UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
 
FORM 10
Amendment No. 3
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
 
NUSTATE ENERGY HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
87-04496677
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
1201 Main Street, Suite 1980,
29201
Columbia, South Carolina
 
(Address of principal executive offices)
(Zip Code)
 
 
Registrant's telephone number, including area code:
(803) 748-1309
 
Securities registered under Section 12(b) of the Act:
 
Title of each class
to be so registered
Name of each exchange on which registered
each class is to be registered
None
Not applicable
 
Securities registered under Section 12(g) of the Act:
 
Common Stock, par value $0.001 per share
(Title of class)
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
[X]
 
 
 

 
 
NuState Energy Holdings, Inc.
FORM 10
TABLE OF CONTENTS

   
Page No.
Item 1.
Business.
3
Item 1A.
Risk Factors.
5
Item 2.
Financial Information.
8
Item 3.
Properties.
15
Item 4.
Security Ownership of Certain Beneficial Owners and Management.
15
Item 5.
Directors and Executive Officers.
18
Item 6.
Executive Compensation.
18
Item 7.
Certain Relationships and Related Transactions, and Director Independence.
20
Item 8.
Legal Proceedings.
21
Item 9.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
21
Item 10.
Recent Sales of Unregistered Securities.
22
Item 11.
Description of Registrant’s Securities to be Registered.
23
Item 12.
Indemnification of Directors and Officers.
25
Item 13.
Financial Statements and Supplementary Data.
25
Item 14.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
25
Item 15.
Exhibits, Financial Statement Schedules.
26
 
OTHER PERTINENT INFORMATION
 
Unless specifically set forth to the contrary, when used in this registration statement the terms “NuState", "we", "our", the "Company" and similar terms refer to NuState Energy Holdings, Inc., a Nevada corporation. In addition, when used herein and unless specifically set forth to the contrary, “2012” refers to the year ended June 30, 2012 and “2011” refers to the year ended June 30, 2011.
 
Additional Information
 
We are filing this General Form for Registration of Securities on Form 10 to amend the Form 10 we filed on May 8, 2013 to register our common stock, par value $0.001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result of our previously-filed registration statement, we are subject to the informational requirements of the Securities Exchange Act of 1934 and, consequently, are required to file annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. The registration statement, including exhibits, may be inspected without charge at the SEC’s principal office in Washington, D.C., and copies of all or any part thereof may be obtained from the Public Reference Section, Securities and Exchange Commission, 100 F Street, NW, Washington, D.C. 20549 upon payment of the prescribed fees. You may obtain information on the operation of the Public Reference Room by calling the SEC at l.800.SEC.0330. The SEC maintains a Website that contains reports, proxy and information statements and other information regarding registrants that file electronically with it. The address of the SEC’s Website is http://www.sec.gov.
 
2

 
 
Item 1. Business
 
Description of Business
We do not have any business or operations and are considered a "shell" company under Federal securities laws. We are actively seeking to acquire assets or shares of an entity actively engaged in business which generates revenues, in exchange for our securities. Our purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms who or which desire to seek the perceived advantages our company may offer. We will not restrict our search to any specific business, industry, or geographical location and we may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because we have nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to our stockholders because it will not permit us to offset potential losses from one venture against gains from another.
 
As of June 11, 2013 , we had less than $1,000 cash on hand . We anticipate a monthly operating burn rate of approximately $57,000 per month post-registration ($684,000 annually), as compared to our pre-registration monthly operating burn rate of $40,000. Our anticipated monthly operating burn rate consists of $47,000 of costs to continue operations and $10,000 of incremental costs to implement our plan of operations.  Based on this burn rate, we will run out of funds immediately without additional capital. We estimate that we must raise minimum additional capital of $564,000, up to $684,000 to cover our incremental costs of implementing our plan of operations. In addition, we will need to raise additional funds of approximately $4.5 million to satisfy our outstanding obligations as of March 31, 2013. If we are unable to raise the additional capital necessary to support our estimated near-term costs, we will likely 1) fail to comply with current reporting regulations, 2) be unable to find a business opportunity, and 3) we could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code.
 
The accompanying financial statements have been prepared on a going concern basis. We used net cash in its operating activities of approximately $123,000 during the nine-month period ended March 31, 2013 and had a working capital deficit of approximately $4,500,000 at March 31, 2013, consisting of $2,513 in current assets and $4,518,169 in current liabilities.  Our auditors have issued a going concern opinion, as our ability to continue as a going concern is dependent upon our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an operating company is consummated. Our plans may continue to provide for our capital requirements by issuing additional equity securities and debt and we will continue to find possible acquisition target. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, we will have sufficient funds to execute our business plan or generate positive operating results.
 
New Business Opportunity
 
We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. These perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity, subject to restrictions of applicable statutes, for all stockholders and other factors. Potentially, available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
 
The analysis of new business opportunities will be undertaken by, or under the supervision of, Mr. Kevin Yates, our Chief Executive Officer, who may not be considered a professional business analyst. Mr. Yates will be the key person in the search, review and negotiation with potential acquisition or merger candidates. We intend to concentrate on identifying preliminary prospective business opportunities that may be brought to our attention through present associations of Mr. Yates and legal counsel or by our stockholders. In analyzing prospective business opportunities, we will consider such matters as:
 
 
the available technical, financial and managerial resources;
 
working capital and other financial requirements;
 
history of operations, if any;
 
prospects for the future;
 
nature of present and expected competition;
 
the quality and experience of management services which may be available and the depth of that management;
 
the potential for further research, development, or exploration;
 
specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities;
 
the potential for growth or expansion;
 
the potential for profit;
 
the perceived public recognition of acceptance of products, services, or trades; name identification; and
 
other relevant factors.
 
We will use the details listed above to evaluate and select a business opportunity. In evaluating and selecting a business opportunity, we will use a multi-step process consisting of the following:
 
 
1.
Search for like-minded parties, this step is expected to take approximately 0-6 months, and will consist of environmental scanning for parties with similar goals. Step 2 will not take place until completion of this search;
 
2.
Feasibility analysis, this step is expected to take approximately 1 week and will involve consideration of the matters listed above, with an emphasis on marketing potential and financing requirements. The feasibility analysis will either result in abandonment to begin a new search, or continuation onto step 3;
 
3.
Goal setting and criteria establishment, this step is expected to take approximately 1 week and will require the establishment of specific, attainable long and short-term performance goals for the business opportunity, in addition to the establishment of specific criteria by which to measure the business’s performance;
 
4.
Evaluation , this step is expected to take approximately 2-4 weeks and will consist of an analysis of relevant data collected to determine if minimum expectations were met from step 3. If goals were achieved, we will move onto step 5, if not, we will re-assess step 3 and begin another evaluation or start a new search altogether;
 
5.
Memorialize letter of intent, this step is expected to take approximately 1 week and will call for the drafting of a non-binding letter of intent to be agreed upon between the like-minded parties. If no agreement is reached after necessary negotiations, we will begin a new search from step 1;
 
6.
Transaction financing, this step is expected to take approximately 1-2 months and will require us to raise sufficient funding to complete the potential acquisition or merger, in addition to funding short-term operations. If this step is unsuccessful we will have to begin a new search;
 
7.
Consummate Transaction, this step is expected to take approximately 1 week and will involve the formal completion of all legal contracts to complete the related merger or acquisition.
 
We will not acquire or merge with any company for which audited financial statements cannot be obtained within the time period prescribed by applicable rules of the United States Securities and Exchange Commission which is presently four business days from the closing date of the transaction. This requirement for readily available audited financial statement may require us to preclude a transaction with a potential candidate that might otherwise be beneficial to our stockholders.
 
 
3

 
 
We will not restrict our search for any specific kind of company, but may acquire a venture that is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which we may offer. However, we do not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as we have successfully consummated such a merger or acquisition.
 
In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. On the consummation of a transaction, it is possible that our present management and stockholders will no longer be in control of our company. In addition, our sole director may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our stockholders.
 
We anticipate that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of a transaction, we may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after we have successfully consummated a merger or acquisition and we are no longer considered a "shell" company. Until such time as this occurs, we will not attempt to register any additional securities. The issuance of substantial additional securities and their potential sale into any trading market which may develop in our securities may have a depressive effect on the value of our securities in the future, if such a market develops, of which there is no assurance.
 
Identify Potential Merger or Acquisition Candidates
In August 2011, the Company entered into a Share Exchange Agreement (“SEA”) with GLINS International NV (“GLINS”), a Curacao company doing business in the country of Suriname, which would have resulted in a change of control. In December 2011, the closing date of the SEA was extended to July 31, 2012. By mutual agreement, the SEA was terminated in August 2012. The Company continues to have relationships throughout the country of Suriname and anticipates developing new business arrangements in the future. We have not identified a potential merger or acquisition candidate at this time. Our search for a business opportunity is not limited to the country of Suriname.
 
The Country of Suriname General Data
The Republic of Suriname is a country in the north-east part of South America bordered by two rivers, the Corantijne River at the west (Guyana) and the Marowijne River at the east (French Guyana). Suriname has a coastline of about 350 kilometers and the distance from north to south is about 450 kilometers. Most of the population lives along the coastline in the capital city of Paramaribo. In total, an estimated 566,846 people live in Suriname as of July 2013.
 
One of the smallest, yet most ethnically diverse and ecologically significant nations in Latin America, Suriname also is one of the Caribbean’s top economic performers. The World Bank recently ranked Suriname among the 10 potentially richest countries. Indeed, its wealth of natural resources is vast yet still largely unexplored, and the country is a net exporter of agriculture products. Tourism is growing as more people become aware of its pristine rainforests and eco-tourism possibilities.
 
Company Background
The company was incorporated in Nevada as Jaguar Investments, Inc. during October 1987. During March 2003, a wholly owned subsidiary of the Company merged with Freight Rate, Inc., a development stage company in the logistics software business. During May 2003, the Company changed its name to Power2Ship, Inc. During October 2006, the Company merged with a newly formed, wholly owned subsidiary, Fittipaldi Logistics, Inc., a Nevada corporation, with the Company surviving but its name changed to Fittipaldi Logistics, Inc. effective November 2006. During December 2007, the Company merged with a newly formed, wholly owned subsidiary, NuState Energy Holdings, Inc., a Nevada corporation, with the Company surviving but renamed NuState Energy Holdings, Inc. effective December 2007.
 
 
4

 
 
The Company has two wholly owned subsidiaries, Commodity Express Transportation, Inc. or CXT, a former provider of truck transportation and third-party logistics services, and Power2Ship Intermodal, Inc. or P2SI, a former provider of intermodal drayage transportation services, which ceased operations in May 2009 and June 2006, respectively. CXT has a wholly owned subsidiary, Commodity Express Brokerage, Inc.
 
On February 12, 2009, the Company filed Form 15 to terminate registration of its common stock under section 12(g) of the Securities Exchange Act of 1934 and subsequently has not submitted any filings to the Securities and Exchange Commission.
 
During the period from February 2009 through April 2010, the Company had several changes to its officers and directors and moved its offices twice. Presently, the Company’s Chairman and President, since April 2010, and its Chief Executive Officer, since July 2010, is Kevin Yates. The Company’s headquarters is located at 1201 Main Street, Suite 1980, Columbia, S.C. 29201.
 
Since April 2010, the Company’s current management developed, and began implementing, the following strategic plan designed to increase the Company’s shareholders’ value:
 
 
1.
Improve the Company’s balance sheet by reducing liabilities and regaining use of certain of its intellectual property and software,
 
2.
Settle litigation,
 
3.
Identify potential merger or acquisition candidates with whom the Company could enter into a transaction upon the Company achieving items 1 and 2 above, and
 
4.
License its intellectual property and software, also known as My Driver’s Seat, which it regained in April 2010.
 
This strategic plan has resulted in the following material events:
 
Reduced Liabilities
Since filing its Form 10-Q for the quarterly period ended September 30, 2008, total liabilities have decreased by $5,169,781 or 53% from $9,687,950 on September 30, 2008 to $4,518,169 on March 31, 2013.
 
In August 2012, its subsidiaries CXT and P2SI each filed a Voluntary Bankruptcy Petition and Schedules in the United States Bankruptcy Court in the District of South Carolina. On October 19, 2012 the Company was awarded the bankruptcy and will be filing the proper paperwork and as result will reduce its liabilities by $1,494,406.
 
Regained Use of Intellectual Property
As part of an agreement entered into with Rentar Environmental Solutions, Inc. (“Rentar”) in April 2010, the Company agreed to provide Rentar  a non-exclusive right  to intellectual properties and software, My Driver’s Seat, which it had developed for the worldwide transportation and security industries and had sold in April 2008 to Rentar Logic, a Delaware corporation incorporate Rentar. The Company’s intellectual property also includes two patents titled “Dynamic and Predictive Information System and Method for Shipping Assets and Transport” assigned to it by the inventors, former officers of the Company. The Company’s management believes that this intellectual property may, with some further development, become a viable business opportunity.
 
Licensing Use of Intellectual Property
We are currently discussing the potential licensing of our software, My Driver’s Seat, with certain third-parties.
 
Employees
At Juen 11, 2013, we had 1 full time employee.
 
Item 1A. Risk Factors
 
The common shares of our Company are considered speculative. You should carefully consider the following risks and uncertainties in addition to other information in this registration statement in evaluating our Company and our business before purchasing our common shares. Our business, operating or financial condition could be harmed due to any of the following risks:
 
 
5

 
 
Our auditors have raised substantial doubts as to our ability to continue as a going concern .
 
Our consolidated financial statements have been prepared assuming we will continue as a going concern. Since inception we have experienced recurring losses from operations, which losses have caused an accumulated deficit of approximately $40.2 million as of March 31, 2013. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, we anticipate that we will continue to incur losses in future periods until we are successful in completing a business combination with an operating entity, with an expected monthly burn rate of $57,000 post-registration. If for some reason we are not able to consummate a business combination within a reasonable period of time, we may not have sufficient resources to continue meeting our reporting obligations with the Securities and Exchange Commission or other obligations which arise from our minimal operations. If we were to fail to continue to meet our SEC reporting obligations the attractiveness of our vehicle to an operating company would be severely diminished and our ability to consummate a business combination would be in jeopardy.
 
We currently have a working capital deficit and are uncertain if and when we will be able to pay our current liabilities.
 
Our working capital deficit was $4,515,656 as of March 31, 2013. This deficit consists of $2,513 in current assets, offset by $4, 518,169 in current liabilities. We do not have any liquid or other assets that can be liquidated to pay our current liabilities while we continue to incur additional liabilities to our officer and certain service providers who are working to prepare the documents required to be filed with the Securities and Exchange Commission to enable our common shares to be registered for trading. Since we currently have limited operations, the only ways we have of paying our current liabilities are to issue our common or preferred shares to our creditors or to issue unsecured promissory notes which may include certain features such as convertibility into common or preferred shares or warrants to purchase additional common or preferred shares in the future.
 
We currently do not have sufficient capital to finance the anticipated recurring costs of being a publicly-traded company.
 
As of June 11, 2013, we had less than $1,000 cash on hand. We anticipate incurring incremental annual costs of approximately $180,000 related to being a publicly-traded company. We currently do not have sufficient resources to finance these costs, and will need to raise additional capital to support our public-company-related activities. If we are unable to raise sufficient capital, we may fail to comply with current reporting regulations.
 
We may still have some exposure to creditors of two of our subsidiaries which filed for bankruptcy.
 
Unpaid creditors of our subsidiaries may look to us as a target to recover on their claims under any number of legal theories, including piercing the corporate veil, breach of fiduciary duty, and deepening insolvency. We also   may find that we have exposure to the subsidiaries’ creditors under various state and federal statutes, or under contracts among the parties.
 
We currently do not have an operating business and cannot provide any assurance that we will have an operating business in the future.
 
We currently do not have any operating business. We continue to incur operating expenses while we consider alternative operating plans. These plans may include business combinations with or investments in other operating companies, or entering into a completely new line of business. We cannot assure you that we will be able to identify any appropriate business opportunities. Even if we are able to identify business opportunities that our Board deems appropriate, we cannot assure you that such a strategy will provide you with a positive return on your investment, and it may in fact result in a substantial decrease in the value of your stock. These factors will substantially increase the uncertainty, and thus the risk, of investing in our shares.
 
We have $930,400 of accrued compensation as of March 31, 2013 and we do not have the funds necessary to pay these obligations.
 
In addition to funding our operating expenses, we need capital to pay accrued compensation aggregating $930,400. The existence of these obligations provides additional challenges to us in our efforts to raise capital to fund our operations. If we are unable to restructure these liabilities and we are unable to raise the capital necessary to satisfy the obligations, it is possible we will be forced to cease operations. Due to our lack of liquidity, we may be forced to satisfy some or all of these obligations through the issuance of our common stock. During the nine-month period ended March 31, 2013 we have issued an aggregate 100,000,000 shares of our common stock to satisfy certain accrued compensation liabilities of $500,000. Such issuances of our common stock, and any future issuances necessary to satisfy outstanding obligations, will further dilute the existing stockholders’ interest in our Company.
 
We have $3,193,028 of convertible notes, notes payable, and accrued interest as of March 31, 2013 which is presently past due and we do not have the funds necessary to pay these obligations.
 
In addition to funding our operating expenses, we need capital to pay various debt obligations totaling approximately $3.2 million as of March 31, 2013 which are either currently past due or which are due in the current fiscal year. Currently, there are $1,694,311 principal amount of the convertible notes payable which are past due, $265,241 principal of the notes payable which are past due, and 1,233,476 of accrued interest which are past due. The interest on the past due principal amounts will continue to accrue monthly at their stated rates. Holders of past due notes do not have a security interest in our assets. The existence of these obligations provides additional challenges to us in our efforts to raise capital to fund our operations. If we are unable to restructure these notes and we are unable to raise the capital necessary to satisfy the obligations, it is possible we will be forced to cease operations.
 
We have $430,100 of accrued dividends as of March 31, 2013 and we may not be able to settle this obligation in cash or stocks.
 
In addition to funding our operating expenses, we need capital to pay accrued dividends totaling approximately $430,100 as of March 31, 2013. The existence of these obligations provides additional challenges to us in our efforts to raise capital to fund our operations. If we are unable to raise the capital necessary to satisfy the obligations, it is possible we will be forced to cease operations.
 
Our sole officer and director does not devote all of his time and attention to our business which may result in his not being able to identify and consummate an acquisition with an operating company.
 
Mr. Yates, who serves as our sole officer and director, devotes only approximately 90% of his time to the business and affairs of our company. Because Mr. Yates is primarily responsible for the identification and consummation of an acquisition of an operating company for us, we are materially dependent upon his efforts on our part. It is possible that because he does not spend his full time and efforts on our behalf that it may take longer to identify and close an acquisition of an operating company than if he was employed by us on a full-time basis.
 
Our internal control over financial reporting was considered ineffective as of June 30, 2012, and may continue to be ineffective in the future, which could result in our financial statements being unreliable, government investigation or loss of investor confidence in our financial reports.
 
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the SEC rules promulgated thereunder, we are required to furnish an annual report by our management assessing the effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. Management's reports as of the year ended June 30, 2012 identified several material weaknesses and concluded that we did not have effective internal control over financial reporting. Ineffective internal controls can result in errors or other problems in our financial statements. Even if material weaknesses identified do not cause our financial statements to be unreliable, if we continue to be unable to assert that our internal controls are effective, our investors could still lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline. Failure to maintain effective internal control over financial reporting could also result in investigation or sanctions by regulatory authorities. We will be unable to achieve acceptable internal controls with only one officer and director.  
 
