maximum liability for expenses and damages in
connection with claims
against such officers and directors in connection with their
service to the Company;

    

    C.   Section 145 of the
General Corporation Law of the State of Delaware, under which the Company is organized
(“Section
145”), empowers the Company to indemnify by agreement its officers,
directors, employees and agents, and persons who serve, at the request of the
Company, as directors, officers, employees or agents of other
corporations or enterprises, and expressly provides that the indemnification provided by Section 145 is not exclusive;
and

    

    D.   The Company desires
and has requested the Indemnitee to serve or continue to serve as a director or
officer of the Company free from undue concern for claims for damages arising
out of or related to such services to the Company.

    

    NOW, THEREFORE, the parties hereto,
intending to be legally bound, hereby agree as follows:

    

    1.   DEFINITIONS.

    

    1.1  Agent. For the
purposes of this Agreement, “agent” of the Company means
any person who is or was a director or officer of the Company or a subsidiary of
the Company; or is or was serving at the request of, for the convenience of, or
to represent the interest of the Company or a subsidiary of the Company as a
director or officer of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or an affiliate of the Company; or was
a director or officer of a foreign or domestic corporation which was a
predecessor corporation of the Company, or was a director or officer of another
enterprise or affiliate of the Company at the request of, for the convenience
of, or to represent the interests of such predecessor corporation. The term
“enterprise” includes any employee benefit plan of the Company, its
subsidiaries, affiliates and predecessor corporations.

    
      
         

      

      
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    1.2  Expenses. For
purposes of this Agreement, “expenses” includes all direct
and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of expenses
under this Agreement, Section 145 or otherwise; provided, however, that expenses
shall not include any judgments, fines, ERISA excise taxes or penalties or
amounts paid in settlement of a proceeding.

    

    1.3  Proceeding. For the
purposes of this Agreement, “proceeding” means any
threatened, pending or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type
whatsoever.

    

    1.4  Subsidiary. For
purposes of this Agreement, “subsidiary” means any
corporation of which more than 50% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or more of its
subsidiaries or by one or more of the Company’s subsidiaries.

    

    2.   AGREEMENT TO
SERVE. The Indemnitee agrees to serve and/or continue to serve as an
agent of the Company, at the will of the Company (or under separate agreement,
if such agreement exists), in the capacity the Indemnitee currently serves as an
agent of the Company, faithfully and to the best of his ability, so long as he
is duly appointed or elected and qualified in accordance with the applicable
provisions of the charter documents of the Company or any subsidiary of the
Company; provided, however, that the Indemnitee may at any time and for any
reason resign from such position (subject to any contractual obligation that the
Indemnitee may have assumed apart from this Agreement), and the Company or any
subsidiary shall have no obligation under this Agreement to continue the
Indemnitee in any such position.

    

    3.   DIRECTORS’ AND
OFFICERS’ INSURANCE. The Company shall, to the extent that the Board
determines it to be economically reasonable, maintain a policy of directors’ and
officers’ liability insurance (“D&O Insurance”), on such
terms and conditions as may be approved by the Board.

    

    4.   MANDATORY
INDEMNIFICATION. Subject to Section 9 below, the Company shall indemnify
the Indemnitee:

    
      
         

      

      
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    4.1  Third Party Actions.
If the Indemnitee is a person who was or is a party or is threatened to be made
a party to any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he is or was an agent of the Company, or by
reason of anything done or not done by him in any such capacity, against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;
and

    

    4.2  Derivative Actions.
If the Indemnitee is a person who was or is a party or is threatened to be made
a party to any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such capacity,
against any amounts paid in settlement of any such proceeding and all expenses
actually and reasonably incurred by him in connection with the investigation,
defense, settlement or appeal of such proceeding if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Company; except that no indemnification under this subsection
shall be made in respect of any claim, issue or matter as to which such person
shall have been finally adjudged to be liable to the Company by a court of
competent jurisdiction due to willful misconduct of a culpable nature in the
performance of his duty to the Company, unless and only to the extent that the
Court of Chancery or the court in which such proceeding was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such amounts which the Court of Chancery or such other
court shall deem proper; and

    

    4.3  Exception for Amounts
Covered by Insurance. Notwithstanding the foregoing, the Company shall
not be obligated to indemnify the Indemnitee for expenses or liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) to the extent such have been
paid directly to the Indemnitee by D&O Insurance.

    

    5.   PARTIAL
INDEMNIFICATION AND CONTRIBUTION.

    

    5.1  Partial
Indemnification. If the Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a proceeding but is not entitled, however, to indemnification for all of the
total amount thereof, then the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled to indemnification.

    
      
         

      

      
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    5.2  Contribution. If the
Indemnitee is not entitled to the indemnification provided in Section 4 for any
reason other than the statutory limitations set forth in the Delaware General
Corporation Law, then in respect of any threatened, pending or completed
proceeding in which the Company is jointly liable with the Indemnitee (or would
be if joined in such proceeding), the Company shall contribute to the amount of
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose and (ii) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.

    

    6.   MANDATORY
ADVANCEMENT OF EXPENSES.

    

    6.1  Advancement. Subject
to Section 9 below, the Company shall advance all expenses incurred by the
Indemnitee in connection with the investigation, defense, settlement or appeal
of any proceeding to which the Indemnitee is a party or is threatened to be made
a party by reason of the fact that the Indemnitee is or was an agent of the
Company or by reason of anything done or not done by him in any such capacity.
The Indemnitee hereby undertakes to promptly repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company under the provisions
of this Agreement, the Certificate of Incorporation or Bylaws of the Company,
the General Corporation Law of Delaware or otherwise. The advances to be made
hereunder shall be paid by the Company to the Indemnitee within thirty (30) days
following delivery of a written request therefor by the Indemnitee to the
Company.

    

    6.2  Exception.
Notwithstanding the foregoing provisions of this Section 6, the Company shall
not be obligated to advance any expenses to the Indemnitee arising from a
lawsuit filed directly by the Company against the Indemnitee if an absolute
majority of the members of the Board reasonably determines in good faith, within
thirty (30) days of the Indemnitee’s request to be advanced expenses, that the
facts known to them at the time such determination is made demonstrate clearly
and convincingly that the Indemnitee acted in bad faith. If such a determination
is made, the Indemnitee may have such decision reviewed by another forum, in the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references
therein to “indemnification” being deemed to refer to “advancement of expenses,” and
the burden of proof shall be on the Company to demonstrate clearly and
convincingly that, based on the facts known at the time, the Indemnitee acted in
bad faith. The Company may not avail itself of this Section 6.2 as to a given
lawsuit if, at any time after the occurrence of the activities or omissions that
are the primary focus of the lawsuit, the Company has undergone a change in
control. For this purpose, a change in control shall mean a given person or
group of affiliated persons or groups increasing their beneficial ownership
interest in the Company by at least twenty (20) percentage points without
advance Board approval.

    
      
         

      

      
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    7.   NOTICE
AND OTHER INDEMNIFICATION PROCEDURES.

    

    7.1  Promptly
after receipt by the Indemnitee of notice of the commencement of or the threat
of commencement of any proceeding, the Indemnitee shall, if the Indemnitee
believes that indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement or threat
of commencement thereof.

    

    7.2  If,
at the time of the receipt of a notice of the commencement of a proceeding
pursuant to Section 7.1 hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such D&O Insurance
policies.

    

    7.3  In
the event the Company shall be obligated to advance the expenses for any
proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee (which approval shall not be unreasonably withheld), upon the
delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the Indemnitee with respect to the same proceeding, provided that: (a) the
Indemnitee shall have the right to employ his own counsel in any such proceeding
at the Indemnitee’s expense; (b) the Indemnitee shall have the right to employ
his own counsel in connection with any such proceeding, at the expense of the
Company, if such counsel serves in a review, observer, advice and counseling
capacity and does not otherwise materially control or participate in the defense
of such proceeding; and (c) if (i) the employment of counsel by the Indemnitee
has been previously authorized by the Company, (ii) the Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at
the expense of the Company.