In the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with their audit of our financial statements, and in the further event that they are unable to devise alternative procedures in order to satisfy themselves as to the material accuracy of our financial statements and related disclosures, it is possible that we would receive a qualified or an adverse audit opinion on those financial statements which could also adversely affect the market price of our Common Stock and our ability to secure additional financing as needed.
 
We may not be able to identify or fully capitalize on any appropriate business opportunities due to many factors which may negatively impact your investment in our company.
 
Due to a variety of factors outside of our control, we may not be able to identify or fully capitalize on any business opportunities we may identify. These factors include:
 
 
competition from other potential acquirers and partners of and investors in potential acquisitions, many of whom may have greater financial resources than we do;
 
in specific cases, failure to agree on the terms of a potential acquisition, such as the amount or price of our acquired interest, or incompatibility between us and management of the Company we wish to acquire; and
 
the possibility that we may lack sufficient capital and/or expertise to develop promising opportunities.
 
Even if we are able to identify business opportunities that our Board deems appropriate, we cannot assure you that such a strategy will provide you with a positive return on your investment, and may in fact result in a substantial decrease in the value of your stock.
 
 
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Any potential acquisition or merger with a foreign company may subject us to additional risks.
 
If we enter into a business combination with a foreign company, we will be subject to risks inherent in business operations outside of the United States.  These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences.  Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency, and balance of payments positions, and in other respects. The country of Suriname carries several specific risks to business operations; due to the mineral industry’s dominance of country, the local economy is highly vulnerable to mineral price volatility. Additionally, to control rising inflation, the country of Suriname has devalued their local currency by 20% in 2011 in addition to raising local income taxes.  
 
In the event we consummate a transaction with a profitable company, we may not be able to utilize our net operating loss carryover which may have a negative impact on your investment.
 
If we enter into a combination with a business that has operating income, we cannot assure you that we will be able to utilize all or even a portion of our existing net operating loss carryover for federal or state tax purposes following such a business combination. If we are unable to make use of our existing net operating loss carryover, the tax advantages of such a combination may be limited, which could negatively impact the price of our stock and the value of your investment. These factors will substantially increase the uncertainty, and thus the risk, of investing in our shares.
 
Economic conditions may affect our ability to obtain financing and to complete a merger or acquisition.
 
Due to general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will need. In the presence of these economic conditions, we may have difficulty raising sufficient capital to support the investigation of potential business opportunities, and to consummate a merger or acquisition. These factors substantially increase the uncertainty, and thus the risk, of investing in our shares.
 
There are a number of factors related to our common stock which may have an adverse effect on our shareholders.
 
Shareholders' interests in our Company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities. In the event that we are required to issue additional shares, enter into private placements to raise financing through the sale of equity securities or acquire business interests in the future from the issuance of shares of our common stock to acquire such interests, the interests of existing shareholders in our Company will be diluted and existing shareholders may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause a reduction in the proportionate ownership and voting power of all existing shareholders.
 
We are a shell company, and liquidity of shares of our common stock is limited.
 
The fact that we are a “shell company” within the meaning of certain regulations means that holders of our common stock are subject to certain restrictions on their ability to sell their shares pursuant to the resale exemptions from registration provided by Rule 144 (“Rule 144”) under, or Section 4(1) of, the Securities Act, and this further limits the liquidity of our common stock.  Specifically, holders of shares of common stock of a “shell company” are only permitted to sell their shares of common stock under Rule 144, subject to certain restrictions, starting one year after (i) the completion of a business combination with a private company in a merger or other transaction after which the company would cease to be a “shell company” (as defined in Rule 12b-2 under the Exchange Act) and (ii) the disclosure of certain financial and information regarding the company in relation to which the business combination was consummated on a Current Report on Form 8-K within four business days thereafter.
 
We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
 
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. As part of the JOBS Act, companies with less than $1 billion in gross revenue can qualify as an “emerging growth company.” Therefore, we qualify as an emerging growth company, and we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include, but are not limited to:
 
·
Not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act;
 
·
Reduced disclosure obligations regarding executive compensation in our periodic and annual reports;
 
·
Not being required to comply with certain new requirements adopted by the Public Company Accounting Oversight Board, or PCAOB, and;
 
·
Not being required to obtain stockholder approval of any golden parachute payments not previously approved.
 
We plan to take advantage of the reduced disclosure obligations. Additionally, we will qualify as a “smaller reporting company” and thus have the advantage of not being required to provide the same level of disclosure as larger public companies. Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. We have elected not to opt in to Section 107 and, therefore, will not delay adoption of certain accounting standards applicable to public companies. This election is irrevocable.  
 
We could remain an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier. We could lose our emerging growth status on the earliest of 1) the last day of the first fiscal year in which we have annual gross revenues of $1 billion or more, 2) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or 3) the date on which we are deemed to be a “large accelerated filer” as  defined by rule 12b-2 under the Securities Act of 1934, as amended, or the Exchange Act, which would occur if the market value of the Company’s common units that are held by non-affiliates exceeds $700 million as of the last business day of the Company’s most recently completed second fiscal quarter. At this time we expect to remain both a “small reporting company” and an “emerging growth company” for the foreseeable future.
 
The concentration of share ownership by Company insiders could pose conflicts of interest which may adversely affect all other Company shareholders.
 
Shareholders with beneficial ownership of at least 5%, senior management and directors have significant ownership of our shares amounting to 91% as of June 11, 2013. This concentration could lead to conflicts of interest and difficulties for non-insider investors effecting corporate changes, and could adversely affect our Company's share price and influence all matters submitted to our Company's shareholders for approval. Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control of our Company, impeding a merger, consolidation, takeover or other business combination involving our Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, which in turn could have a material adverse effect on the market price of our shares. Employee, Director and consultant stock options and warrants could lead to greater concentration of share ownership among insiders and could lead to dilution of share ownership which could lead to depressed share prices.
 
We have certain provisions in our Articles of Incorporation and Bylaws, and there are other provisions under Nevada law, that may serve to make a takeover of our Company more difficult.
 
Provisions of our articles of incorporation and bylaws may delay or prevent a takeover which may not be in the best interests of our stockholders. Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of Nevada law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders.
 
Our common stock is quoted in the over the counter market on the OTC Pink.
 
Our common stock is quoted on the OTC Pink. OTC Pink offers a quotation service to companies that are unable to list their securities on an exchange or for companies, such as ours, whose securities are not eligible for quotation on the OTC Bulletin Board. The requirements for quotation on the OTC Pink are considerably lower and less regulated than those of the OTC Bulletin Board or an exchange. Because our common stock is quoted on the OTC Pink, it is possible that even fewer brokers or dealers would be interested in making a market in our common stock which further adversely impacts its liquidity.
 
 
7

 
 
The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell their shares.
 
Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a "penny stock," and trading in our common stock is subject to the requirements of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a "penny stock," including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 
This registration statement contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the impact of the pending bankruptcy of our subsidiaries, our ability to consummate the acquisition of an operating entity and/or assets, our ability to generate revenues and pay our operating expenses, our ability to raise capital as necessary, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this registration statement in its entirety. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this registration statement, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
 
Item 2.
 
Management’s Discussion and Analysis of Financial Condition and Results Of Operations
 
The following discussion of our financial condition and results of operation for 2011 through 2012 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
 
Plan of Operations
 
Our current business objective is to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective is to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
 
In evaluating and selecting a business opportunity, we intend will consider the following factors:
 
 
the available technical, financial and managerial resources;
 
working capital and other financial requirements;
 
history of operations, if any;
 
prospects for the future;
 
nature of present and expected competition;
 
the quality and experience of management services which may be available and the depth of that management;
 
the potential for further research, development, or exploration;
 
specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities;
 
the potential for growth or expansion;
 
the potential for profit;
 
the perceived public recognition of acceptance of products, services, or trades; name identification; and
 
other relevant factors.
 
We will use the details listed above to evaluate and select a business opportunity. In evaluating and selecting a business opportunity, we will use a multi-step process consisting of the following:
 
 
1.
Search for like-minded parties, this step is expected to take approximately 0-6 months, and will consist of environmental scanning for parties with similar goals. Step 2 will not take place until completion of this search;
 
2.
Feasibility analysis, this step is expected to take approximately 1 week and will involve consideration of the matters listed above, with an emphasis on marketing potential and financing requirements. The feasibility analysis will either result in abandonment to begin a new search, or continuation onto step 3;
 
3.
Goal setting and criteria establishment, this step is expected to take approximately 1 week and will require the establishment of specific, attainable long and short-term performance goals for the business opportunity, in addition to the establishment of specific criteria by which to measure the business’s performance;
 
4.
Evaluation , this step is expected to take approximately 2-4 weeks and will consist of an analysis of relevant data collected to determine if minimum expectations were met from step 3. If goals were achieved, we will move onto step 5, if not, we will re-assess step 3 and begin another evaluation or start a new search altogether;
 
5.
Memorialize letter of intent, this step is expected to take approximately 1 week and will call for the drafting of a non-binding letter of intent to be agreed upon between the like-minded parties. If no agreement is reached after necessary negotiations, we will begin a new search from step 1;
 
6.
Transaction financing, this step is expected to take approximately 1-2 months and will require us to raise sufficient funding to complete the potential acquisition or merger, in addition to funding short-term operations. If this step is unsuccessful we will have to begin a new search;
 
7.
Consummate Transaction, this step is expected to take approximately 1 week and will involve the formal completion of all legal contracts to complete the related merger or acquisition.
 
 
8

 
 
We currently engage in limited business activities and have limited cash resources. As such, the costs of investigating and analyzing business combinations will be paid through capital raises. The incremental cost to implement a plan of operations is anticipated to cost approximately $120,000.  We also anticipate incurring costs incremental costs of $180,000 related to the filing of quarterly, annual and other reports with the Securities and Exchange Commission and costs relating to consummating an acquisition. We do not have any firm commitments, however, for the provision of any additional capital to our company to fund these costs.
 
We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
 
Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
 
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
 
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
 
NuState Energy Holdings, Inc.
RESULTS OF OPERATIONS
 
   
Three-month period ended
March 31,
   
Increase/
(Decrease)
in $ 2013
   
Increase/
(Decrease)
in % 2013
   
Nine-month period ended
March 31,
   
Increase/
(Decrease)
in $ 2013
   
Increase/
(Decrease)
in % 2013
 
   
2013
   
2012
   
vs 2012
   
vs 2012
   
2013
   
2012
   
vs 2012
   
vs 2012
 
                                                 
                                                 
Operating expenses:
                                               
Selling, general and administrative
    95,550       139,598       (44,048 )     -31.6 %     320,535       556,759       (236,224 )     -42.4 %
Total operating expenses
    95,550       139,598       (44,048 )     -31.6 %     320,535       556,759       (236,224 )     -42.4 %
                                                                 
Operating loss
    95,550       139,598       (44,048 )     -31.6 %     320,535       556,759       (236,224 )     -42.4 %
                                                                 
Other expense:
                                                               
Decrease in fair value of derivative liabilities
    -       26,606       (26,606 )     -100.0 %     5,556       87,197       (81,641 )     -93.6 %
Interest expense
    (113,619 )     (101,290 )     12,329       12.2 %     (233,847 )     (279,023 )     (45,176 )     -16.2 %
      (113,619 )     (74,684 )     38,935       -52.1 %     (228,291 )     (191,826 )     36,465       -19.0 %
                                                                 
Net loss from continuing operations
    (209,169 )     (214,282 )     (5,113 )     2.4 %     (548,826 )     (748,585 )     (199,759 )     26.7 %
                                                                 
Discontinued operations:
                                                               
Gain on extinguishment of debt
    -       -       -    
NM
      1,494,406       -       1,494,406    
NM
 
Net income from discontinued operations
    -       -       -    
NM
      1,494,406       -       1,494,406    
NM
 
                                                                 
Net (loss) income
    (209,169 )     (214,282 )     5,113       -2.4 %     945,580       (748,585 )     1,694,165       -226.3 %
 
NM: Not meaningful
 
 
9

 
 
Selling, General, and Administrative Expenses
 
Selling, general, and administrative expenses primarily consist of compensation to officers, legal and professional fees, and consulting fees.
 
The decrease in selling, general and administrative expenses during the three and nine-month periods ended March 31, 2013, when compared with the prior year periods, is primarily due to the following:
 
 
·
During fiscal 2012, the consulting agreements with two related parties expired. Those contracts were not renewed during the nine-month period ended March 31, 2013, resulting in lower consulting fees during the period;
 
·
This decrease was offset slightly by an increase in legal and professional fees related to the filing of our registration statement and the bankruptcy filing of our former subsidiaries, CXT and P2SI.
 
Gain on Extinguishment of Debt
Gain on extinguishment of debt consists of a gain on extinguishment of discontinued of $1,494,406, which resulted from the deconsolidation of our two subsidiaries which filed for bankruptcy during the nine-month period ended March 31, 2013.
 
Decrease in Fair Value of Derivative Liabilities
Decrease in fair value of derivative liabilities results from the changes in the fair value of the derivative liability due to the application of ASC 815, resulting in either income or expense, depending on the difference in fair value of the derivative liabilities between their measurement dates. The decrease in fair value of derivative liabilities recognized during the nine-month period ended March 31, 2013 is primarily due to the setting of a conversion price floor on all outstanding convertible notes payable convertible at a variable rate. The decrease in fair value of derivative liabilities recognized during the nine-month period ended March 31, 2012 is primarily due to an increase of our common stock quoted price between measurement dates and during such periods, respectively. Our common stock quoted price is one of the primary assumptions used in the computation of our derivative liabilities.
 
Interest Expense
Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. The increase in interest expense during the three-month period ended March 31, 2013 is primarily due to the $50,000 increase in a certain promissory note recognized as interest expense. The decrease in interest expense during the nine-month period ended March 31, 2013 is primarily due to lower amortization of debt discount during the nine-month period ended March 31, 2013, when compared to the prior year period. The decrease is primarily due to the issuance of $150,000 in convertible notes payable during fiscal 2011 with embedded conversion features amounting to approximately $107,000, all of which was amortized prior to the nine-month period ended March 31, 2013. The embedded conversion features were accounted for as debt discount and amortized over the terms of the related convertible notes, which ranged between 6 and 12 months.
 
Results of Operations for the Year ended June 30, 2012 as compared to the Year ended June 30, 2011
 
NuState Energy Holdings, Inc.
RESULTS OF OPERATIONS
 
   
Year ended
June 30,
   
Increase/
(Decrease)
in $ 2012
   
Increase/
(Decrease)
in % 2012
 
   
2012
   
2011
   
vs 2011
   
vs 2011
 
                         
Operating expenses:
                       
Selling, general and administrative
    1,042,144       372,189       669,955       180.0 %
Total operating expenses
    1,042,144       372,189       669,955       180.0 %
                                 
Operating loss
    1,042,144       372,189       669,955       180.0 %
                                 
Other expense:
                               
Decrease in fair value of derivative liabilities
    26,086       14,733       11,353    
NM
 
Interest expense
    (307,337 )     (223,572 )     (83,765 )     37.5 %
      (281,251 )     (208,839 )     (72,412 )     34.7 %
                                 
Net loss
    (1,323,395 )     (581,028 )     (742,367 )     127.8 %
 
NM: Not meaningful
 
 
10

 
 
Selling, General, and Administrative Expenses
 
Selling, general, and administrative expenses primarily consist of compensation to officers, legal and professional fees, and consulting fees.
 
The increase in selling, general and administrative expenses during fiscal 2012, when compared with the prior year, is primarily due to the following:
 
 
·
During fiscal 2012, we hired an interim Chief Operating Officer with an annual compensation of $120,000. The interim chief operating officer provided services for 12 months during fiscal 2012. We did not have an interim Chief Operating Officer during fiscal 2011. Additionally, a Chairman of the Board’s employment agreement which provides for an annual compensation of $240,000 was effective for 12 months during fiscal 2012 and 8 months during fiscal 2011. During 4 months of fiscal 2011, we suspended this employment agreement due to lack of corporate activity;
 
·
The increase in compensation was primarily due to finding an acquisition target for our company, time devoted to legal matters, and the preparatory work for this registration statement;
 
·
The increase in legal fees during fiscal 2012 was primarily from the legal resources we had to devote to settling certain claims from certain vendors and one of our former officers. The settlement occurred in October 2011;
 
·
Additionally, our professional fees during fiscal 2012 increased primarily as a result of the preparation and the audit of our financial statements in anticipation of this registration statement. No such resources were devoted to this project during fiscal 2011.
 
Decrease in Fair Value of Derivative Liabilities
Decrease in fair value of derivative liabilities results from the changes in the fair value of the derivative liability due to the application of ASC 815, resulting in either income or expense, depending on the difference in fair value of the derivative liabilities between their measurement dates. The decrease in fair value of derivative liabilities recognized during fiscal 2012 and 2011 is primarily due to an increase of our common stock quoted price between measurement dates and during such periods, respectively. Our common stock quoted price is one of the primary assumptions used in the computation of our derivative liabilities.
 
Interest Expense
Interest expense represents stated interest of notes and convertible notes payable as well as amortization of debt discount. The increase in interest expense is primarily due to higher amortization of debt discount during fiscal 2011 and 2012. The increase is primarily due to the issuance of $237,000 and $150,000 in convertible notes payable during fiscal 2012 and 2011, respectively, with embedded conversion features amounting to approximately $90,000 and $107,000, respectively, of which approximately $159,000 and $33,000 was amortized during fiscal 2012 and 2011, respectively. The embedded conversion features were accounted for as debt discount and amortized over the terms of the related convertible notes, which ranged between 6 and 12 months. Additionally, interest expense increased due to higher weighted average interest bearing debt during fiscal 2012 when compared to the prior year.
 
 
11

 
 
Liquidity and Capital Resources
 
   
Ending balance at
March 31,
   
Average balance during
nine-months ended March 31,
 
   
2013
   
2012
   
2013
   
2012
 
Cash
  $ 2,513     $ 1,012     $ 1,763     $ 6,954  
                                 
Accounts payable and accrued expenses
    394,741       338,113       366,427       461,175  
Notes and convertible notes payable and accrued  interest, excluding debt discount
    3,193,028       1,787,552       2,490,290       2,075,971  
 
At March 31, 2013 and 2012, 100% of our total assets consisted of cash and cash equivalents.
 
We do not have any material commitments for capital expenditures.
 
The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments and effectively implement our growth strategy. Our primary sources are financing activities such as the issuance of notes payable and convertible notes payable. In the past, we have mostly relied on debt and equity financing to provide for our operating needs.
 
Our other receivable consisted of a judgment in favor of the Company. We do not expect that other receivables will be a significant source of liquidity for the foreseeable future.
 
We are unable to generate sufficient funds from operations to fund our ongoing operating requirements through June 30, 2013. As of June 11, 2013 we had less than $1,000 on hand . We will need to raise funds to enhance our working capital and use them for strategic purposes. We intend to generate proceeds from either debt or equity financing.
 
We intend to finance our operations using a mix of equity and debt financing. We do not anticipate incurring capital expenditures for the foreseeable future. We anticipate that we will need to raise approximately $180,000 per year in the near term to finance the recurring costs of being a publicly-traded company, $564,000 to continue operations, and $120,000 to implement a plan of operations, with additional funding necessary to pay our outstanding obligations of approximately $4.5 million as of March 31, 2013. In the long-term, we anticipate we will need to raise a substantial amount of capital to complete an acquisition. We are unable to quantify the resources we will need to successfully complete an acquisition. If these funds cannot be obtained, we may not be able to consummate an acquisition or merger, and our business may fail as a result.
 
Going Concern
The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately $122,000 and $250,000 during the nine-month period ended March 31, 2013 and the year ended June 30, 2012, respectively, and has a working capital deficit of approximately $4.5 million and $6.2 million at March 31, 2013 and December 31, 2012, respectively. The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an  operating company is consummated. Management plans may continue to provide for its capital requirements by issuing additional equity securities and debt and the Company will continue to find possible acquisition target. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.
 
 
12

 
 
   
Nine-Month Periods Ended
March 31,
 
   
2013
   
2012
 
Cash flows from operating activities
           
             
Net loss from continuing operations
  $ (548,826 )   $ (748,585 )
Non-cash adjustments
               
Amortization of debt discount
    3,712       130,597  
Decrease in fair value of derivative liability
    (5,556 )     (87,197 )
Other
    -       11,500  
                 
Changes in assets and liabilities
               
Other receivable
    -       315,000  
Accrued interest
    230,136       148,426  
Accrued compensation
    192,000       172,500  
Other
    6,037       (114,125 )
Net cash provided by (used in) continuing operations
    (122,497 )     (171,884 )
                 
Cash flows from investing activities
               
Proceeds from issuance of common stock
    70,000       -  
Proceeds from issuance of convertible notes payable
    55,000       160,000  
      125,000       160,000  
                 
Net variation in cash
  $ 2,503     $ (11,884 )
 
Nine months ended March 31, 2013
 
The increase in accrued compensation during the nine-month period ended March 31, 2012 is primarily due to slower payments to our officers resulting from a lack of resources to pay such payables timely, offset by the forfeiture of $282,000 in compensation by one of our officers and the satisfaction of $150,000 to the same officer through the cashless exercise of stock options. The increase in accrued interest during the nine-month period ended March 31, 2013 is primarily attributable to the issuance of interest-bearing convertible notes payable during the prior year.
 
Cash generated from financing activities consists of proceeds of $55,000 from the issuance of convertible notes payable and proceeds of $70,000 from the issuance of common stock during the nine-month period.
 
The decrease in cash flows used in operating activities during the nine-month period ended March 31, 2013, when compared to the prior year period, is primarily due to a decrease in operating expenses and interest expense during the nine-month period ended March 31, 2013.
 
Nine months ended March 31, 2012
 
The increase in accrued interest and accrued compensation during the nine-month period ended March 31, 2012 resulted primarily from our lack of financial resources to pay such payables.
 
Cash provided by financing activities consisted of proceeds of $160,000 from the issuance of convertible notes payable during the nine-month period.
 
Cash used in operating activities during the nine-month period ended March 31, 2012 is due primarily to higher operating expenses and interest expense, offset by the collection of our other receivable.
 
 
Year ended June 30, 2012
                       
Sources of liquidity and capital resources
                       
   
Ending balance at
June 30,
       
Average balance during
 
   
2012
   
2011
   
2012
   
2011
 
Cash
  $ 10     $ 12,896     $ 6,453     $ 6,466  
Other receivable
    -       315,000       157,500       315,000  
Notes and convertible notes payable, excluding debt discount
    2,923,725       2,364,389       2,644,057       1,888,521  
 
 
13

 
 
Year ended June 30, 2012
 
The decrease in other receivable during fiscal 2012 resulted from the receipt of settlement during the period. The decrease in accounts payable during fiscal 2012 is primarily due to the payment of certain liabilities related to such settlement, which were paid upon receipt of the proceeds. Additionally, certain liabilities were satisfied by the issuance of notes payable of $132,000. The increase in accrued interest during fiscal 2012 is primarily attributable to the issuance of interest-bearing convertible notes payable during the year. The increase in accrued compensation during fiscal 2012 is primarily due to slower payments to our officers resulting from a lack of resources to pay such payables timely.
 
Cash generated from financing activities consists of proceeds of $237,000 from the issuance of convertible notes payable during the year.
 
Year ended June 30, 2011
 
The increase in accrued interest and accrued compensation during fiscal 2011 resulted primarily from our lack of financial resources to pay such payables.
 
Cash provided by financing activities consisted of proceeds of $150,000 from the issuance of convertible notes payable during the year
 
Obligations under Material Contracts
 
None.
 
Seasonality
None.
 
Inflation
None.
 
Critical Accounting Policies and Significant Estimates
The SEC recently issued proposed guidance for disclosure of critical accounting policies and estimates. The Company’s most critical accounting policies relate to derivative liabilities. The SEC defines “critical accounting estimates” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods.
 
The Company’s critical accounting policies are as follows:
 
Convertible Instruments - The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815.
 
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments in accordance with EITF 00-19. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provide an exception to this rule when the host instrument is deemed to be conventional (as that term is described).
 
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with the provisions of ASC 470 20 “Debt with Conversion Options” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
 
 
14

 
 
The Company believes the certain conversion features embedded in convertible notes payable are not clearly and closely related to the economic characteristics of the Company’s stock price. Accordingly, the Company has recognized derivative liabilities in connection with such instruments. The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance at every balance sheet thereafter. The Company uses judgment in determining which valuation is most appropriate for the instrument (e.g., Black Scholes), the expected volatility, the implied risk free interest rate, as well as the expected dividend rate.
 
Recently Issued Accounting Pronouncements
 
Recent accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.
 
Off Balance Sheet Arrangements
 
We do not have any obligations that are not reflected on our balance sheet.
 
Item 3. Properties
 
We rent our principal executive offices from an unrelated third party on a month-to-month basis for a monthly rental of $350.
 
Item 4. Security Ownership of Certain Beneficial Owners and Management
 
The following table sets forth information available to us as of June 11, 2013 with respect to the beneficial ownership of the outstanding shares of each class of our voting stock by:
 
 
each person who is the beneficial owner of more than 5% of the outstanding shares of any class of voting stock;
 
each director
 
each executive officer; and
 
all executive officers and directors as a group.
 
Unless otherwise indicated, the business address of each person listed is in care of 1201 Main St., Suite 1980, Columbia, SC 29201. We believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them. Under securities laws, a person is considered to be the beneficial owner of securities he owns and that can be acquired by him within 60 days from June 11, 2013 upon the exercise of options, warrants, convertible securities or other understandings. We determine a beneficial owner's percentage ownership by assuming that options, warrants or convertible securities that are held by him, but not those held by any other person and which are exercisable within 60 days of June 11, 2013, have been exercised or converted.
 
Name of Beneficial Owner
 
Amount and Nature of
Beneficial Ownership
   
% of Class
   
% Voting
Control (1)
 
Common Stock:
                 
Kevin Yates (2)
    115,000,000       22.6 %     22.0 %
All officers and directors as a group
    115,000,000       22.6 %     22.0 %
(one person)
                       
The Amber Capital Fund Ltd (3)
    48,298,613       9.0 %     9.3 %
Carmelo Luppino (4)
    70,776,289       13.1 %     13.6 %
Michael Garnick (5)
    42,107,759       8.3 %     8.1 %
Arthur Notini (6)
    35,683,678       6.8 %     6.8 %
Harvey Altholtz (7)
    39,420,000       7.6 %     7.6 %
                         
                         
Robert F. Green, Jr. (8)
    28,015,422       5.5 %     5.4 %
Elisha Cheung (9)
    27,970,738       5.4 %     5.4 %
Frank Reilly (10)
    51,360,666       10.2 %     9.8 %
                         
Series Y Convertible Preferred Stock:
                       
Kevin Yates
    -       *       *  
All officers and directors as a group
    -       *       *  
(one person)
                       
Richard Hersh
    87,000       100 %     3.3 %
                         
Total
    458,720,565               91.23 %
 
 
15

 
 
 
*
represents less than 1%
 
 
1
Percent of Voting Control is based upon the number of issued and outstanding shares of our common stock and our Series Y Convertible Preferred Stock on April 30, 2013. On that date we had 504,383,202 outstanding shares of common stock with one vote per share and 87,000 shares of Series Y Convertible Preferred Stock with 200 votes per share for an aggregate of 521,783,202 votes.
 
2
Mr. Yates is the control person of Mobile Software Team, LLC. His beneficial ownership related to Mobile Software Team, LLC includes 5,000,000 shares underlying a warrant exercisable at $0.005 per share that expires on September 1, 2014.
 
3
Michael B. Collins is a control person of The Amber Capital Fund Ltd. which is located at 5 Park Road, Hamilton, Bermuda HM09. Its beneficial ownership includes:
 
§
3,000,000 shares underlying a warrant exercisable at $0.025 per share that expires on May 15, 2015,
 
§
21,000,000 shares underlying $55,000 of 12% unsecured convertible notes, a $15,000 10% convertible debenture, a $25,000 18% unsecured convertible note, and a $25,000 12% unsecured convertible note all of which convert at $0.005 per share,
 
§
5,500,000 shares underlying warrants issuable upon conversion of $55,000 of unsecured convertible notes at $0.025 per share that expires on the three-year anniversary of the notes conversion dates, and
 
§
1,500,000 shares underlying a $15,000 convertible debenture at a conversion price of $0.01 per share based on 50% of the average closing price per share for the ten trading days immediately prior to the date the Company receives a notice of conversion from the investor, which in no event may be less than $0.01.
 
4
Mr. Luppino’s address is 77 Sheather Road, Mt. Kisko, New York 10549. Mr. Luppino is the control person of Luppino Landscaping & Masonry, LLC. His beneficial ownership includes:
 
§
1,000,000 shares of common stock underlying a warrant exercisable at $0.025 per share that expires on November 1, 2014,
 
§
1,500,000 shares of common stock underlying a warrant exercisable at $0.025 per share that expires on March 5, 2015.
 
§
6,550,000 shares of common stock underlying a warrant exercisable at $0.025 per share that expires on May 25, 2015,
 
§
19,000,000 shares underlying $95,000 of 12% unsecured convertible notes that convert at $0.005 per share, and
 
§
2,500,000 shares underlying a warrant issuable upon conversion of $20,000 of a 12% unsecured convertible note that is exercisable at $0.025 per share and expires on the three-year anniversary of the note conversion date.
 
§
In addition, his beneficial ownership related to Luppino Landscaping & Masonry, LLC includes:
 
§
666,667 shares underlying a warrant exercisable at $0.025 per share that expires on May 15, 2015
 
§
4,000,000 shares underlying a $20,000 12%, unsecured convertible note that converts at $0.005 per share and
 
§
2,000,000 shares underlying warrants issuable upon conversion of a $20,000 12% unsecured convertible note exercisable at $0.025 per share that expires on the three-year anniversary of the note conversion date.
 
5
Mr. Garnick’s address is 1590 Stockton Road, Meadowbrook, Pennsylvania 19046.  Mr. Garnick’s beneficial ownership includes:
 
·
3,333,333 shares underlying a $50,000 16% convertible note that converts at $0.015 per share.
 
6
Mr. Notini’s address is 1055 Mammoth Road, Dracut, Massachusetts 01826. His beneficial ownership includes:
 
§
4,333,333 shares underlying a warrant exercisable at $0.025 per share that expires on May 25, 2015,
 
§
2,000,000 shares underlying a warrant issuable upon conversion of $20,000 of 12% unsecured convertible notes that are exercisable at $0.025 per share and expire on the three-year anniversary of the notes conversion dates,
 
§
11,000,000 shares underlying a $25,000 18% unsecured convertible note and $30,000 of 12% unsecured convertible notes all of which are convertible at $0.005 per share,
 
§
1,666,700 shares underlying $16,667 of convertible debentures at a conversion price of $0.01 per share based on 50% of the average closing price of our common stock for the ten trading days immediately preceding the date the Company receives a notice of conversion from Investor but in no event less than $0.01 per share,
 
§
2,000,000 shares underlying 10 shares of Series F preferred stock costing an aggregate of $50,000 that are convertible at $0.025 per share and
 
§
33,200 shares underlying 332 shares of Series C preferred stock costing an aggregate of $9,960 that are convertible at $0.30 per share.
 
7
Mr. Harvey Altholtz is the General Partner of Wealth Strategy Partners LLP which is the General Partner of the Adamas Fund, LLLP. Wealth Strategy Partners LLP is located at 1800 Second St., Suite 758,      Sarasota, Florida 34236. Its beneficial ownership includes 15,000,000 shares of common stock underlying 30,000 shares of Series I preferred stock convertible at 500 common shares per preferred share.
 
 
16

 
 
 
8
Mr. Green’s address is 607 Dwyer Avenue, Arlington Heights, Illinois 60005. His beneficial ownership includes:
 
500,000 shares underlying a warrant exercisable at $0.025 per share that expires on November 1, 2014,
 
783,333 shares underlying a warrant exercisable at $0.025 per share that expires on May 25, 2015 and
 
2,400,000 shares underlying a $12,000 12% unsecured convertible note that converts at $0.025 per share.
 
9
Mr. Cheung’s address is 11709 Shadow Drive, Dublin, California 94568. His beneficial ownership includes:
 
·
1,500,000 shares underlying a warrant issuable upon conversion of $15,000 of 12% unsecured convertible notes that are exercisable at $0.025 per share and expires on the three-year anniversary of the note conversion date and
 
·
10,000,000 shares underlying $25,000 of an 18% unsecured convertible note and $25,000 of 12% unsecured convertible notes all of which are convertible at $0.005 per share.
 
10
Mr. Reilly’s beneficial ownership includes:
 
120,000 shares of common stock underlying a warrant exercisable at $0.025 per share which expires on May 25, 2015.
 
 
17

 
 
Item 5. Directors and Executive Officers
 
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
 
Name
Position
Age
Date First Elected or Appointed
Mr. Kevin Yates
Chairman of the Board of Director
47
April, 2010
       
 
Chief Executive Officer
 
July, 2010
 
Business Experience
Mr. Kevin Yates has served as Chairman of the Company’s Board of Directors since April 2010 and as the Company’s Chief Executive Officer, Treasurer and Secretary since July 2010. Mr. Yates formally served as Chief Operating Officer of the company in 2006-2007.
 
For the past eight years, Mr. Yates has served as President and Director of PocketMD. Mr. Yates has also served as Director of Mobile Software Team, LLC from August 2008 through July 2012, and C3I  Services, LLC from July 2012 to present.
 
Mr. Yates’ devotes approximately 90% of his time to the business and affairs of our company. Mr. Yates experience in working with public companies’ operational strategy and market plan makes him an asset to the Company.
 
There are no family relationships among our directors or executive officers.
 
Item 6. Executive Compensation
 
Summary Compensation Table
The following table summarizes all compensation recorded by us in the two completed fiscal years for:
 
a.
our principal executive officer or other individual serving in a similar capacity;
 
b.
our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at June 30, 2012 as that term is defined under Rule 3b-7 of the Securities Exchange Act of 1934; and
 
c.
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as an executive officer at June 30, 2012.
 
Summary Compensation Table
 
Name and principal position
Year
 
Salary
($)
   
Other Compensation ($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Total
($)
 
CEO
2011
  $ 9,500     $ 36,000 (1)     N/A       N/A     $ 45,500  
Kevin Yates, Chairman of the Board
                                         
CEO
2012
  $ 1,500     $ 164,400 (1)     N/A       N/A     $ 165,900  
Kevin Yates, Chairman of the Board
                                         
                                           
Interim COO
                                         
Will Williams
2012
  $ 120,000       N/A       N/A     $ 5,000 (2)   $ 125,000  
 
 
1.
Other compensation for Mr. Yates during fiscal 2011 and 2012 represented funds paid to Mobile Software Team, LLC and C3I Services, LLC, related parties by means of common ownership and management to the Company during fiscal 2012 and 2011. The related parties provided assistance to Mr. Yates in his duties.
 
2.
Option awards for Mr. Williams during fiscal 2012 represented 5,000,000 warrants to purchase our Common Stock  with an aggregate grant date fair value of $5,000, calculated in accordance with FASB ASC Topic 718. The assumptions made in the calculation of the fair value of these warrants are disclosed in Note 7: Stockholders’ Deficit in the accompanying Audited Financial Statements as of and for the year ended June 30, 2012 .
 
 
18

 
 
Employment Agreements and Narrative Regarding Executive Compensation
 
Kevin Yates’ employment agreement
 
On May 6, 2010, we entered in an executive employment agreement with Kevin Yates, as our President. The agreement provides for the following, among other things:
 
 
Base annual salary of $240,000;
 
 
Base salary may increase from time to time with the approval of our Compensation Committee;
 
 
Grant of options convertible in 60,000,000 shares of our common stock and exercisable at $0.0025 per share;
 
 
Termination clause: upon death, retirement or permanent disability of Kevin Yates, or at any time by us, or upon thirty-day notice by Kevin Yates
 
 
If the employment is terminated by Kevin Yates for good reason, as defined, or by us, other than for cause, as defined, death, retirement or permanent disability of Kevin Yates, Kevin yates is entitled to two years base salary (currently, the equivalent of $480,000) and unpaid bonuses or incentive compensation, if any.
 
On June 3, 2010, Kevin Yates and the Company suspended the employment agreement for lack of corporate activity. On October 30, 2010, the employment agreement was reinstated. On April 30, 2010, we entered in a consulting agreement with Mobile Software Team, LLC (‘Mobile Software”). Kevin Yates, our Chairman of the Board is also a managing member of Mobile Software. The agreement provides for the following, among other things:
 
 
Base annual consulting fee of $120,000;
 
 
Grant of warrants convertible in 5,000,000 shares of our common stock at an exercise price of $0.005 per share.
 
 
Termination clause: the earliest of April 30, 2012, the date we become a reporting company, or upon 30 day written notice by each party. Mobile Software used proceeds from the consulting agreement to pay certain of our operating expenses.
 
On April 1, 2012, we entered in a consulting agreement with C3I Services, LLC (‘C3I Services”). Kevin Yates, our Chairman of the Board is also a managing member of C3i Services, LLC. The agreement provides for the following, among other things:
 
 
Base annual consulting fee of $120,000;
 
 
Termination clause: the earliest of July 1, 2013, the date we become a reporting company, or upon 30 day written notice by each party. C3I Services used proceeds from the consulting agreement to pay certain of our operating expenses.
 
Will William’s consulting agreement
On July 1, 2011, we entered in a consulting agreement with Williams Global Holdings, LLC. The agreement provided for the following:
 
 
Will Williams would act as the Interim Chief Operating Officer for the duration of the agreement;
 
 
Base annual consulting fee of $120,000;
 
 
Grant of warrants convertible in 5,000,000 shares of our common stock at an exercise price of $0.005 per share.
 
 
Termination clause: the earliest of July 1, 2013, or upon 30 day written notice by each party.
 
The agreement was terminated, effective July 1, 2012.
 
Stock Option Plan
In January 2001, we adopted the 2001 Employee Stock Compensation Plan, or the Plan. The Plan provided for stock compensation through the award of shares of our common stock.
 