    

    8.   DETERMINATION
OF RIGHT TO INDEMNIFICATION.

    

    8.1  To
the extent the Indemnitee has been successful on the merits or otherwise in
defense of any proceeding referred to in Section 4.1 or 4.2 of this Agreement or
in the defense of any claim, issue or matter described therein, the Company
shall indemnify the Indemnitee against expenses actually and reasonably incurred
by him in connection with the investigation, defense or appeal of such
proceeding, or such claim, issue or matter, as the case may be.

    
      
         

      

      
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    8.2  In
the event that Section 8.1 is inapplicable, or does not apply to the entire
proceeding, the Company shall nonetheless indemnify the Indemnitee unless the
Company shall prove by clear and convincing evidence to a forum listed in
Section 8.3 below that the Indemnitee has not met the applicable standard of
conduct required to entitle the Indemnitee to such indemnification.

    

    8.3  The
Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 8.2 hereof that the Indemnitee is not entitled to
indemnification will be heard from among the following, except that the
Indemnitee can select a forum consisting of the stockholders of the Company only
with the approval of the Company:

    

    (a)  A
quorum of the Board consisting of directors who are not parties to the
proceeding for which indemnification is being sought;

    

    (b)  The
stockholders of the Company;

    

    (c)  Legal
counsel mutually agreed upon by the Indemnitee and the Board, which counsel
shall make such determination in a written opinion;

    

    (d)  A
panel of three arbitrators, one of whom is selected by the Company, another of
whom is selected by the Indemnitee and the last of whom is selected by the first
two arbitrators so selected; or

    

    (e)  The
Court of Chancery of Delaware or other court having jurisdiction of subject
matter and the parties.

    

    8.4  As
soon as practicable, and in no event later than thirty (30) days after the forum
has been selected pursuant to Section 8.3 above, the Company shall, at its own
expense, submit to the selected forum its claim that the Indemnitee is not
entitled to indemnification, and the Company shall act in the utmost good faith
to assure the Indemnitee a complete opportunity to defend against such
claim.

    

    8.5  If
the forum selected in accordance with Section 8.3 hereof is not a court, then
after the final decision of such forum is rendered, the Company or the
Indemnitee shall have the right to apply to the Court of Chancery of Delaware,
the court in which the proceeding giving rise to the Indemnitee’s claim for
indemnification is or was pending or any other court of competent jurisdiction,
for the purpose of appealing the decision of such forum, provided that such
right is executed within sixty (60) days after the final decision of such forum
is rendered. If the forum selected in accordance with Section 8.3 hereof is a
court, then the rights of the Company or the Indemnitee to appeal any decision
of such court shall be governed by the applicable laws and rules governing
appeals of the decision of such court.

    
      
         

      

      
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    8.6  Notwithstanding
any other provision in this Agreement to the contrary, the Company shall
indemnify the Indemnitee against all expenses incurred by the Indemnitee in
connection with any hearing or proceeding under this Section 8 involving the
Indemnitee and against all expenses incurred by the Indemnitee in connection
with any other proceeding between the Company and the Indemnitee involving the
interpretation or enforcement of the rights of the Indemnitee under this
Agreement unless a court of competent jurisdiction finds that each of the
material claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or not made in good faith.

    

    9.   EXCEPTIONS.
Any other provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement:

    

    9.1  Claims Initiated by
Indemnitee. To indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to proceedings
specifically authorized by the Board or brought to establish or enforce a right
to indemnification and/or advancement of expenses arising under this Agreement,
the charter documents of the Company or any subsidiary or any statute or law or
otherwise, but such indemnification or advancement of expenses may be provided
by the Company in specific cases if the Board finds it to be appropriate;
or

    

    9.2  Unauthorized
Settlements. To indemnify the Indemnitee hereunder for any amounts paid
in settlement of a proceeding unless the Company consents in advance in writing
to such settlement, which consent shall not be unreasonably withheld;
or

    

    9.3  Securities Law
Actions. To indemnify the Indemnitee on account of any suit in which
judgment is rendered against the Indemnitee for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section l6(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law; or

    

    9.4  Unlawful
Indemnification. To indemnify the Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for
adjudication.

    

    10.  NON-EXCLUSIVITY.
The provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation
or Bylaws, the vote of the Company’s stockholders or disinterested directors,
other agreements or otherwise, both as to action in the Indemnitee’s official
capacity and to action in another capacity while occupying his position as an
agent of the Company, and the Indemnitee’s rights hereunder shall continue after
the Indemnitee has ceased acting as an agent of the Company and shall inure to
the benefit of the heirs, executors and administrators of the
Indemnitee.