Our board of directors could appoint a Compensation Committee of the board of directors to administer the Plan. In the absence of such appointment, the board of directors was responsible for the administration of the Plan. We did not appoint a Compensation Committee to administer the plan. The board of directors had the sole power to award shares of common stock under the Plan, as well as determining those eligible to receive an award of Plan shares. Awards of shares under the Plan may be made as compensation for services rendered, directly or in lieu of other compensation payable, as a bonus in recognition of past service or performance or may be sold to an employee.
 
 
19

 
 
The maximum number of shares which may be awarded under the plan is 5,000,000. Awards were generally granted to:
 
 
executive officers, officers and directors (including advisory and other special directors);
 
full-time and part-time employees;
 
natural persons engaged by us as a consultant, advisor or agent; and;
 
a lawyer, law firm, accountant or accounting firm, or other professional or professional firm engaged by us.
 
Grants to employees may be made for cash, property, services rendered or other form of payment constituting lawful consideration under applicable law. Shares awarded other than for services rendered may not be sold at less than the fair value of our common stock on the date of grant.
 
The plan terminated in January 2011. The board of directors had absolute discretion to amend the plan
 
with the exception that the board had no authority to extend the term of the plan, to increase the number of shares subject to award under the plan or to amend the definition of "Employee" under the plan.
 
Outstanding Equity Awards at Fiscal Year End
The following table provides information concerning unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer outstanding at June 30, 2012:
 
Option Awards
 
Stock Awards
 
Name
 
Number of securities underlying unexercised options (#) exercisable
   
Number of securities underlying unexercised options (#) unexercisable
   
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)
   
Option exercise price ($)
 
Option expiration date
 
Number of shares or units of stock that have not vested (#)
   
Market value of shares or units of stock that have not vested ($)
   
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
   
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested (#)
 
Kevin Yates
    5,000,000  (1)                     0.005  
09/01/14
                               
 
 
1) 
5,000,000 warrants, exercisable at $0.005 per share, expiring in September 2014, issued to Mobile Software Team, a related party by common ownership and management with the Company.
 
Director Compensation
Our Board of Directors is comprised of Mr. Yates, who is also an executive officer of our company, and does not receive any compensation specifically for his Board services.
 
Item 7. Certain Relationships and Related Transactions, and Director Independence
 
Other than compensation arrangements, we describe below transactions, during our last fiscal year, to which we were a party, in which:
 
·
The amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years; and
 
·
Any of our directors, executive officers, or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.
 
Consulting Agreements
 
During fiscal 2012 we entered into a consulting agreement with Williams Global Holdings, LLC, managed by Will Williams, our interim chief operating officer. The consulting agreement provided for base annual consulting fees of $120,000 and the grant of 5,000,000 warrants to purchase our common stock, with an exercise price of $0.005 per share and expiring in September 2014. The warrants had a grant date fair value of $5,000. The consulting agreement terminates on the earliest of July 1, 2013, or upon 30 day written notice by each party.
 
During fiscal 2010 we entered into a consulting agreement with Mobile Software Team, LLC, managed by Kevin Yates, our Chairman of the Board. Under this agreement, we incurred $100,000 and $120,000 in annual consulting fees during fiscal 2012 and 2011, respectively. The consulting agreement terminated on April 30, 2012. Mobile Software Team, LLC used proceeds from the consulting agreement to pay certain of our operating expenses.
 
During fiscal 2012 we entered into a consulting agreement with C3I Services, LLC, managed by Kevin Yates, our Chairman of the Board. The consulting agreement provided for base annual consulting fees of $120,000. The consulting agreement terminates on the earliest of July 1, 2013, the date we become a reporting company, or upon 30 days written notice by each party. C3I Services, LLC used proceeds from the consulting agreement to pay certain of our operating expenses.
 
Warrants
 
During fiscal 2012 we issued warrants to purchase 5,000,000 shares of our common stock, with an exercise price of $0.005 per share and expiring in September 2014, to Will Williams, our interim chief operating officer, with a fair value of $5,000.
 
Convertible Notes Payable
 
During fiscal 2012 we issued a $10,000 convertible note payable to Arthur Notini, a holder of more than 5% of our common stock. The convertible note payable matured in April 2013 and is currently past due. The convertible note bears interest at a rate of 12% per annum, payable upon conversion. Interest continues to accrue at 12% per annum monthly until conversion. The convertible note is convertible into shares of our common stock at a rate equal to 80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion. In no event shall the conversion price per share be less than $0.005 or more than $0.10. As of December 31, 2012, $10,814 of principal and accrued interest is outstanding on this convertible note.
 
During fiscal 2012 we issued a $25,000 convertible note payable to Arthur Notini, a holder of more than 5% of our common stock. The convertible note payable matures in December 2013 and bears interest at a rate of 18% per annum, payable upon conversion. The convertible note is convertible into shares of our common stock at a rate equal to the lesser of: 1)80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion, or 2) $0.005. As of December 31, 2012, $29,728 of principal and accrued interest is outstanding on this convertible note.  
 
During fiscal 2012 we issued a $10,000 convertible note payable to Elisha Cheung, a holder of more than 5% of our common stock. The convertible note payable matured in August 2012 and is currently past due. The convertible note bears interest at a rate of 12% per annum, payable upon conversion. Interest continues to accrue at 12% per annum monthly until conversion. The convertible note is convertible into shares of our common stock at a rate equal to the lesser of: 1)20% of the market price of our common stock for the 10 trading days immediately preceding the date of conversion, or 2) $0.005. As of December 31, 2012, $10,820 of principal and accrued interest is outstanding on this convertible note.
 
During fiscal 2012 we issued a $12,000 convertible note payable to Robert Green, Jr., a holder of more than 5% of our common stock. The convertible note payable matured in April 2013 and is currently past due. The convertible note bears interest at a rate of 12% per annum, payable upon conversion. Interest continues to accrue at 12% per annum monthly until conversion. The convertible note is convertible into shares of our common stock at a rate equal to the lesser of: 1)20% of the market price of our common stock for the 10 trading days immediately preceding the date of conversion, or 2) $0.005. As of December 31, 2012, $12,984 of principal and accrued interest is outstanding on this convertible note.
 
During fiscal 2012 we issued two $25,000 convertible notes payable, aggregating $50,000, to The Amber Capital Fund Ltd., a holder of more than 5% of our common stock. The convertible note payable matured in April 2013 and is currently past due. The convertible note bears interest at a rate of 12% per annum, payable upon conversion. Interest continues to accrue at 12% per annum monthly until conversion. The convertible note is convertible into shares of our common stock at a rate equal to 80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion. In no event shall the conversion price per share be less than $0.005 or more than $0.10. As of December 31, 2012, $55,891 of principal and accrued interest is outstanding on these convertible notes.
 
During fiscal 2012 we issued a $25,000 convertible note payable to Carmelo Luppino, a holder of more than 5% of our common stock. The convertible note payable matured in December 2012 and is currently past due. The convertible note bears interest at a rate of 18% per annum, payable upon conversion. The convertible note is convertible into shares of our common stock at a rate equal to the lesser of: 1)80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion, or 2) $0.005. As of December 31, 2012, $28,382 of principal and accrued interest is outstanding on this convertible note.  
 
During fiscal 2012 we issued a $20,000 convertible note payable to Carmelo Luppino, a holder of more than 5% of our common stock. The convertible note payable matured in April 2013 and is currently past due. The convertible note bears interest at a rate of 12% per annum, payable upon conversion. Interest continues to accrue at 12% per annum monthly until conversion. The convertible note is convertible into shares of our common stock at a rate equal to 80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion. In no event shall the conversion price per share be less than $0.005 or more than $0.10. As of December 31, 2012, $21,641 of principal and accrued interest is outstanding on this convertible note.
 
During fiscal 2012 we issued a $25,000 convertible note payable to Elisha Cheung, a holder of more than 5% of our common stock. The convertible note payable matures in December 2013 and bears interest at a rate of 18% per annum, payable upon conversion. The convertible note is convertible into shares of our common stock at a rate equal to the lesser of: 1)80% of the average closing price of our common stock for the 30 trading days immediately preceding the date of conversion, or 2) $0.005. As of December 31, 2012, $29,629 of principal and accrued interest is outstanding on this convertible note.  
 
Common Stock
 
During fiscal 2012 we issued 2,000,000 shares of our common stock to Carmelo Luppino, a holder of more than 5% of our common stock, upon conversion of a $10,000 convertible note payable.
 
 
20

 
 
Director Independence
Our sole director is not considered “independent” within the meaning of meaning of Rule 5605 of the NASDAQ Marketplace Rules.
 
Item 8. Legal Proceedings
 
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
 
Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matter
 
Our current market price on OTC Pink was $0.0006 on June 11, 2013.
 
Market Information
Our common shares are quoted on the OTC Pink Quotation System under the symbol “NSEH,” but trade infrequently.
 
The high and low bid prices of our common stock for the periods indicated below are as follows:
 
Quarter Ended
High
Low
March 31, 2013 0.0012  
December 31, 2012
0.0012
0.0005
September 30, 2012
0.0018
0.0005
June 30, 2012
0.0018
0.0007
March 31, 2012
0.0019
0.0005
December 31, 2011
0.0029
0.0003
September 30, 2011
0.0035
0.0007
June 30, 2011
0.0032
0.0011
March 31, 2011
0.0036
0.0016
December 31, 2010
0.0046
0.0011
September 30, 2010
0.006
0.001
 
Holders
As of June 11, 2013 there were 435 shareholders of record.
 
Dividends
We have not paid any cash dividends since 2008 and do not anticipate or contemplate paying dividends in the foreseeable future, with the exception of dividends on our Series B Preferred Shares. It is the present intention of management to utilize all available funds for the development of our business. The holders of Series B Preferred Stock are entitled to receive annual dividends of 10% payable in cash or shares of our common stock, at our option.
 
At March 31, 2013, we have not declared the payment of dividends on the Series B Preferred Stock aggregating approximately $430,100.
 
 
21

 
 
Securities Authorized for Issuance under Equity Compensation Plans.
 
The following table sets forth securities authorized for issuance under any equity compensation plans approved by our stockholders as well as any equity compensation plans not approved by our stockholder as of June 30, 2012.
 
   
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
   
Weighted average exercise price of outstanding options, warrants and rights (b)
   
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
 
Plan category
                 
                   
Plans approved by our shareholders:
                 
2012 Employee Stock Compensation Plan
    0       0       0  
Plans not approved by stockholders
    0       0       0  
 
Item 10. Recent Sales of Unregistered Securities
During the three-month period ended December 31, 2009, we issued 2,000,000 shares of our common stock to a consultant for services performed at a fair value of $4,800, or $0.0024 per share. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the three-month period ended December 31, 2009, we issued 2,000,000 shares of our common stock to an accredited investor pursuant to a private placement which generated gross proceeds of $5,000, or $0.0025 per share. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the three-month period ended June 30, 2010, we issued 2,000,000 shares of our common stock to an accredited investor pursuant to a private placement which generated gross proceeds of $5,000, or $0.0025 per share. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the period of November 30, 2010 to August 8, 2011, we issued convertible notes payable to ten accredited investors and one company at a fair value of $200,000. These notes are convertible at a rate equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date of conversion. Notwithstanding the foregoing, in no event shall the conversion price per share be less than $0.005 or more than $0.10. The convertible notes mature between August 2011 and May 2012. Upon conversion, these convertible notes payable holders are entitled to 20,000,000 warrants with an exercise price of $0.025 per share, expiring 3 years from the date of conversion. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the three-month period ended December 31, 2011, we issued a convertible note payable to an entity affiliated with the former officer. The note payable is due the earlier of 1) 180 days following our merger with an acquisition candidate or 2) January 1, 2013. If on the due date, the price per share of our common stock is more than $0.05 per share, we have the option to convert such note by issuing shares of our common stock at their then market price. If the obligations under the note are not satisfied by January 1, 2013, the amount payable under the note increases to $150,000. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
 
22

 
 
During the three-month period ended June 30, 2012, we issued 15,713,960 warrants to four consultants for services performed at a fair value of $103,284, or $0.006 per share. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the three-month period ended June 30, 2012, we issued 15,333,333 warrants to five accredited investors for interest at a fair value of $92,000, or $0.006 per share. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
During the period of November 14, 2011 to September 30, 2012, we issued convertible notes payable to nine accredited investors at a fair value of $277,000. These notes are convertible at a rate equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date of conversion. Notwithstanding the foregoing, in no event shall the conversion price per share be less than $0.005 or more than $0.10. The convertible notes mature between September 2012 and June 2013. Upon conversion, these convertible note payable holders are entitled to 27,700,000 warrants with an exercise price of $0.025 per share, expiring 3 years from the date of conversion. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
In January 2013, we issued 5,000,000 shares of our common stock to an accredited investor to satisfy accrued compensation at a fair value of $250,000. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
In April 2013, we issued 50,000,000 shares of our common stock to an officer and director to satisfy accrued compensation at a fair value of $250,000. This private transaction is exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) of that Act.
 
Item 11. Description of Registrant’s Securities to be Registered
 
General
Our authorized capital stock consists of 750,000,000 shares of common stock at a par value of $0.001 per share and 1,000,000 shares of preferred stock, par value $0.01 per share, issuable in such series, and with such designations, rights and preferences as shall be determined by our Board of Directors from time to time. As of March 31, 2013, we have designated the following series of preferred stock:
 
 
Shares Authorized
Preferred B
200,000
Preferred C
20,000
Preferred D
40
Preferred F
500,000
Preferred G
6
Preferred H
1,600
Preferred I
100,000
Preferred J
80
Preferred Y
87,000
 
Preferred Stock
 
All issued and outstanding shares of the Company's preferred stock has a par value of $0.01 per share and rank prior to any class or series of the Company's common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends, except for Series Y Preferred Stock.
 
Series B Preferred Stock
The Series B Preferred Stock has a stated value of $5.00 per share. Each share of Series B preferred Stock is convertible in 20 shares of the Company's common stock. In addition, the holders of the preferred stock are entitled to receive annual dividends of 10% payable in cash or shares of the Company's common stock, at the Company’s option.
 
At March 31, 2013, the Company has not declared the payment of dividends aggregating approximately $411,400.
 
 
23

 
 
Series C Preferred Stock
The Series C Preferred Stock has a stated value of $30.00 per share. Each share of Series C Preferred Stock is convertible in 100 shares of the Company's common stock.
 
Series D Preferred Stock
The Series D Preferred Stock has a stated value of $25,000 per share. Each share of the Series D preferred Stock is convertible in 1,000,000 shares of the Company's common stock. In addition, the holders of the Series D Preferred Stock are entitled to receive a participation interest in the annual net profits generated from any future business activities undertaken by the Company in Brazil.
 
Series F Preferred Stock
The Series F Preferred Stock has a stated value of $5,000 per share. Each share of Series F Preferred Stock is convertible in 200,000 shares of the Company's common stock.
 
Series G Preferred Stock
The Series G Preferred Stock has a stated value of $25,000 per share. Each share of Series G Preferred Stock is convertible in 1,000,000 shares of the Company's common stock. In addition, the holders of the preferred stock are entitled to receive a participation interest in the annual net profits generated from any future business activities undertaken by the Company in Brazil.
 
Series H Preferred Stock
The Series H Preferred Stock has a stated value of $1,000 per share. Each share of Series H Preferred Stock is convertible in 1,000,000 shares of the Company's common stock.
 
Series I Preferred Stock
The Series I Preferred Stock has a stated value of $10.00 per share. Each share of Series I Preferred Stock is convertible into 500 shares of the Company's common stock.
 
During fiscal 2010, the Company and the beneficiary of 70,000 shares of Series I Preferred Stock held in escrow agreed that such beneficiary would return such shares to the Company’s treasury.
 
Series J Preferred Stock
The Series J Preferred Stock has a stated value of $2,500 per share. Each share of the Series J Preferred Stock is convertible into the Company’s common shares using a conversion price equal to 50% of the average closing price of the Company's common stock for the ten trading days immediately preceding the conversion date, although in no instance less than $0.01 per share or greater than $0.03 per share.
 
Series Y Preferred Stock
The Series Y Preferred Stock has a stated value and par value of $.01 and has no liquidity preference. Each share of Series Y Preferred Stock has 200 votes per share and has the right to vote with the common shareholders in all matters. The shares are convertible into 230,405 shares of the Company's common stock at the holder's option. The shares are held by one of the Company’s former Chairman of the Board.
 
Common Stock
Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor. In the event of a liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock
 
 
24

 
 
Item 12. Indemnification of Directors and Officers
 
The Nevada Revised Statutes allows us to indemnify each of our officers and directors who are made a party to a proceeding if:
 
(a) the officer or director conducted himself or herself in good faith;
 
(b) his or her conduct was in our best interests, or if the conduct was not in an official capacity, that the conduct was not opposed to our best interests; and
 
(c) in the case of a criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. We may not indemnify our officers or directors in connection with a proceeding by or in our right, where the officer or director was adjudged liable to us, or in any other proceeding, where our officer or director are found to have derived an improper personal benefit.
 
Our by-laws require us to indemnify directors and officers against, to the fullest extent permitted by law, liabilities which they may incur under the circumstances described above.
 
Item 13. Financial Statements and Supplementary Data
 
We set forth below a list of our audited financial statements included in this Registration Statement on Form 10.
 
 
i
Audited Financial Statements of NuState Energy Holdings, Inc. for the year ending June 30, 2012.
 
a
NuState Financials June 30, 2012
 
b
Notes to the Financial Statements June 30, 2012
 
ii
Audited Financial Statements of NuState Energy Holdings, Inc. for the twelve-month period ending June 30, 2011.
 
a
Financials June 30, 2011
 
b
Notes to the Financial Statements June 30, 2011
 
We set forth below a list of our unaudited financial statements included in this Registration Statement on Form 10.
 
 
i
Unaudited Financial Statements of NuState Energy Holdings, Inc. for the period ending March 31, 2013 and 2012.
 
The financial statements follow the signature page to this Registration Statement on Form 10.
 
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.
 
 
25

 
 
Item 15. Financial Statements and Exhibits
 
The financial statements included in this Registration Statement on Form 10 are listed in Item 13 and commence following the signature page to this Registration Statement on Form 10.
 
Exhibit
No.
Description of Exhibit
 
2.1
Merger Agreement Between Jaguar Investments, Inc., Freight Rate, Inc., and Jag2 Corporation (1)
 
2.2
Agreement and Plan of Merger Between Fittipaldi Logistics, Inc. and State Petroleum Distributors, Inc. (30)
 
3.1
Articles of Incorporation (2)
 
3.2
Certificate of Amendment to Articles of Incorporation (3)
   
3.3
Certificate of Amendment to the Articles of Incorporation (4)
 
3.4
Certificate of Voting Powers, Designations, Preferences and Rights to Series B Convertible Preferred Stock (10)
   
3.5
Certificate of Voting Powers, Designations, Preferences and Rights to Series C Convertible Preferred Stock (10)
   
3.6
Certificate of Voting Powers, Designations, Preferences and Rights to Series Y Preferred Stock (5)
 
3.7
Certificate of Correction of Certificate of Voting Powers, Designations, Preferences and Right to Series Y Preferred Stock (5)
 
3.8
Certificate of Amendment to Articles of Incorporation Increasing Authorized Shares of Common Stock to 250,000,000 filed on August 13, 2004 (9)
 
3.9
Certificate of Voting Powers, Designations, Preferences and Rights to Preferred Stock of Series X Convertible Preferred Stock (5)
 
3.10
Bylaws (2)
 
3.11
Amended Bylaws dated March 31, 2003 (5)
 
3.12
Certificate to Set Forth Designations, Preferences and Rights to Series D Convertible Preferred Stock (23)
 
3.13
Certificate to Set Forth Designations, Preferences and Rights to Series E Convertible Preferred Stock (29)
 
3.14
Certificate to Set Forth Designations, Preferences and Rights to Series F Convertible Preferred Stock (29)
 
3.15
Certificate to Set Forth Designations, Preferences and Rights to Series G Convertible Preferred Stock (29)
 
3.16
Certificate to Set Forth Designations, Preferences and Rights to Series H Convertible Preferred Stock (29)
 
3.17
Certificate to Set Forth Designations, Preferences and Rights to Series I Convertible Preferred Stock (29)
   
3.18
Certificate to Set Forth Designations, Preferences and Rights to Series J Convertible Preferred Stock **
 
4.1
Form of Common Stock Purchase Warrant to Newbridge Securities Corporation for Business Advisory Agreement (10)
 
 
26

 
 
4.2
Form of 14.25% secured convertible debenture**
 
4.3
$100,000 principal amount promissory note pursuant to settlement agreement with Stokes Logistics Consulting, LLC**
 
4.4
$100,000 principal amount 8% secured convertible promissory note**
 
4.5
Letter of agreement dated February 8, 2008 evidencing $25,000 principal promissory note to Canberra Financial Services II, Inc**
 
4.6
$14,000 principal 12.5% promissory note for services**
 
4.7
Form of unsecured promissory note**
 
4.8
Form of non-plan option agreement (10)
 
4.9
Form of common stock purchase warrant (10)
 
4.10
Form of Common Stock Purchase Warrant re: 14.25% secured convertible debentures (10)
 
4.11
Form of Common Stock Purchase Warrant issued to Newbridge Securities Corporation as Placement Agent for 14.25% secured convertible debentures (10)
 
4.12
Form of Series C 10% unsecured convertible debenture (20)
 
4.13
Form of Warrant for Series C 10% unsecured convertible debenture offering **
 
4.14
Form of Series D 8% unsecured convertible debenture**
 
4.15
Form of 10% convertible debenture**
 
4.16
Form of Warrant for Series D 8% unsecured convertible debenture (22)
 
4.17
Articles of Merger between Power2Ship, Inc. and Fittipaldi Logistics, Inc. (25)
 
4.18
Form of Term Sheet for Purchase of Outstanding Debentures (Version 2) (28)
 
4.19
Form of Term Sheet for Purchase of Outstanding Debentures (Version 1) (28)
 
4.20
Form of Non-Plan Stock Option Agreement for Employees (29)
   
4.21
Form of Non-Plan Stock Options Agreement for Executives (29)
 
4.22
Articles of Merger between Fittipaldi Logistics, Inc. and NuState Energy Holdings, Inc. (31)
     
4.23
$10,000 principal amount 12% convertible promissory note**
 
4.24
$5,000 principal amount 12% convertible promissory note**
 
4.25
$25,000 principal amount 12% convertible promissory note**
 
4.26
$25,000 principal amount 12% convertible promissory note**
 
4.27
$20,000 principal amount 12% convertible promissory note**
 
4.28
$20,000 principal amount 12% convertible promissory note**
 
4.29
$5,000 principal amount 12% convertible promissory note**
 
4.30
$20,000 principal amount 12% convertible promissory note**
 
4.31
$25,000 principal amount 12% convertible promissory note**
 
4.32
$25,000 principal amount 18% convertible promissory note**
 
4.33
$12,000 principal amount 12% convertible promissory note**
 
4.34
$10,000 principal amount 12% convertible promissory note**
 
4.35
$20,000 principal amount 12% convertible promissory note**
 
4.36
$18,000 principal 12.5% promissory note for services**
 
4.37
$30,000 principal amount 12% convertible promissory note**
 
4.38
$15,000 principal amount 12% convertible promissory note**
 
4.39
$10,000 principal amount 12% convertible promissory note**
 
4.40
$25,000 principal amount 18% convertible promissory note**
 
4.41
$25,000 principal amount 18% convertible promissory note**
 
4.42
$15,000 principal amount 12% convertible promissory note**
 
4.43
$25,000 principal amount 12% convertible promissory note**
   
4.44
$10,000 principal amount 12% convertible promissory note**
   
4.45 $25,000 principal amount 12% convertible promissory note**
   
4.46 $10,000 principal amount 12% convertible promissory note**
 
10.1
Securities Purchase Agreement (6)
   
10.2
Investor Registration Rights Agreement (6)
 
10.3
2001 Employee Stock Compensation Plan (3)
 
10.4
Employment Agreement with Richard Hersh (8)
 
10.5
Form of Intellectual Property Assignment Agreement between Power2Ship, Inc. and each of Richard Hersh, Michael J. Darden and John Urbanowicz (10)
 
10.6
Security Agreements for 14.25% secured convertible debentures (10)
   
10.7
Registration Rights Agreement for 14.25% secured convertible debentures (10)
 
10.8
Asset Purchase Agreement with GFC, Inc. (14)
 
10.9
Mutual Agreement with Commodity Express Transportation, Inc. (15)
   
10.10
Asset Purchase Agreement with GFC, Inc. (16)
   
10.11
Form of Unsecured Promissory Note (13)
   
10.12
Separation and Severance Agreement with Richard Hersh (23)
 
 
27

 
 
10.13
Consulting Agreement with Richard Hersh (23)
 
10.14
Consulting Agreement with David S. Brooks and S. Kevin Yates (as amended) (23)
 
10.15
Software Transaction Agreement Between NuState Energy Holdings, Inc., Rentar Environmental Solutions, Inc. and the organizers of a new company to be formed (33)
 
10.16
Capital Contribution Agreement Between Rentar Logic, Inc., Rentar Environmental Solutions, Inc. and NuState Energy Holdings, Inc. (33)
 
10.17
Rentar Logic, Inc. Shareholders Agreement (33)
 
10.18
Voting Trust Agreement Between Rentar Logic, Inc., Rentar Environmental Solutions, Inc. and NuState Energy Holdings, Inc. (33)
 
10.19
NuState/Rentar Agreement April 2010**
 
10.20
Employment Agreement with Kevin Yates**
 
10.21
Consulting Agreement with Will Williams**
 
10.22
Consulting Agreement with Mobile Software Team, LLC**
 
10.23
Consulting Agreement with C3i Sports, LLC**
 
14.1
Code of Ethics (11)
 
21.1
Subsidiaries of Registrant (20)
 
 
**
Filed herewith
 
(1)
Incorporated by reference to Current Report on Form 8-K filed on March 26, 2003.
(2)
Incorporated by reference to registration statement on Form 10-SB, as amended.
(3)
Incorporated by reference to definitive Schedule 14C Information Statement filed on February 2, 2001.
(4)
Incorporated by reference to definitive Schedule 14C Information Statement filed on April 22, 2003.
(5)
Incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
(6)
Incorporated by reference to Current Report on Form 8-K filed on July 8, 2004.
(7)
Incorporated by reference to Current Report on Form 8-K filed on January 3, 2002.
(8)
Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended March 31, 2003.
(9)
Incorporated by reference to Preliminary Information Statement on Schedule 14C filed on July 8, 2004.
(10)
Incorporated by reference to registration statement on Form SB-2, SEC File No. 333-118792, filed on September 3, 2004.
(11)
Incorporated by reference to Amendment No. 1 to registration statement the Form SB-2, SEC File No. 333-118792, filed on October 20, 2004.
(12)
Incorporated by reference to Amendment No. 3 to the registration statement on Form SB-2, SEC File No. 333-118792, filed on December 15, 2004.
(13)
Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended December 31, 2004 filed on February 14, 2005.
(14)
Incorporated by reference to Current Report on Form 8-K/A filed on February 25, 2005.
(15)
Incorporated by reference to Current Report on Form 8-K filed on March 25, 2005.
(16)
Incorporated by reference to Current Report on Form 8-K filed on March 28, 2005.
(17)
Incorporated by reference to Quarterly Report on Form 10-QSB for the period ended March 31, 2005.
(18)
Incorporated by reference to Current Report on Form 8-K filed on June 3, 2005.
(19)
Incorporated by reference to Current Report on Form 8-K filed on July 28, 2005.
 
 
28

 
 
(20)
Incorporated by reference to registration statement on Form SB-2, SEC File No. 333-131832 filed on February 14, 2006.
(21)
Incorporated by reference to Current Report on Form 8-K filed on February 17, 2006.
(22)
Incorporated by reference to Amendment No. 1 to registration statement the Form SB-2, SEC File No. 333-131832 filed on May 5, 2006.
(23)
Incorporated by reference to Annual Report on Form 10-K for the fiscal year ended June 30, 2006 filed on October 13, 2006.
(24)
Incorporated by reference to Current Report on Form 8-K filed on October 17, 2006.
(25)
Incorporated by reference to Current Report on Form 8-K filed on October 24, 2006.
(26)
Incorporated by reference to Current Report on Form 8-K filed on January 26, 2007.
(27)
Incorporated by reference to Current Report on Form 8-K filed on April 30, 2007.
(28)
Incorporated by reference to Current Report on Form 8-K filed on July 25, 2007.
(29)
Incorporated by reference to Annual Report on Form 10-KSB filed on October 15, 2007.
(30)
Incorporated by reference to Current Report on Form 8-K filed on November 15, 2007.
(31)
Incorporated by reference to Current Report on Form 8-K filed on December 31, 2007.
(32)
Incorporated by reference to Current Report on Form 8-K filed on March 25, 2008.
(33)
Incorporated by reference to Current Report on Form 8-K filed on June 13, 2008.
(34)
Incorporated by reference to Current Report on Form 8-K filed on October 16, 2008.
 
 
29

 
 
Signatures
 
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly cased this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
NuState Energy Holdings, Inc.
 
       
Date: June 14, 2013
     
       
 
By:
/s/ Kevin Yates  
   
Kevin Yates, Chief Executive Officer
 
 
 
30

 
 
TABLE OF CONTENTS
 
   
Reports of Independent Registered Public Accounting Firms
F-1
   
Financial Statements:
 
   
Consolidated Balance Sheets
F-2
   
Consolidated Statements of Operations
F-3
   
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
F-4
   
Consolidated Statements of Cash Flows
F-5
   
Notes to Consolidated Financial Statements
F-6
 
 
i
Audited Financial Statements of NuState Energy Holdings, Inc. for the year ending June 30, 2012.
 
a
NuState Financials June 30, 2012
 
b
Notes to the Financial Statements June 30, 2012
 
ii
Audited Financial Statements of NuState Energy Holdings, Inc. for the twelve-month period ending June 30, 2011.
 
a
Financials June 30, 2011
 
b
Notes to the Financial Statements June 30, 2011
 
i
Unaudited Financial Statements of NuState Energy Holdings, Inc. for the quarter ending March 31, 2013 and 2012.
 
 
31

 
 
7900 Glades Rd, Suite 540,
Boca Raton, FL 33434
Tel: 561-886-4200
Fax: 561-886-3330
e-mail: info@sherbcpa.com
Offices in New York and Florida
Certified Public Accountants
 
To the Board of Directors and
 
Stockholders of Nustate Energy Holdings, Inc.
 
We have audited the accompanying balance sheets of Nustate Energy Holdings, Inc. as of June 30, 2012 and 2011, and the related statements of income, comprehensive income, stockholders’ deficit, and cash flows for each of the years in the two year period ended June 30, 2012. Nustate Energy Holdings, Inc. management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nustate Energy Holdings, Inc. as of June 30, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two years period ended June 30, 2012 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a net working capital deficiency, a stockholders’ deficiency and an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 

 
Sherb & Co.,LLP
Certificated Public Accountant
 
Boca Raton, Florida
January 11, 2013
 
 
F-1

 

NuState Energy Holdings, Inc.
CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
June 30,
2012
   
June 30,
2011
 
Current Assets:
           
Cash
  $ 10     $ 12,896  
Other receivable
    -       315,000  
Total assets
  $ 10       327,896  
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current Liabilities:
               
Accounts payable and accrued expenses
  $ 388,704     $ 584,237  
Accrued compensation
    1,420,400       1,148,500  
Liabilities of discontinued operations
    1,494,406       1,494,406  
Derivative liability
    5,556       92,273  
Notes and Convertible notes payable and accrued interest less unamortized discount
    2,920,013       2,290,660  
Total liabilities
    6,229,079       5,610,076  
Stockholders' Deficit:
               
Preferred stock, $0.001 par value, 2,000,000 shares authorized:
               
Series B, 200,000 shares authorized, 149,600 shares issued and outstanding
    1,496       1,496  
Series C, 20,000 shares authorized, 332 shares issued and outstanding
    3       3  
Series D, 40 shares authorized, 19 shares issued and outstanding
    -       -  
Series F, 500,000 shares authorized, 128 shares issued and outstanding
    1       1  
Series G, 6 shares authorized, -0- issued and outstanding
    -       -  
Series H, 1,600 shares authorized, 70 shares issued and outstanding.
    -       -  
Series I, 100,000 shares authorized, 30,000 shares issued and outstanding
    300       300  
Series J, 80 shares authorized, 2 shares issued and outstanding
    -       -  
Series Y, 87,000 shares authorized, 87,000 shares issued and outstanding
    870       870  
Common stock; $.001 par value; 750,000,000 shares authorized; 327,216,535 and 317,216,535 issued and outstanding
    327,216       317,216  
Additional paid-in capital
    34,562,775       34,121,469  
Accumulated deficit
    (41,121,730 )     (39,723,535 )
Total stockholders’ deficit
    (6,229,069 )     (5,282,180 )
Total liabilities and stockholders’ deficit
  $ 10     $ 327,896  
 
See Notes to Consolidated Financial Statements.
 
 
F-2

 
 
NuState Energy Holdings, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
For the year ended
 
   
June 30,
2012
   
June 30,
2011
 
Operating expenses:
           
Selling, general and administrative
  $ 1,042,144     $ 372,189  
Total operating expenses
    1,042,144       372,189  
Operating loss
    1,042,144       372,189  
Other expense:
               
Decrease in fair value of derivative liabilities
    26,086       14,733  
Interest expense
    (307,337 )     (223,572 )
      (281,251 )     (208,839 )
Net loss
    (1,323,395 )     (581,028 )
Less dividends Series B Preferred stock
    (74,800 )     (74,800 )
Net loss attributable to common shareholders
  $ (1,398,195 )   $ (655,828 )
Earnings (loss) per share:
               
Basic and diluted
  $ (0.00 )   $ (0.00 )
Basic and diluted weighted average common shares outstanding
    335,126,124       306,880,881  
 
See Notes to Consolidated Financial Statements.
 
 
F-3

 
 
NuState Energy Holdings, Inc.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
From July 1, 2010 to June 30, 2012
 
   
Series B
Prefe rred
Stock
   
Series C
Prefe rred
Stock
   
Series D
Prefe rred
 Stock
   
Series F
Prefe rred
Stock
   
Series H
Prefe rred
Stock
   
Series I
Prefe rred
Stock
   
Series J
Prefe rred
Stock
   
Series Y
Prefe rred
Stock
   
Common
Stock
   
Trea sury
   
Additional
Paid -in
   
Accum ulated
   
Total
Stock holders'
 
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sha res
   
$
   
Sto ck
   
Capital
   
Deficit
   
Deficit
 
Balance, July 1, 2010
    149,600       1,496       332       3       25       -       128       1       70       -       30,000       300       2     $ -       87,000       870       301,313,187       301,313       -       34,010,735       (39,067,707 )     (4,752,989 )
                                                                                                                                                                                 
Conversion of Series D Preferred Stock
    -       -       -       -       (6 )     -       -       -       -       -       -       -       -       -       -       -       6,000,000       6,000       -       (6,000 )     -       -  
Conversion of convertible note payable
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       9,903,348       9,903       -       41,934       -       51,837  
Preferred stock dividends
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       74,800       (74,800 )     -  
Net loss
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (581,028 )     (581,028 )
Ending balance, June 30, 2011
    149,600     $ 1,496       332     $ 3       19     $ -       128     $ 1       70     $ -       30,000     $ 300       2       -       87,000     $ 870       317,216,535     $ 317,216     $ -     $ 34,121,469     $ (39,723,535 )   $ (5,282,180 )
                                                                                                                                                                                 
Conversion of Series D Preferred Stock
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -  
Conversion of convertible note payable
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       5,000,000       5,000       -       20,000       -       25,000  
Issuance to satisfy obligations
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       5,000,000       5,000       -       1,500       -       6,500  
Fair value of warrants issued for services
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       103,284       -       103,284  
Fair value of warrants issued for interest
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       92,000       -       92,000  
Reclassification of liabilty contracts to equity contracts
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       149,722       -       149,722  
Preferred stock dividends
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       74,800       (74,800 )     -  
Net loss
    -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       (1,323,395 )     (1,323,395 )
Ending balance, June 30, 2012
    149,600     $ 1,496       332     $ 3       19     $ -       128     $ 1       70     $ -       30,000     $ 300       2     $ -       87,000     $ 870       327,216,535     $ 327,216     $ -     $ 34,562,775     $ (41,121,730 )   $ (6,229,069 )
 
See Notes to Consolidated Financial  Statements.
 
F-4

 
 
NuState Energy Holdings, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Year ended
June 30,
 
   
2012
   
2011
 
Cash flows from operating activities:
           
Net loss
  $ (1,323,395 )   $ (581,028 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Amortization of debt discount
    159,108       33,277  
Decrease in fair value of derivative liability
    (26,086 )     (14,733 )
Fair value of shares issued to satisfy obligations
    6,500       -  
Fair value of options and warrants issued for services
    103,284       -  
Fair value of options and warrants issued for interest
    92,000       -  
Changes in operating assets and liabilities:
               
Other receivable
    315,000       -  
Accounts payable
    (63,534 )     -  
Accrued interest
    215,337       190,344  
Accrued compensation
    271,900       231,500  
Net cash used in continuing operations
    (249,886 )     (140,640 )
Net cash provided by (used in) discontinued operations
    -       3,500  
Net cash used in operating activities
    (249,886 )     (137,140 )
Cash flows from financing activities:
               
Proceeds from issuance of convertible notes payable
    237,000       150,000  
Net cash provided by financing activities
    237,000       150,000  
Net increase (decrease) in cash
    (12,886 )     12,860  
Cash, beginning of year
    12,896       36  
Cash, end of year
  $ 10     $ 12,896  
Supplemental disclosures of cash flow information:
               
Cash paid for interest
  $ -     $ -  
Cash paid for income taxes
  $ -     $ -  
Non-cash investing and financing activities:
               
Conversion of preferred stock Series D to common stock
  $ -     $ 6,000  
Conversion of note payables to common stock
  $ 25,000     $ 51,837  
Preferred stock dividends
  $ 74,800     $ 74,800  
Embedded conversion features
  $ 89,091     $ 107,006  
Issuance of note payable to satisfy certain liabilities
  $ 132,000     $ -  
Reclassificaton from liability to equity contracts
  $ 147,222     $ -  
 
See Notes to Consoldated Financial Statements.
 