    
      
         

      

      
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    11.  GENERAL
PROVISIONS.

    

    11.1
Interpretation of
Agreement. It is understood that the parties hereto intend this Agreement
to be interpreted and enforced so as to provide indemnification and advancement
of expenses to the Indemnitee to the fullest extent now or hereafter permitted
by law, except as expressly limited herein.

    

    11.2
Severability.
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, then: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to
Section 11.1 hereof.

    

    11.3
Modification and
Waiver. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both of the parties hereto. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.

    

    11.4
Subrogation. In
the event of full payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of the
Indemnitee, who shall execute all documents required and shall do all acts that
may be necessary or desirable to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

    

    11.5
Counterparts.
This Agreement may be executed in one or more counter-parts, which shall
together constitute one agreement.

    

    11.6
Successors and
Assigns. The terms of this Agreement shall bind, and shall inure to the
benefit of, the successors and assigns of the parties hereto.

    

    11.7
Notice. All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given: (a) if delivered by hand and
receipted for by the party addressee; or (b) if mailed by certified or
registered mail, with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement or as subsequently modified by written
notice.

    
      
         

      

      
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    11.8
Governing Law.
This Agreement shall be governed exclusively by and construed according to the
laws of the State of Delaware, as applied to contracts between Delaware
residents entered into and to be performed entirely within
Delaware.

    

    11.9
Consent to
Jurisdiction. The Company and the Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of California for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement.

    

    11.10
Attorneys’
Fees. In the event Indemnitee is required to bring any action to enforce
rights under this Agreement (including, without limitation, the expenses of any
Proceeding described in Section 3), the Indemnitee shall be entitled to all
reasonable fees and expenses in bringing and pursuing such action, unless a
court of competent jurisdiction finds each of the material claims of the
Indemnitee in any such action was frivolous and not made in good
faith.

    

    IN WITNESS WHEREOF, the
parties hereto have entered into this Indemnity Agreement effective as of the
date first written above.

    

    
      
        
          	
                  The
      Company:

                	 
      	
                  Indemnitee:

                
	
                  Rubicon
      Financial Incorporated

                	 
      	 
      
	
                  a
      Delaware corporation

                	 
      	 
      
	 
      	 
      	 
      
	
                  By:

                	
                  /s/ Joseph Mangiapane, Jr.

                	 
      	
                  /s/ Todd Torneo

                
	 
      	
                  Joseph
      Mangiapane, Chairman/CEO

                	
                    

                	
                  Todd
      Torneo

                

        

      

    

     

    
      
        
        

      

      
        9THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN
REGISERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT.  NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

     

    THE
OBLIGATIONS EVIDENCED BY THIS NOTE ARE SECURED BY ASSETS OF THE COMPANY AND ITS
SUBSIDIARIES AS MORE FULLY SET FORTH IN THAT CERTAIN SECURITY AGREEMENT OF EVEN
DATE HEREWITH BETWEEN THE COMPANY AND HOLDER.

     

    STRATOS
RENEWABLES CORPORATION

     

    SECURED
PROMISSORY NOTE

    

    
      	 
      	
              July
      15, 2009

            
	
              $8,659,719

            	
              Beverly
      Hills, California

            

    

     