 
F-5

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN:
 
NuState Energy Holdings, Inc. , or the Company, is a Nevada corporation, incorporated in October 1987. It was formerly known as Jaguar Investments, Inc. between October 1987 and May 2003, Power2Ship, Inc., between May 2003 and November 2006, and Fittipaldi Logistics, Inc. between November 2006 and December 2007.
 
The Company has two wholly-owned subsidiaries, Commodity Express Transportation, Inc., or CXT, and Power2Ship Intermodal, Inc, or P2SI, which ceased operations in May 2009 and June 2006, respectively. CXT has a wholly-owned subsidiary, Commodity Express Brokerage, Inc.
 
CXT was a provider of truck transportation and third-party logistics services. P2SI was a provider of intermodal drayage transportation services.
 
During April 2008, the Company sold certain intellectual property and software to Rentar Logic, Inc., or Rentar, in consideration for $3,000,000 and a 49% interest in Rentar. In April 2010, Rentar issued 384,366 shares of its common stock to satisfy its obligation of approximately $1.9 million with the Company. Contemporaneously, during April 2010, the Company relinquished its interest in Rentar to satisfy its obligations under three notes payable with a carrying value of $1.9 million.
 
The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately $250,000 during fiscal 2012 and has a working capital deficit of approximately $6 million at June 30, 2012. The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an operating company is consummated. Management plans may continue to provide for its capital requirements by issuing additional equity securities and debt and the Company will continue to find possible acquisition target. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.
 
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about recovery of assets from discontinued operations and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.
 
Cash and Cash Equivalents
 
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less, when purchased, to be cash equivalents.
 
Concentration of Credit Risks
 
The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable.
 
 
F-6

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company’s cash and cash equivalents accounts are held at financial institutions and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. During fiscal 2012, the Company has not reached bank balances exceeding the FDIC insurance limit.
 
The Company's other receivable was the result of a judgment in favor of the Company. The net proceeds from such judgment were received during fiscal 2012.
 
Fair Value of Financial Instruments
 
The Company accounts, for assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.
 
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
 
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
 
The Company’s derivative liability at June 30, 2012 is classified as Level 3 financial instrument.
 
Additional Disclosures Regarding Fair Value Measurements
 
The carrying value of cash and cash equivalents, other receivable, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable, and liabilities from discontinued operations approximate their fair value due to the short maturity of these items.
 
Convertible Instruments
 
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities, or ASC 815.
 
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
 
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
 
 
F-7

 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
ASC 815-40, Contracts in Entity’s own Equity, provides that, among other things, generally, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.
 
The Company needs to determine whether the instruments issued in the transactions are considered indexed to the Company’s own stock. The Company issued certain promissory notes during fiscal 2012 which were convertible at variable rates. Such instruments were deemed to include embedded conversion features until June 23, 2012, at which time, the Company and the noteholders agreed to set a floor on the conversion rate. Accordingly, the Company’s outstanding
instruments are convertible at fixed rates at June 30, 2012, except for one convertible promissory notes amounting to $10,000. Additionally, certain convertible promissory notes aggregating $145,000 include subsequent financing reset provisions which were recorded as embedded conversion features at each measurement date through June 23, 2012, the date at which such notes also became convertible at a fixed rate.
 
Income Taxes
 
Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.
 
Share-Based Payment
 
The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.
 
The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
 
Segment Reporting
 
The Company operates in one segment, which is to search for possible acquisition targets and merge with an operating company. The Company's chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company's statements of operations.
 
Recent Accounting Pronouncements
 
Recent accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.
 
As an emerging growth company under the JOBS Act, we have elected to use the exemption allowing us delay the adoption of new or revised accounting standers that have different effective dates for public and private companies until those standards apply to private companies pursuant to Section 102(b)(1) of the Act.
 
 
F-8

 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Basic and Diluted Earnings Per Share
 
Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method).
 
   
June 30
2012
   
June 30
2011
 
Numerator:
           
Net loss
  $ (1,323,395 )   $ (581,028 )
Decrease in fair value of derivative liabilities
    26,086       14,733  
Preferred stock dividends
    (74,800 )     (74,800 )
Numerator for basic earnings per share- net loss from continuing operations attributable to common stockholders-as adjusted
  $ (1,372,109 )   $ (641,095 )
                 
                 
Denominator:
               
Denominator for basic earnings per share--weighted average shares
    335,126,124       306,880,881  
Effect of dilutive securities- :
               
Stock options
    -       -  
Warrants
    -       -  
Convertible promissory notes
    -       -  
Preferred Stock Series B
    -       -  
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions
    335,126,124       306,880,881  
                 
Earnings (loss) per share:
               
Basic and diluted
               
Net earnings (loss) per share- basic
  $ (0.00 )   $ (0.00 )
 
 
F-9

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The weighted-average anti-dilutive common share equivalents are as follows:
 
   
Fiscal Year Ended
June 30
 
   
2012
   
2011
 
Series B Preferred Stock
    2,992,000       2,992,000  
Series C Preferred Stock
    33,200       33,200  
Series D Preferred Stock
    19,000,000       19,000,000  
Series F Preferred Stock
    25,695,000       25,695,000  
Series H Preferred Stock
    2,796,000       2,796,000  
Series I Preferred Stock
    15,000,000       15,000,000  
Series J Preferred Stock
    500,000       500,000  
Series Y Preferred Stock
    230,405       230,405  
Convertible notes payable
    127,072,057       64,924,342  
Options
    74,000,000       86,000,000  
Warrants
    28,212,884       49,289,041  
      295,531,546       266,459,988  
 
The anti-dilutive common shares outstanding at June 30, 2012 and 2011 are as follows:
 
   
2012
   
2011
 
Series B Preferred Stock
    2,992,000       2,992,000  
Series C Preferred Stock
    33,200       33,200  
Series D Preferred Stock
    19,000,000       19,000,000  
Series F Preferred Stock
    25,695,000       25,695,000  
Series H Preferred Stock
    2,796,000       2,796,000  
Series I Preferred Stock
    15,000,000       15,000,000  
Series J Preferred Stock
    500,000       500,000  
Series Y Preferred Stock
    230,405       230,405  
Convertible notes payable
    152,859,165       67,642,342  
Options
    74,000,000       86,000,000  
Warrants
    57,047,293       49,500,000  
      350,153,063       269,388,947  
 
 
F-10

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 3: OTHER RECEIVABLE
 
The Company’s other receivable consisted of a judgment award in favor of the Company stemming from litigations prior to July 1, 2009. The consideration was received in October 2011.
 
During April 2008, the Company sold certain intellectual property and software to Rentar Logic, Inc., or Rentar, in consideration for $3,000,000 and a 49% interest in Rentar. In April 2010, Rentar issued 384,366 shares of its common stock to satisfy its obligation of approximately $1.9 million with the Company. The Company also obtained the rights to distribute the intellectual property and software initially sold to Rentar in 2008.
 
NOTE 4: DERIVATIVE LIABILITY
 
A summary of the transactions related to the derivative liability for fiscal 2012 and 2011 is as follows:
 
   
2012
 
Derivative liability at July 1, 2011
  $ 92,273  
Issuance of embedded conversion features, recognized as debt discount
    89,091  
Decrease in fair value of derivative liability, recognized as other income
    (26,086 )
Reclassfication of liability contracts to equity contracts
    (147,222 )
Conversion of notes payable
    (2,500 )
Derivative liability at June 30, 2012
  $ 5,556  
 
      2011  
Derivative liability at July 1, 2010
  $ -  
Issuance of embedded conversion features, recognized as debt discount
    107,006  
Decrease in fair value of derivative liability, recognized as other income
    (14,733 )
Derivative liability at June 30, 2011
  $ 92,273  
 
The Company used the binomial method to determine the fair value of the derivative liability at each measurement dates, using the following assumptions:
 
   
2012
   
2011
 
Effective Exercise price
 
$0.0007-0.0009
   
$0.0009-0.0024
 
Effective Market price
 
$0.0008-0.0018
   
$0.0011-0.0031
 
Volatility
 
233%-236%
   
236%
 
Risk-free interest
 
0.04%-0.05%
   
0.04%
 
Terms
 
1 day-23 months
   
7-12 months
 
Expected dividend rate
 
0%
   
0%
 
 
NOTE 6: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE
 
Convertible Notes Payable
 
The Company had convertible promissory notes aggregating $1.6 million and $1.3 million at June 30, 2012 and 2011, respectively. The accrued interest amounted to approximately $897,000 and $719,000 at June 30, 2012 and 2011, respectively. The Convertible Notes Payable bear interest at rates ranging between 10% and 16% per annum. Interest is generally payable monthly. The Convertible Notes Payable are generally convertible at rates ranging between $0.01 and 0.0267 per share, at the holders’ option, with the exception of one convertible promissory note amounting to $10,000, which is convertible at a rate of 50% of the average closing price of the common stock for the ten trading days immediately preceding the conversion date. At June 30, 2012, the maturity date of $145,000 of the Convertible notes payable ranges between September 2011 and March 2012. All other convertible promissory notes have matured prior to June 30, 2009.
 
 
F-11

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The conversion rate of certain convertible promissory notes, aggregating $145,000 at June 30, 2012, may be adjusted for subsequent financing. Additionally, upon conversion, the holders of such convertible promissory notes are also entitled to 29,000,000 warrants, exercisable at a rate of $0.025. The warrants expire 3 years from the date of issuance.
 
Notes Payable
 
The Company had promissory notes aggregating $266,000 and $234,000 at June 30, 2012 and 2011, respectively. The related accrued interest amounted to $162,000 and $124,000 at June 30, 2012 and 2011, respectively. The Notes Payable bear interest at rates ranging between 8% and 16% per annum. Interest is generally payable monthly. All promissory notes have matured prior to June 30, 2009.
 
Transactions
 
The Company generated proceeds of $77,000 from the issuance of convertible promissory notes during fiscal 2012.
 
The Company generated proceeds of $160,000 from the issuance of promissory notes payable during fiscal 2012.
 
The Company issued 5,000,000 shares of its common stock pursuant to the conversion of convertible promissory notes amounting to $25,000 during fiscal 2012.
 
The Company issued 5,000,000 shares of its common stock to satisfy obligations amounting to $6,500 during fiscal 2012.
 
The Company recognized debt discount of approximately $89,000 during fiscal 2012 pursuant to issuance of embedded conversion features associated with the issuance of convertible promissory notes payable.
 
The Company generated proceeds of $150,000 from the issuance of convertible promissory notes during fiscal 2011.
 
The Company issued 1,000,000 shares of its common stock and 500,000 warrants pursuant to the conversion of convertible promissory note amounting to $5,000 during fiscal 2011.
 
The Company recognized debt discount of approximately $107,000 during fiscal 2011 pursuant to issuance of embedded conversion features associated with the issuance of convertible promissory notes payable.
 
The Company recognized interest expense of approximately $307,000 and $224,000 during fiscal 2012 and 2011, respectively, including amortization of debt discount of approximately$159,000 and $33,000 during fiscal 2012 and 2011, respectively.
 
NOTE 7: STOCKHOLDERS’ DEFICIT
 
Common Stock
 
A summary of the issuance of shares of Common Stock, related consideration and fair value of transaction, for fiscal 2011 is as follows:
 
 
F-12

 

NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   
Number of shares
of common stock
   
Fair Value
at Issuance
   
Fair Value
at Issuance
(per share)
 
Conversion of 6 shares Series D Preferred Stock
    6,000,000     $ 6,000     $ 0.001  
Conversion of notes payable
    9,903,348       51,837       0.005  
 
A summary of the issuance of shares of Common Stock, related consideration and fair value of transaction, for fiscal 2012 is as follows:
 
   
Number of shares
of common stock
   
Fair Value
at Issuance
   
Fair Value at
Issuance (per share)
 
Issuance to satisfy obligations
    5,000,000     $ 6,500     $ 0.001  
Conversion of convertible notes payable
    5,000,000       25,000       0.005  
 
Preferred Stock
 
All issued and outstanding shares of the Company's preferred stock has a par value of $0.01 per share and rank prior to any class or series of the Company's common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends, except for Series Y Preferred Stock.
 
Series B Preferred Stock
 
The Series B Preferred Stock has a stated value of $5.00 per share. Each share of Series B preferred Stock is convertible in 20 shares of the Company's common stock. In addition, the holders of the preferred stock are entitled to receive annual dividends of 10% payable in cash or shares of the Company's common stock, at the Company’s option.
 
At June 30, 2012, the Company has not declared the payment of dividends aggregating approximately $355,000.
 
Series C Preferred Stock
 
The Series C Preferred Stock has a stated value of $30.00 per share. Each share of Series C Preferred Stock is convertible in 100 shares of the Company's common stock.
 
Series D Preferred Stock
 
The Series D Preferred Stock has a stated value of $25,000 per share. Each share of the Series D preferred Stock is convertible in 1,000,000 shares of the Company's common stock. In addition, the holders of the Series D Preferred Stock are entitled to receive a participation interest in the annual net profits generated from any future business activities undertaken by the Company in Brazil.
 
 
F-13

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Series F Preferred Stock
 
The Series F Preferred Stock has a stated value of $5,000 per share. Each share of Series F Preferred Stock is convertible in 200,000 shares of the Company's common stock.
 
Series H Preferred Stock
 
The Series H Preferred Stock has a stated value of $1,000 per share. Each share of Series H Preferred Stock is convertible in 1,000,000 shares of the Company's common stock.
 
Series I Preferred Stock
 
The Series I Preferred Stock has a stated value of $10.00 per share. Each share of Series I Preferred Stock is convertible into 500 shares of the Company's common stock.
 
Series J Preferred Stock
 
The Series J Preferred Stock has a stated value of $2,500 per share. Each share of the Series J Preferred Stock is convertible into the Company’s common shares using a conversion price equal to 50% of the average closing price of the Company's common stock for the ten trading days immediately preceding the conversion date, although in no instance less than $0.01 per share or greater than $0.03 per share.
 
Series Y Preferred Stock
 
The Series Y Preferred Stock has a stated value and par value of $.01 and has no liquidity preference. Each share of Series Y Preferred Stock has 200 votes per share and has the right to vote with the common shareholders in all matters. The shares are convertible into 230,405 shares of the Company's common stock at the holder's option. The shares are held by one of the Company’s former Chairman of the Board.
 
Warrants
 
The following is a summary of the Company’s activity related to its warrants between July 1, 2010 and June 30, 2012:
 
   
Warrants
   
Weighted
Average Price
Per Share
   
Weighted
Average
Remaining
Contractual
Term
   
Aggregate
Intrinsic
Value
 
Balance, July 1, 2010
    71,850,000     $ 0.02                
Granted
    500,000       0.03                
Exercised
    -       -                
Forfeitures
    (22,850,000 )     0.03                
Outstanding at June 30, 2011
    49,500,000       0.01       0.81          
Granted
    37,547,293       0.006                  
Exercised
    -       -                  
Forfeitures
    (30,000,000 )     0.02                  
Outstanding and exercisable at June 30, 2012
    57,047,293     $ 0.020       2.19     $ -  
 
The Company issued 15,333,333 warrants to several note holders in lieu of interest during fiscal 2012. The warrants are exercisable at $0.006 per share and expire in May 2015. The fair value of the warrants at issuance of $92,000 is included in interest expense.
 
 
F-14

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company issued 17,213,960 warrants to several consultants during fiscal 2012. The warrants are exercisable at a range of $0.025 to $0.005 and expire between December 2013 and May 2017. The fair value of the warrants at issuance of $100,784 is included in selling, general, and administrative expenses.
 
The Company issued 5,000,000 warrants to a related party by means of common ownership and management with the Company during fiscal 2012. The related party is providing assistance to the Company’s Chairman of the Board in his duties. The warrants are exercisable at $0.025 per share and expire in April 2013. The fair value of the warrants at issuance, which amounted to $5,000, is included in selling, general, and administrative expenses.
 
The Company issued 500,000 warrants upon conversion of a convertible note payable to a note holder during fiscal 2011. The warrants are exercisable at $0.025 per share and expire in December 2013.
 
The fair value of the warrants granted during the years ended June 30, 2012 and 2011 is based on the Black Scholes Model using the following assumptions:
 
   
2012
 
2011
 
Exercise price:
  $0.005  - 0.025   N/A  
Market price at date of grant:
  $0.0011 - 0.007   N/A  
Expected volatility:
  232%  - 236%   N/A  
Term: (years)
  3  – 5   N/A  
Risk-free interest rate:
  0.07%  - 0.05%   N/A  
 
Options
 
In January 2001, The Company adopted the 2001 Employee Stock Compensation Plan, or the Plan.
 
The Plan provided for stock compensation through the award of shares of the Company’s common stock.
 
The Company’s board of directors may appoint a Compensation Committee of the board of directors to administer the Plan. In the absence of such appointment, the board of directors was responsible for the administration of the Plan. The Company did not appoint a Compensation Committee to administer the
 
plan. The board of directors had the sole power to award shares of common stock under the Plan, as well as determining those eligible to receive an award of Plan shares. Awards of shares under the Plan may be made as compensation for services rendered, directly or in lieu of other compensation payable, as a bonus
 
in recognition of past service or performance or may be sold to an employee.
 
The maximum number of shares which may be awarded under the plan is 5,000,000. Awards were generally granted to:
 
 
·
executive officers, officers and directors (including advisory and other special directors) of the Company;
 
·
full-time and part-time employees of our company;
 
·
natural persons engaged by us as a consultant, advisor or agent; and;
 
·
a lawyer, law firm, accountant or accounting firm, or other professional or professional firm engaged by us.
 
Grants to employees may be made for cash, property, services rendered or other form of payment constituting lawful consideration under applicable law. Shares awarded other than for services rendered may not be sold at less than the fair value of our common stock on the date of grant.
 
The plan terminated in January 2011. The board of directors had absolute discretion to amend the plan
 
with the exception that the board had no authority to extend the term of the plan, to increase the number of shares subject to award under the plan or to amend the definition of "Employee" under the plan.
 
 
F-15

 

NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company generally recognizes its share-based payment over the vesting terms of the underlying options.
 
   
Options
   
Weighted
Average Price
Per Share
   
Weighted
Average
Remaining
Contractual
Term
   
Aggregate
Intrinsic
Value
 
Balance, July 1, 2010
    86,000,000     $ 0.01             -  
Granted
    -       -                
Exercised
    -       -                
Forfeitures
    -       -                
Outstanding at June 31, 2011
    86,000,000       0.01       1.66          
Granted
    -       -                  
Exercised
    -       -                  
Forfeitures
    (12,000,000 )     -                  
Outstanding and exercisable at June 30, 2012
    74,000,000     $ 0.01       0.86     $ -  
 
 
   
2012
   
2011
 
Weighted-average grant date fair value
  N/A     N/A  
Fair value of options, recognized as selling, general, and administrative expenses
           
number of options granted
  N/A     N/A  
The total compensation cost related to non-vested awards not yet recognized amounted to $0 at June 30, 2012.
           
 
The Company’s policy is to issue shares pursuant to the exercise of stock options from its available authorized but unissued shares of common stock. It does not issue shares pursuant to the exercise of stock options from its treasury shares.
 