    FOR VALUE RECEIVED, Stratos Renewables
Corporation, a Nevada corporation (“Company”)
promises to pay to the order of Blue Day SC Ventures, a joint venture of BlueDay
Limited, a business company existing under the laws of the British Virgin
Islands and MA Green, a partnership (“Holder”),
or its registered assigns, the principal sum of Eight Million Six Hundred Fifty
Nine Thousand Seven Hundred Nineteen Dollars (US$8,659,719) or such lesser
amount as shall equal the outstanding principal amount hereof, together with
interest from the date of this Note on the unpaid principal balance at a rate
equal to fifteen percent (15%) per annum, computed on the basis of the actual
number of days elapsed and a year of 365 days. All unpaid principal, together
with any then unpaid and accrued interest and other amounts payable hereunder,
shall be due and payable on the earliest to occur (the “Maturity
Date”) of (i) December 31, 2012, (ii) a Change of Control (as
defined below) or (iii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and payable by Holder
or made automatically due and payable in accordance with the terms
hereof.  All references to Dollars herein are to lawful currency of
the United States of America. This Secured Promissory Note (including all
Secured Promissory Notes issued in exchange, transfer or replacement hereof,
this “Note”) is
one of the Notes issued by the Company pursuant to Section 1.1 of that certain
Secured Note And Common Stock Purchase Agreement dated July 15, 2009 (as
amended, modified or supplemented, the “Note and Common
Stock Purchase Agreement”) between Company and Investors (as defined in
the Note and Common Stock Purchase
Agreement).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    All
amounts owing on this Note shall be payable in arrears, with payments first
applied to any and all costs and expenses incurred by Holder in enforcement or
the preservation of any rights hereunder, second to accrued and unpaid interest
on this Note, and thereafter on the unpaid principal amount hereof, at the
address for such purpose specified below the Holder’s name on Schedule I of the
Note and Common Stock Purchase
Agreement, or at such other address as the Holder may from time to time direct
in writing.

     

    This Note
may be prepaid by the Company, but, except with respect to prepayments described
in Section 4 below, prepayment may be made only with the consent of the
Holder.  Any prepayment of amounts outstanding under this Note shall
be made in connection with a prepayment with respect to all Notes issued
pursuant to the Note and Common Stock Purchase Agreement, allocated pro rata among such Notes
based on the principal and interest outstanding with respect
thereto.

     

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

     

    1.           Definitions.
Capitalized terms used in this Note have the meanings given in the Note and
Common Stock Purchase Agreement unless otherwise defined herein. In addition,
the following capitalized terms have the following meanings:

     

    (a)         “Affiliate”
shall mean, with respect to any Person (i) a Person directly or indirectly
controlling, controlled by or under, control with such Person, (ii) a
Person owning or controlling 10% or more of the outstanding voting securities of
such Person, or (iii) an officer, director, general partner, member or
manager of such Person, or a member of the immediate family of an officer,
director, general partner, member or manager of such Person.  When the
Affiliate is an officer, director, partner or manager of such Person or a member
of the immediate family of an officer, director, general partner, member or
manager of such Person, any other Person for which the Affiliate acts in that
capacity shall also be considered an Affiliate.  For these purposes,
control means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.

     

    (b)         “Change of
Control” means (i)  any “person” or “group” (within the meaning
of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of
the outstanding voting securities of the Company having the right to vote for
the election of members of the Board of Directors, (ii) any reorganization,
merger or consolidation of the Company, other than a transaction or series of
related transactions in which the holders of the voting securities of the
Company outstanding immediately prior to such transaction or series of related
transactions retain, immediately after such transaction or series of related
transactions, at least a majority of the total voting power represented by the
outstanding voting securities of the Company or such other surviving or
resulting entity or (ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company.

    
      
         

      

      
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    (c)         “Holder”
shall mean the Person specified in the introductory paragraph of this Note or
any Person who shall at the time be the registered holder of this
Note.

     

    (d)         
“Obligations”
shall mean and include all loans, advances, debts, liabilities and obligations,
howsoever arising, owed by the Company to Holder of every kind and description
(whether or not evidenced by any note or instrument and whether or not for the
payment of money), now existing or hereafter arising under or pursuant to the
terms of this Note and the Note and Common Stock Purchase Agreement, including,
all interest, fees, charges, expenses, attorneys’ fees and costs and
accountants’ fees and costs chargeable to and payable by the Company hereunder
and thereunder, in each case, whether direct or indirect, absolute or
contingent, due or to become due, and whether or not arising after the
commencement of a proceeding under Title 11 of the United States Code (11
U. S. C. Section 101 et
seq.), as amended from time to time (including post-petition interest)
and whether or not allowed or allowable as a claim in any such
proceeding.

     

    (e)         “Person”
shall mean any entity, corporation, company, association, joint venture, joint
stock company, partnership, trust, organization, individual (including personal
representatives, executors and heirs of a deceased individual), nation, state,
government (including agencies, departments, bureaus, boards, divisions and
instrumentalities thereof), trustee, receiver or liquidator, as well as any
syndicate or group that would be deemed to be a Person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.

     

    (f)         
“Subsidiary”
of a Person shall mean each corporation or other entity of which (a) such Person
or any other Subsidiary of such Person is a general partner or a manager (b) or
at least 50% of the securities or other ownership interests having by their
terms ordinary voting power to elect at least 50% of the board of directors or
other Persons performing similar functions is directly or indirectly owned or
controlled by such Person, by any one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries.

     

    2.           Events of
Default. The occurrence of any of the following shall constitute an
“Event of
Default” under this Note:

     

    (a)           Failure to Pay. Company shall
fail to pay when due the principal or interest payment on the due date hereunder
and such payment shall not have been made within three (3) business days of
Company’s receipt of Holder’s written notice to Company of such failure to pay
or any other payment required under the terms of this Note on the date due and
such payment shall not have been made within five (5) days of Company’s receipt
of Holder’s written notice to Company of such failure to pay;

    
      
         

      

      
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    (b)           Voluntary Bankruptcy or Insolvency
Proceedings. The Company shall
(i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or liquidated,
(v) become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing;

     

    (c) Involuntary Bankruptcy or
Insolvency Proceedings. Proceedings for the appointment of a receiver,
trustee, liquidator or custodian of the Company or of all or a substantial part
of the property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or the
debts thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within 30 days of
commencement;

     

    (d) Representations and
Warranties.  Any representation, warranty, certificate, or
other statement (financial or otherwise) made or furnished by or on behalf of
the Company to Purchaser in writing in connection with this Note or the Note and
Common Stock Purchase Agreement, or as an inducement to Holder to enter into
this Note and the Note and Common Stock Purchase Agreement, shall be false,
incorrect, incomplete or misleading in any material respect when made or
furnished;

     

    (e) Other Payment
Obligations.  The Company or any of its Subsidiaries shall (i)
fail to make any payment when due under the terms of any bond, debenture, note
or other evidence of indebtedness for money borrowed to be paid by such person
(excluding this Note) and such failure shall continue beyond any period of grace
provided with respect thereto, or (ii) default in the observance or performance
of any other agreement, term or condition contained in any such bond, debenture,
note or other evidence of indebtedness, and the effect of such failure or
default is to cause, or permit the holder or holders thereof to cause,
indebtedness in an aggregate amount of $100,000 or more to become due prior to
its stated date of maturity;

     

    (f) Judgments. A final judgment
or order for the payment of money in excess of $250,000 shall be rendered
against the Company or any of its subsidiaries and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of the Company or any of its subsidiaries and such
judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within thirty (30) days after issue or levy;

     

    (g) Enforceability. This Note or
the Note and Common Stock Purchase Agreement or any material term thereof shall
cease to be, or be asserted by the Company not to be, a legal, valid and binding
obligation of the Company enforceable in accordance with its
terms;

    
      
         

      

      
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    (h)           Breaches of Covenants. The
Company or any Subsidiary shall fail to observe or perform any other covenant,
representation, or warranty, obligation, condition or agreement contained in the
Transaction Documents (other than those specified in Section 2(a) above)
and, in the cases of breaches reasonably capable of cure, such failure shall
continue for thirty (30) days after written notice to Company of such
failure.  With respect to covenants in Sections 5.3(b)(v), 5.3(c) and
5.3(d) of the Note and Common Stock Purchase Agreement, any breach shall
constitute an immediate Event of Default; or

     

    (i)           Failure to Close Interbank
Facility.  The Company shall fail to close the Interbank
Facility (as defined in the Purchase Agreement) or fail to secure at least
$8,000,000 in new outside financing for the Chepen Project by the close of
business on October 15, 2009, and such failure shall continue for thirty (30)
days after written notice by all holders of Notes issued under the Purchase
Agreement.