NOTE 8: INCOME TAXES
 
A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:
 
   
Years Ended
June 30,
 
 
 
2012
   
2011
 
Statutory federal rate
    -35.0 %     -35.0 %
State income taxes net of federal income tax benefit
    -3.6 %     -3.6 %
Permanent differences for tax purposes
    12.4 %     -3.9 %
Change in valuation allowance
    26.2 %     42.5 %
Effective income tax rate:
    0.0 %     0.0 %
 
 
F-16

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The components of the deferred tax assets and liabilities are as follows:
 
   
June 30,
 
   
2012
   
2011
 
Deferred tax assets:
           
Net operating loss carryovers
  $ 9,990,000     $ 9,780,000  
Accrued compensation
    548,000       443,000  
Other temporary differences
    42,000       2,000  
Total deferred tax assets
    10,580,000       10,225,000  
Valuation allowance
    (10,580,000 )     (10,225,000 )
Net deferred tax asset
  $ -     $ -  
 
At June 30, 2012, the Company had available net operating loss carryovers of approximately $25.9 million that may be applied against future taxable income and expires at various dates between 2026 and 2032. Such amounts may be subject to the limitations contained under Section 382 of the Internal Revenue Code relating to changes in ownership. The Company has a deferred tax asset arising substantially from the benefits of such net operating loss deduction and has recorded a valuation allowance for the full amount of this deferred tax asset since it is more likely than not that some or all of the deferred tax asset may not be realized. The valuation allowance for the deferred tax asset increased by $355,000 and $120,000 during the fiscal years ended June 30, 2012 and 2011 respectively.
 
NOTE 9: LITIGATION AND CONTINGENCIES
 
In October 2011, the Company settled with two claimants, one of the Company’s former officer and a former vendor of CXT. The settlement provides that, among other things, it will pay $155,000 to both claimants. The Company also issued a $100,000 note payable an entity affiliated with the former officer. The note payable is due the earlier of 1) 180 days following the Company’s merger with an acquisition candidate or 2) January 1, 2013. If on the due date, the Company’s price per share of its common stock is more than $0.05 per share, the Company has the option to convert such note by issuing its shares of common stock at their then market price. If the obligations under the note are not satisfied by January 1, 2013, the amount payable under the note increases to $150,000. Additionally, the Company issued 5,000,000 of its common stock to the entity affiliated with the former officer. Furthermore, the Company granted a distribution license of its intellectual property. The Company accrued approximately $262,000 in connection with this settlement at June 30, 2011.
 
NOTE 10 - RELATED PARTY TRANSACTIONS
 
During fiscal 2012 and 2011, the Company paid $161,000 and $34,000, respectively, to a related party by means of common ownership and management with the Company as compensation to our Chairman of the Board and President.
 
During fiscal 2012, the Company issued 5,000,000 warrants with a fair value of $5,000 to a related party which employed our acting Chief Operating Officer, exercisable at $0.005 per share, expiring in September 2014. The Company also paid the same related party $8,000 as compensation to our acting Chief Operating Officer.
 
NOTE 11: SUBSEQUENT EVENTS
 
In August 2012, the Company’s wholly-owned subsidiaries, CXT and P2SI, have filed a voluntary petition of liquidation under the Chapter 7 of the US Bankruptcy Code. The two subsidiaries became subject to the control of the court in which the petition was filed. The Company ceased to have a controlling financial interest of the subsidiaries upon filing, and accordingly, has deconsolidated the subsidiaries during the three-month period ended September 30, 2012. The subsidiaries had no assets and $1,494,406 in liabilities as of the date of the filing. The deconsolidation of the subsidiaries resulted in other income of $1,494,406 during the three-month period ended September 30, 2012, which consists of the extinguishment of debt of the subsidiaries.
 
In January 2013, the Company issued 50,000,000 shares of its common stock to satisfy an accrued compensation liability of $250,000.
 
In April 2013, the Company issued 50,000,000 shares of its common stock to the Chairman of the Board and Chief Executive Officer to satisfy an accrued compensation liability of $250,000.
 
 
F-17

 
 
NuState Energy Holdings, Inc.
BALANCE SHEETS

   
March 31,
2013
   
June 30,
2012
 
   
(Unaudited)
    (1)  
ASSETS
             
Current Assets:
             
Cash
  $ 2,513     $ 10  
Total assets
  $ 2,513     $ 10  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current Liabilities:
               
Accounts payable and accrued expenses
  $ 394,741     $ 388,704  
Accrued compensation
    930,400       1,420,400  
Liabilities of discontinued operations
    -       1,494,406  
Derivative liability
    -       5,556  
Notes and Convertible notes payable and accrued interest less unamortized discount
    3,193,028       2,920,013  
Total liabilities
    4,518,169       6,229,079  
                 
                 
Stockholders' Deficit:
               
Preferred stock, $0.001 par value, 2,000,000 shares authorized:
               
Series B, 200,000 shares authorized, 149,600 shares issued and outstanding
    1,496       1,496  
Series C, 20,000 shares authorized, 332 shares issued and outstanding
    3       3  
Series D, 40 shares authorized, 19 shares issued and outstanding
    -       -  
Series F, 500,000 shares authorized, 128 shares issued and outstanding
    1       1  
Series G, 6 shares authorized, -0- issued and outstanding
    -       -  
Series H, 1,600 shares authorized, 70 shares issued and outstanding.
    -       -  
Series I, 100,000 shares authorized, 30,000 shares issued and outstanding
    300       300  
Series J, 80 shares authorized, 2 shares issued and outstanding
    -       -  
Series Y, 87,000 shares authorized, 87,000 shares issued and outstanding
    870       870  
                 
Common stock; $.001 par value; 750,000,000 shares authorized; 454,383,202 and 327,216,535 issued and outstanding
    454,383       327,216  
Additional paid-in capital
    35,259,541       34,562,775  
Accumulated deficit
    (40,232,250 )     (41,121,730 )
                 
Total stockholders’ deficit
    (4,515,656 )     (6,229,069 )
                 
Total liabilities and stockholders’ deficit
  $ 2,513     $ 10  
 
(1) Derived from audited financial statements
 
See Notes to Financial Statements.
 
 
F-18

 
 
NuState Energy Holdings, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three-month periods ended
March 31,
   
Nine-month periods ended
March 31,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Operating expenses:
                       
Selling, general and administrative
  $ 95,550     $ 139,598     $ 320,535     $ 556,759  
Total operating expenses
    95,550       139,598       320,535       556,759  
                                 
Operating loss
    95,550       139,598       320,535       556,759  
                                 
Other expense:
                               
Decrease in fair value of derivative liabilities
    -       26,606       5,556       87,197  
Interest expense
    (113,619 )     (101,290 )     (233,847 )     (279,023 )
      (113,619 )     (74,684 )     (228,291 )     (191,826 )
                                 
Net loss from continuing operations
    (209,169 )     (214,282 )     (548,826 )     (748,585 )
                                 
Discontinued operations:
                               
Gain on extinguishment of debt of discontinued operations
    -       -       1,494,406       -  
Net income from discontinued operations
    -       -       1,494,406       -  
                                 
Net income (loss)
    (209,169 )     (214,282 )     945,580       (748,585 )
                                 
Less dividends Series B Preferred stock
    (18,700 )     (18,700 )     (56,100 )     (56,100 )
                                 
Net (loss) income attributable to common shareholders
  $ (227,869 )   $ (232,982 )   $ 889,480     $ (804,685 )
                                 
Earnings per share:
                               
Basic
                               
Continuing operations
  $ -     $ -     $ -     $ -  
Discontinued operations
  $ -     $ -     $ -     $ -  
Net per share
  $ -     $ -     $ -     $ -  
                                 
Diluted
                               
Continuing operations
  $ -     $ -     $ -     $ -  
Discontinued operations
  $ -     $ -     $ -     $ -  
Net per share
  $ -     $ -     $ -     $ -  
                                 
Basic weighted average common shares outstanding
    444,205,424       322,216,535       389,714,231       321,335,054  
Diluted weighted average common shares outstanding-continuing operations
    444,205,424       322,216,535       389,714,231       321,335,054  
Diluted weighted average common shares outstanding-discontinued operations
    444,205,424       322,216,535       389,714,231       321,335,054  
 
See Notes to Financial Statements.
 
 
F-19

 
 
NuState Energy Holdings, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Nine-month periods ended
March 31,
 
   
2013
   
2012
 
Cash flows from operating activities:
           
Net loss from continuing operations
  $ (548,826 )   $ (748,585 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Amortization of debt discount
    3,712       130,597  
Fair value of shares issued to satisfy obligations
    -       6,500  
Fair value of options and warrants issued for services
    -       5,000  
Decrease in fair value of derivative liability
    (5,556 )     (87,197 )
Changes in operating assets and liabilities:
               
Other receivable
    -       315,000  
Accounts payable
    6,037       (114,125 )
Accrued interest
    230,136       148,426  
Accrued compensation
    192,000       172,500  
Net cash used in continuing operations
    (122,497 )     (171,884 )
Net cash used in discontinued operations
    -       -  
Net cash used in operating activities
    (122,497 )     (171,884 )
                 
Cash flows from financing activities:
               
Proceeds from issuance of common stock
    70,000       -  
Proceeds from issuance of convertible notes payable
    55,000       160,000  
                 
Net cash provided by financing activities
    125,000       160,000  
                 
Net increase (decrease) in cash
    2,503       (11,884 )
                 
Cash, beginning of period
    10       12,896  
                 
Cash, end of period
  $ 2,513     $ 1,012  
                 
Supplemental disclosures of cash flow information:
               
Cash paid for interest
  $ -     $ -  
Cash paid for income taxes
  $ -     $ -  
                 
Non-cash investing and financing activities:
               
                 
Conversion of note payables to common stock
  $ 10,000     $ 25,000  
Preferred stock dividends
  $ 56,100     $ 56,100  
Embedded conversion features
  $ -     $ 89,089  
Issuance of shares pursuant to non-cash exercise of options to satisfy obligations
  $ 150,000     $ -  
Issuance of note payable to satisfy certain liabilities
  $ -     $ 132,000  
Issuance of shares to satisfy accrued compensation
  $ 250,000     $ -  
Forfeiture of officer's compensation
  $ 282,000     $ -  
Gain on extinguishment of debt of discontinued operations
  $ 1,494,406     $ -  
 
See Notes to Financial Statements.
 
 
F-20

 
 
NUSTATE ENERGY HOLDINGS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
 
NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN:

NuState Energy Holdings, Inc. ,  or   the Company, is a Nevada corporation, incorporated in October 1987.  It was formerly known as Jaguar Investments, Inc. between October 1987 and May 2003, Power2Ship, Inc., between May 2003 and November 2006, and Fittipaldi Logistics, Inc. between November 2006 and December 2007.

The Company had two wholly-owned subsidiaries, Commodity Express Transportation, Inc., or CXT, and Power2Ship Intermodal, Inc., or P2SI, which ceased operations in May 2009 and June 2006, respectively. CXT had a wholly-owned subsidiary, Commodity Express Brokerage, Inc.

In August 2012, the Company’s wholly-owned subsidiaries, CXT and P2SI, have filed a voluntary petition of liquidation under the Chapter 7 of the US Bankruptcy Code. The two subsidiaries became subject to the control of the court in which the petition was filed.  The Company ceased to have a controlling financial interest of the subsidiaries upon filing, and accordingly, has deconsolidated the subsidiaries during the nine-month period ended March 31, 2013.  The subsidiaries had no assets and $1,494,406 in liabilities as of the date of the filing.  The deconsolidation of the subsidiaries resulted in other income of $1,494,406 during the nine-month period ended March 31, 2013, which consists of the extinguishment of debt of the subsidiaries.

CXT was a provider of truck transportation and third-party logistics services. P2SI was a provider of intermodal drayage transportation services.

During April 2008, the Company sold certain intellectual property and software to Rentar Logic, Inc., or Rentar, in consideration for $3,000,000 and a 49% interest in Rentar.  In April 2010, Rentar issued 384,366 shares of its common stock to satisfy its obligation of approximately $1.9 million with the Company.  Contemporaneously, during April 2010, the Company relinquished its interest in Rentar to satisfy its obligations under three notes payable with a carrying value of $1.9 million.

The balance sheet presented as of June 30, 2012 has been derived from our audited financial statements. The unaudited financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to those rules and regulations, but we believe that the disclosures are adequate to make the information presented not misleading. The financial statements and notes included herein should be read in conjunction with the annual financial statements and notes for the year ended June 30, 2012 included in our accompanying Registration Statement on Form 10.  In the opinion of management, all adjustments, consisting of normal, recurring adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results of operations for the three and nine-month periods ended March 31, 2013 are not necessarily indicative of the results for the year ending June 30, 2013.

The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately $122,000 during the nine-month period ended March 31, 2013 and has a working capital deficit of approximately $4.5 million at March 31, 2013.  The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an operating company is consummated. Management plans may continue to provide for its capital requirements by issuing additional equity securities and debt and the Company will continue to find possible acquisition target. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about recovery of assets from discontinued operations and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.
 
 
F-21

 
 
Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less, when purchased, to be cash equivalents.

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable.

The Company’s cash and cash equivalents accounts are held at financial institutions and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. During the nine-month period ended March 31, 2013, the Company has not reached bank balances exceeding the FDIC insurance limit.

The Company's other receivable was the result of a judgment in favor of the Company.  The net proceeds from such judgment were received during fiscal 2012.

Fair Value of Financial Instruments

The Company accounts, for assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.
 
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
 
Level 1:    
Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2:    
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:    
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
 
The Company’s derivative liability at June 30, 2012 is classified as Level 3 financial instrument.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash and cash equivalents, other receivable, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable, and liabilities from discontinued operations approximate their fair value due to the short maturity of these items.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities, or ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.  

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40, Contracts in Entity’s own Equity, provides that, among other things, generally, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability. 
 
 
F-22

 
 
The Company needs to determine whether the instruments issued in the transactions are considered indexed to the Company’s own stock.  The Company issued certain promissory notes during fiscal 2012 which were convertible at variable rates.  Such instruments were deemed to include embedded conversion features until June 23, 2012, at which time, the Company and the note holders agreed to set a floor on the conversion rate.  Accordingly, the Company’s outstanding instruments are convertible at fixed rates at March 31, 2013.   Additionally, certain convertible promissory notes aggregating $145,000 included subsequent financing reset provisions which were recorded as embedded conversion features at each measurement date through June 23, 2012, the date at which such notes became convertible at a fixed rate.

Income Taxes

Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

Share-Based Payment

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.
 
The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Segment Reporting

The Company operates in one segment, which is to search for possible acquisition targets and merge with an operating company. The Company's chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company's statements of operations.

Recent Accounting Pronouncements

Recent accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method).  Potential common shares includable in the computation of fully-diluted per-share results are not presented in the financial statements as their affect would be anti-dilutive.
 
 
F-23

 
 
   
Three-months ended
   
Nine-months ended
 
   
March 31,
2013
   
March 31,
2012
   
March 31,
2013
   
March 31,
2012
 
Numerator:
                       
Net loss from continuing operations
 
$
(209,169
)
 
$
(214,282
)
 
$
(548,826
)
 
$
(748,585
)
Decrease in fair value of deriviative liabilities
   
-
     
26,606
     
5,556
     
87,197
 
Preferred stock dividends
   
(18,700
)
   
(18,700
)
   
(56,100
)
   
(56,100
)
Numerator for basic earnings per share- net loss from continuing operations attributable to common stockholders-as adjusted
 
$
(227,869
)
 
$
(206,376
)
 
$
(599,370
)
 
$
(717,488
)
                                 
Net income from discontinued operations
 
$
-
   
$
-
   
$
1,494,406
   
$
-
 
                                 
Denominator:
                               
Denominator for basic earnings per share-weighted average shares
   
444,205,424
     
322,216,535
     
389,714,231
     
321,335,054
 
Effect of dilutive securities-when applicable:
                               
Stock options
   
-
     
-
     
-
     
-
 
Warrants
   
-
     
-
     
-
     
-
 
Convertible promissory notes
   
-
     
-
     
-
     
-
 
Preferred Stock Series B
   
-
     
-
     
-
     
-
 
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions
   
444,205,424
     
322,216,535
     
389,714,231
     
321,335,054
 
                                 
Earnings (loss) per share:
                               
Basic
                               
Continuing operations, as adjusted
 
$
-
   
$
-
   
$
-
   
$
-
 
Discontinued operations
 
$
-
   
$
-
   
$
-
   
$
-
 
Net earnings (loss) per share-basic
 
$
-
   
$
-
   
$
-
   
$
-
 
                                 
Dilted
                               
Continuing operations, as adjusted
 
$
-
   
$
-
   
$
-
   
$
-
 
Discontinued operations
 
$
-
   
$
-
   
$
-
   
$
-
 
Net earnings (loss) per share-diluted
 
$
-
   
$
-
   
$
-
   
$
-
 
 
 
F-24

 
 
The weighted-average anti-dilutive common share equivalents are as follows:
 
   
Three-month periods ended
March 31,
   
Nine-month periods ended
March 31,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Series B Preferred Stock
   
2,992,000
     
2,992,000
     
2,992,000
     
2,992,000
 
Series C Preferred Stock
   
33,200
     
33,200
     
33,200
     
33,200
 
Series D Preferred Stock
   
19,000,000
     
19,000,000
     
19,000,000
     
19,000,000
 
Series F Preferred Stock
   
25,695,000
     
25,695,000
     
25,695,000
     
25,695,000
 
Series H Preferred Stock
   
2,796,000
     
2,796,000
     
2,796,000
     
2,796,000
 
Series I Preferred Stock
   
15,000,000
     
15,000,000
     
15,000,000
     
15,000,000
 
Series J Preferred Stock
   
500,000
     
500,000
     
500,000
     
500,000
 
Series Y Preferred Stock
   
230,405
     
230,405
     
230,405
     
230,405
 
Convertible notes payable
   
173,664,930
     
122,360,064
     
163,925,004
     
103,146,240
 
Options
   
6,200,000
     
74,000,000
     
30,103,704
     
80,311,111
 
Warrants
   
54,758,404
     
28,500,000
     
56,980,626
     
34,330,370
 
     
300,869,939
     
291,106,669
     
317,255,939
     
284,034,326
 
 
The anti-dilutive common shares outstanding at March 31, 2013 and 2012 are as follows:
 
   
2013
   
2012
 
             
Series B Preferred Stock
   
2,992,000
     
2,992,000
 
Series C Preferred Stock
   
33,200
     
33,200
 
Series D Preferred Stock
   
19,000,000
     
19,000,000
 
Series F Preferred Stock
   
25,695,000
     
25,695,000
 
Series H Preferred Stock
   
2,796,000
     
2,796,000
 
Series I Preferred Stock
   
15,000,000
     
15,000,000
 
Series J Preferred Stock
   
500,000
     
500,000
 
Series Y Preferred Stock
   
230,405
     
230,405
 
Convertible notes payable
   
173,664,930
     
126,525,441
 
Options
   
-
     
62,000,000
 
Warrants
   
50,047,293
     
28,500,000
 
     
289,958,828
     
283,272,046
 
 
 
F-25

 
 
NOTE 3: DERIVATIVE LIABILITY

A summary of the transactions related to the derivative liability for the nine-month period ended March 31, 2013 and the year ended June 30, 2012 is as follows:
 
   
Nine-months ended
March 31,
2013
 
       
Derivative liability at July 1, 2012
 
$
5,556
 
Decrease in fair value of derivative liability, recognized as other income
   
(5,556
)
Derivative liability at March 31, 2013
 
$
-
 
 
   
Year ended
June 30,
2012
 
       
Derivative liability at July 1, 2011
 
$
92,273
 
Issuance of embedded conversion features, recognized as debt discount
   
89,091
 
Decrease in fair value of derivative liability, recognized as other income
   
(26,086
)
Reclassification of liability contracts to equity contracts
   
(147,222
)
Conversion of notes payable
   
(2,500
)
Derivative liability at June 30, 2012
 
$
5,556
 

The Company used the binomial method to determine the fair value of the derivative liability at each measurement dates, using the following assumptions:

   
March 31,
 
   
2013
   
2012
 
Effective Exercise price
   
N/A
     
$0.00088
-
0.00096
 
Effective Market price
   
N/A
     
$0.0011
-
0.0012
 
Volatility
   
N/A
       
 236%
   
Risk-free interest
   
N/A
       
 0.04%
   
Terms (months)
   
N/A
     
1
6
 
Expected dividend rate
   
N/A
       
0% 
   
 
NOTE 4: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE

Convertible Notes Payable

The Company had convertible promissory notes aggregating approximately $1.7 million and $1.6 million at March 31, 2013 and June 30, 2012, respectively.  The accrued interest amounted to approximately $1 million and $897,000 at March 31, 2013 and June 30, 2012, respectively.  The Convertible Notes Payable bear interest at rates ranging between 10% and 18% per annum.  Interest is generally payable monthly.  The Convertible Notes Payable are generally convertible at rates ranging between $0.01 and 0.0267 per share, at the holders’ option. At March 31, 2013, all convertible promissory notes have matured.