     

    3.           Rights of
Holder upon Default.  Upon the occurrence or existence of any
Event of Default (other than an Event of Default, referred to in Sections 2(b)
and 2(c), and giving effect to any applicable cure periods), and at any time
thereafter during the continuance of such Event of Default, Holder may, by
written notice to Company, declare all outstanding Obligations payable by
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding. Upon the
occurrence or existence of any Event of Default described in Sections 3(b)
or 3(c), immediately and without notice, all outstanding Obligations payable by
Company hereunder shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the other
Transaction Documents to the contrary notwithstanding. In addition to the
foregoing remedies, upon the occurrence or existence of any Event of Default,
Holder may exercise any other right power or remedy granted to it by the
Transaction Documents or otherwise permitted to it by law, either by suit in
equity or by action at law, or both.

     

    4.           Prepayment
of the Notes from Chepen Project Cash Flows.  From and after
March 15, 2011, the Company shall direct a percentage of the Excess Cash Flow
(as defined in the Note and Common Stock Purchase Agreement) from the operation
of the Chepen Project (as defined in the Note and Common Stock Purchase
Agreement) to the prepayment of this Note in accordance with its
terms.  Prepayments of the Notes from Excess Cash Flow shall be made
in amounts and upon terms described in the Note and Common Stock Purchase
Agreement.

     

    5.           Successors
and Assigns.
Subject to the restrictions on transfer described in Section 7 below, the
rights and obligations of Company and Holder of this Note shall be binding upon
and benefit the successors, assigns, heirs, administrators and transferees of
the parties.

    
      
         

      

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

     

    7.           Assignment
by Company.
Neither this Note nor any of the rights, interests or obligations
hereunder may be assigned, by operation of law or otherwise, in whole or in
part, by Company without the prior written consent of Holder.

     

    8.           Notices. All notices, requests,
demands, consents, instructions or other communications required or permitted
hereunder shall in writing and faxed, mailed or delivered to each party as
follows:  (a) if to the Holder, at the Holder’s address or facsimile
number set forth on the signature page to the Note and Common Stock Purchase
Agreement, or at such other address as the Holder shall have furnished the
Company in writing, or (b) if to the Company, at 9440 Little Santa Monica Blvd.,
Suite 401, Beverly Hills, California 90210, Attn: Valerie Broadbent, facsimile:
(310) 919-3044, or at such other address or facsimile number as the Company
shall have furnished to the Holder in writing.  All such notices and
communications will be deemed effectively given the earlier of (i) when
received, (ii) when delivered personally, (iii) one business day after being
delivered by facsimile (with receipt of appropriate confirmation), (iv) one
business day after being deposited inside the United States with an overnight
courier service of recognized standing for delivery within the United States,
(v) three business day after being deposited within the United States with an
express courier service of recognized standing for delivery outside of the
United States or vice versa or (v) four days after being deposited in the U.S.
mail, first class with postage prepaid, provided that first class mail shall not
be used for the delivery of notice outside of the United States.

     

    9.           Payment. Payment shall be made in
lawful tender of the United States.

     

    10.         Expenses;
Waivers. If
action is instituted to collect this Note or to maintain or preserve any rights
of Holder hereunder, the prevailing party in such dispute shall be entitled to
recover from the non-prevailing party all costs and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred in connection with
such action. Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or
demands relative to this instrument.

     

    11.         Governing
Law. This Note
and all actions arising out of or in connection with this Note shall be governed
by and construed in accordance with the internal laws of the State of
California.

     

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

    

    
      
        	
                STRATOS
      RENEWABLES CORPORATION

              
	 
      	 
      
	
                By:

              	
                  

              
	
                Name:

              	
                Thomas
      Snyder

              
	
                Title:

              	
                President
      and Chief Executive
Officer

              

      

    

    
      
         

      

      
        6

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