If the obligations under a certain convertible promissory note of $100,000 are not met by January 1, 2013, the amount payable under the note increases to $150,000. This note is still outstanding as of March 31, 2013, and the $50,000 principal increase has been recognized as interest expense on our statement of operations for the nine-month period ended March 31, 2013.

Additionally, upon conversion, the holders of $192,000 of convertible promissory notes are also entitled to 19,200,000 warrants, exercisable at a rate of $0.025.  The warrants expire 3 years from the date of issuance.

Notes Payable

The Company had promissory notes aggregating approximately $265,000 at March 31, 2013 and June 30, 2012.  The related accrued interest amounted to approximately $191,000 and $162,000 at March 31, 2013 and June 30, 2012, respectively.  The Notes Payable bear interest at rates ranging between 8% and 16% per annum.  Interest is generally payable monthly.  All promissory notes have matured as of March 31, 2013.

 
F-26

 
 
Transactions

The Company generated proceeds of $55,000 from the issuance of convertible promissory notes during the nine-month period ended March 31, 2013.

The Company issued 14,000,000 shares of its common stock pursuant to private placements amounting to $70,000 during the nine-month period ended March 31, 2013.

The Company issued 60,000,000 shares of its common stock pursuant to a non-cash exercise of options to satisfy obligations of $150,000 during the nine-month period ended March 31, 2013.

The Company issued 3,166,167 shares of its common stock pursuant to the conversion of convertible promissory notes amounting to $10,000 during the nine-month period ended March 31, 2013.

The Company generated proceeds of $160,000 from the issuance of convertible promissory notes during the nine-month period ended March 31, 2012.

The Company issued 5,000,000 shares of its common stock pursuant to the conversion of convertible promissory note amounting to $25,000 during the nine-month period ended March 31, 2012.

The Company issued 5,000,000 shares of its common stock to satisfy obligations of $6,500 during the nine-month period ended March 31, 2012.

The Company recognized debt discount of approximately $89,000 during the nine-month period ended March 31, 2012 pursuant to issuance of embedded conversion features associated with the issuance of convertible promissory notes payable.

The Company recognized interest expense of approximately $184,000 and $279,000 during the nine-month periods ended March 31, 2013 and 2012, respectively, including amortization of debt discount of approximately $4,000 and  $131,000 during the nine-month periods ended March 31, 2013 and 2012, respectively.

NOTE 5: STOCKHOLDERS’ DEFICIT

Common Stock
 
A summary of the issuance of shares of Common Stock, related consideration and fair value of transaction, for the nine-month period ended March 31, 2012 is as follows:
 
   
Number of shares
of common stock
   
Fair Value
at Issuance
   
Fair Value
at Issuance
(per share)
 
                   
Conversion of convertible notes payable
    5,000,000       25,000       0.005  
Shares issued to satisfy obligations
    5,000,000       6,500       0.001  
 
 
A summary of the issuance of shares of Common Stock, related consideration and fair value of transaction, for the nine-month period ended March 31, 2013 is as follows:

   
Number of shares
of common stock
   
Fair Value
at Issuance
   
Fair Value
at Issuance
(per share)
 
                   
Shares issued to satisfy accrued compensation
    50,000,000       250,000       0.005  
Conversion of convertible notes payable
    3,166,667       15,833       0.005  
Shares issued pursuant to private placement
    14,000,000       70,000       0.005  
Shares issued pursuant to non-cash exercise of options to satisfy obligations
    60,000,000       150,000       0.0025  
 
 
F-27

 
 
Preferred Stock

All issued and outstanding shares of the Company's preferred stock has a par value of $0.01 per share and rank prior to any class or series of the Company's common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends, except for Series Y Preferred Stock.

Series B Preferred Stock

The Series B Preferred Stock has a stated value of $5.00 per share. Each share of Series B preferred Stock is convertible in 20 shares of the Company's common stock. In addition, the holders of the preferred stock are entitled to receive annual dividends of 10% payable in cash or shares of the Company's common stock, at the Company’s option.

At March 31, 2013, the Company has not declared the payment of dividends aggregating approximately $430,100.

Series C Preferred Stock

The Series C Preferred Stock has a stated value of $30.00 per share. Each share of Series C Preferred Stock is convertible in 100 shares of the Company's common stock.

Series D Preferred Stock

The Series D Preferred Stock has a stated value of $25,000 per share. Each share of the Series D preferred Stock is convertible in 1,000,000 shares of the Company's common stock. In addition, the holders of the Series D Preferred Stock are entitled to receive a participation interest in the annual net profits generated from any future business activities undertaken by the Company in Brazil.

Series F Preferred Stock

The Series F Preferred Stock has a stated value of $5,000 per share. Each share of Series F Preferred Stock is convertible in 200,000 shares of the Company's common stock.

Series H Preferred Stock

The Series H Preferred Stock has a stated value of $1,000 per share. Each share of Series H Preferred Stock is convertible in 1,000,000 shares of the Company's common stock.

Series I Preferred Stock

The Series I Preferred Stock has a stated value of $10.00 per share. Each share of Series I Preferred Stock is convertible into 500 shares of the Company's common stock.

Series J Preferred Stock

The Series J Preferred Stock has a stated value of $2,500 per share. Each share of the Series J Preferred Stock is convertible into the Company’s common shares using a conversion price equal to 50% of the average closing price of the Company's common stock for the ten trading days immediately preceding the conversion date, although in no instance less than $0.01 per share or greater than $0.03 per share.

Series Y Preferred Stock

The Series Y Preferred Stock has a stated value and par value of $.01 and has no liquidity preference. Each share of Series Y Preferred Stock has 200 votes per share and has the right to vote with the common shareholders in all matters. The shares are convertible into 230,405 shares of the Company's common stock at the holder's option.  The shares are held by one of the Company’s former Chairman of the Board.

Forfeiture of Officer’s Compensation

During the nine-month period ended March 31, 2013, the Company included $282,000 in additional paid in capital to record the forfeiture of officer’s compensation by the Chairman and Chief Executive Officer.

 
F-28

 
 
Warrants

The Company issued 6,500,000 warrants to several note holders in lieu of interest during the nine-month period ended March 31, 2012. The warrants are exercisable at a range of $0.025 - $0.005 per share and expire in July and September 2014. The fair value of the warrants at issuance of $92,000 is included in interest expense.

The Company issued 7,000,000 warrants pursuant to private placements during the nine-month period ended March 31, 2013. The warrants are exercisable at a rate of $0.025 per share and expire in August 2014 and March 2015.

Options

In January 2001, The Company adopted the 2001 Employee Stock Compensation Plan, or the Plan. The Plan provided for stock compensation through the award of shares of the Company’s common stock.

The Company’s board of directors may appoint a Compensation Committee of the board of directors to administer the Plan. In the absence of such appointment, the board of directors was responsible for the administration of the Plan. The Company did not appoint a Compensation Committee to administer the plan. The board of directors had the sole power to award shares of common stock under the Plan, as well as determining those eligible to receive an award of Plan shares. Awards of shares under the Plan may be made as compensation for services rendered, directly or in lieu of other compensation payable, as a bonus in recognition of past service or performance or may be sold to an employee.

The maximum number of shares which may be awarded under the plan is 5,000,000. Awards were generally granted to:
 
 
executive officers, officers and directors (including advisory and other special directors) of the Company;
 
full-time and part-time employees of our company;
 
natural persons engaged by us as a consultant, advisor or agent;
   
and;
 
a lawyer, law firm, accountant or accounting firm, or other professional or professional firm engaged by us.
 
Grants to employees may be made for cash, property, services rendered or other form of payment constituting lawful consideration under applicable law. Shares awarded other than for services rendered may not be sold at less than the fair value of our common stock on the date of grant.

The plan terminated in January 2011.  The board of directors had absolute discretion to amend the plan with the exception that the board had no authority to extend the term of the plan, to increase the number of shares subject to award under the plan or to amend the definition of "Employee" under the plan.

The Company generally recognizes its share-based payment over the vesting terms of the underlying options.

   
Options
   
Weighted
Average Price
Per Share
   
Weighted
Average
Remaining
Contractual
Term
   
Aggregate
Intrinsic
Value
 
Balance, July 1, 2011
   
86,000,000
   
$
0.01
           
-
 
Granted
   
-
     
-
               
Exercised
   
-
     
-
               
Forfeitures
   
(12,000,000
)
   
0.025
               
Outstanding at June 30, 2012
   
74,000,000
     
0.01
     
0.86
         
Granted
   
-
     
-
                 
Exercised
   
(60,000,000
)
   
0.025
                 
Forfeitures
   
(14,000,000
)
   
0.025
                 
Outstanding and exercisable at March 31, 2013
   
-
   
$
-
     
-
   
$
-
 
 
 
 
   
2012
   
2011
 
Weighted-average grant date fair value
   
N/A
     
N/A
 
Fair value of options, recognized as selling, general, and administrative expenses number of options granted
   
N/A
     
N/A
 
 
The total compensation cost related to non-vested awards not yet recognized amounted to $0 at March 31, 2013.

The Company’s policy is to issue shares pursuant to the exercise of stock options from its available authorized but unissued shares of common stock. It does not issue shares pursuant to the exercise of stock options from its treasury shares.

 
F-29

 
 
NOTE 6: RELATED PARTY TRANSACTIONS

During the nine-month periods ended March 31, 2013 and 2012, the Company incurred expenses of $90,000 and $108,750, respectively, and paid $72,500 and $126,000, respectively, to a related party by means of common ownership and management with the Company as compensation to our Chairman of the Board and President.

During the nine-month period ended March 31, 2012, the Company issued 5,000,000 warrants with a fair value of $5,000 to a related party which employed our acting Chief Operating Officer, exercisable at $0.005 per share, expiring in September 2014. The Company also incurred expenses of $90,000  to the same related party during the nine-month period ended March 31, 2012, and paid the same related party $3,500 and $31,000 as compensation to our acting Chief Operating Officer during the nine-month periods ended March 31, 2013 and 2012, respectively.

NOTE 7: SUBSEQUENT EVENTS

In April 2013, the Company issued 50,000,000 shares of its common stock to its Chairman of the Board and Chief Executive Officer to satisfy an accrued compensation liability of $250,000.
 
 
 
F-30
Exhibit 3.18
 
 
CERTIFICATE TO SET FORTH DESIGNATIONS, PREFERENCES AND RIGHTS TO
SERIES J PREFERRED STOCK OF
NUSTATE ENERGY HOLDINGS, INC.

I, Frank P. Reilly, Chief Executive Officer and Secretary of NUSTATE ENERGY HOLDINGS, INC., a corporation organized and existing under the General Corporation Law of the State of Nevada (the "Corporation"), in accordance with the provisions of Section 78.195 under Nevada Revised Statutes thereof, DO HEREBY CERTIFY:

         That pursuant to authority conferred upon the Board of Directors by the Articles of Incorporation of said Corporation, said Board of Directors adopted a resolution providing for the issuance of a Series of eighty (80) shares of Series J Preferred Stock pursuant to a written consent dated June 20, 2008 which resolution is as follows:

SERIES J CONVERTIBLE PREFERRED STOCK

1. Designation, Amounts and Par Value. The designation of this series, which consists of eighty (80) shares of preferred stock, is the Series J Preferred Stock (the "Series J Preferred Stock"). The "Stated Value" of the Series J Preferred Stock shall be $2,500.00 per share. The par value is $.01 per share.

2. Dividends. No dividend shall be payable with respect to the Series J Preferred Stock.

3. Rank and Liquidation.

(a) The Series J Preferred Stock shall rank prior to any other class or series of common stock of the Corporation hereinafter designated, in each case as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation.

(b) Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, the Holders of the Series J Preferred Stock shall be entitled to receive, before any payment or distribution shall be made on any class of common stock of the Corporation ("Common Stock" or "Junior Stock"), out of the assets of the Corporation available for distribution to stockholders, the Stated Value per share of Series J Preferred Stock. Upon the payment in full of all amounts due to Holders of the Series J Preferred Stock and any class of securities not designated as Junior Stock, the holders of the Common Stock shall receive all remaining assets of the Corporation legally available for distribution. If the assets of the Corporation available for distribution to the Holders of the Series J Preferred Stock, or any class of capital stock parri passu with that of the Series J Preferred Stock, shall be insufficient to permit payment in full of the amounts payable as aforesaid to the Holders of Series J Preferred Stock upon such liquidation, dissolution or winding up, whether voluntary or involuntary, then all such assets of the Corporation shall be distributed to the exclusion of the holders of shares of Junior Stock ratably among the Holders of the Series J Preferred Stock and any class of capital stock parri passu with that of the Series J Preferred Stock.

(c) The purchase or the redemption by the Corporation of shares of any class of stock, the merger or consolidation of the Corporation with or into any other corporation or entity in which the Corporation is the survivor, or the sale or transfer by the Corporation of substantially all of its assets shall be deemed to be a liquidation, dissolution or  winding-up of the Corporation for the purposes of this paragraph 3.

4. Conversion into Common Stock. The Series J Preferred Stock shall have the following conversion rights and obligations:

(a) Subject to the further provisions of this paragraph 4, the Holder of shares of Series J Preferred Stock shall have the right to convert the Series J Preferred Stock into fully paid and non-assessable shares of Common Stock determined in accordance with the conversion price defined in paragraph 4(b) below (the "Conversion Price").

(b) The number of shares of Common Stock issuable upon conversion of the Series J Preferred Stock shall equal (i) the Stated Value per share being converted, divided by (ii) the Conversion Price. The Conversion Price shall be fifty percent (50%) of the average closing price of the Common Stock for the ten (10) trading days immediately preceding the conversion date as defined in paragraph 4(c) below (the "Conversion Date"), although in no instance shall the Conversion Price be less than $0.01 per share or greater than $0.03 per share. Further, the Conversion Price shall be subject to adjustment as described herein and in any subscription agreement.

 
 

 
 
Exhibit 3.18
 
 
(c) Holder will give notice of its decision to exercise its right to convert the Series J Preferred Stock or part thereof by telecopying an executed and completed Notice of Conversion (a form of which is annexed as Exhibit A to this Certificate of Designation) to the Corporation via confirmed telecopier transmission. The Holder will not be required to surrender the Series J Preferred Stock certificate until the Series J Preferred Stock has been fully converted. Each date on which a Notice of Conversion is telecopied to the Corporation in accordance with the provisions hereof shall be deemed a Conversion Date. The Corporation will itself, or will cause the Corporation's transfer agent to, transmit the Corporation's Common Stock certificates representing the Common Stock issuable upon conversion of the Series J Preferred Stock to the Holder for receipt by such Holder within five (5) business days after receipt by the Corporation of the Notice of Conversion (the "Delivery Date"). A Series J Preferred Stock certificate representing the balance of the Series J Preferred Stock not so converted will be provided by the Corporation to the Holder if requested by Holder, provided the Holder has delivered the original Series J Preferred Stock certificate to the Corporation. To the extent that a Holder elects not to surrender Series J Preferred Stock for reissuance upon partial payment or conversion, the Holder hereby indemnifies the Corporation against any and all loss or damage attributable to a third-party claim in an amount in excess of the actual amount of the Stated Value of the Series J Preferred Stock then owned by the Holder.

In the case of the exercise of the conversion rights set forth in paragraph 4(a), the conversion privilege shall be deemed to have been exercised and the shares of Common Stock issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Corporation of the Notice of Conversion. The person or entity entitled to receive Common Stock issuable upon such conversion shall, on the date such conversion privilege is deemed to have been exercised and thereafter, be treated for all purposes as the record holder of such Common Stock and shall on the same date cease to be treated for any purpose as the record holder of such shares of Series J Preferred Stock so converted.

Upon the conversion of any shares of Series J Preferred Stock, no adjustment or payment shall be made with respect to such converted shares on account of any dividend on the Common Stock.

The Corporation shall not be required, in connection with any conversion of Series J Preferred Stock to issue a fraction of a share of its Common Stock and shall instead deliver a stock certificate representing the nearest whole number. However, the Company may issue a fraction of a share of Series J Preferred Stock.

(d) The Conversion Price determined pursuant to Paragraph 4(b) shall be subject to adjustment from time to time as follows:

(i) In case the Corporation shall at any time (A) declare any dividend or distribution on its Common Stock or other securities of the Corporation other than the Series J Preferred Stock, (B) split or subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock into a smaller number of shares, or (D) issue by reclassification of its Common Stock any shares or other securities of the Corporation, then in each such event the Conversion Price shall be adjusted proportionately so that the Holders of Series J Preferred Stock shall be entitled to receive the kind and number of shares or other securities of the Corporation which such Holders would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Series J Preferred Stock been converted immediately prior to the happening of such event (or any record date with respect thereto). Such adjustment shall be made whenever any of the events listed above shall occur. An adjustment made to the Conversion Price pursuant to this paragraph 4(d) (i) shall become effective immediately after the effective date of the event.

(ii) For so long as Series J Preferred Stock is outstanding, the Holder is granted the anti-dilution and price protection rights set forth herein.

 
 

 
 
Exhibit 3.18
 
 
(e) (i) In case of any merger of the Corporation with or into any other corporation or entity (other than a merger in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification, conversion, or change of the outstanding shares of Common Stock) then unless the right to convert shares of Series J Preferred Stock shall have terminated as part of such merger, lawful provision shall be made so that Holders of Series J Preferred Stock shall thereafter have the right to convert each share of Series J Preferred Stock into the kind and amount of shares of stock and/or other securities or property receivable upon such merger by a Holder of the number of shares of Common Stock into which such shares of Series J Preferred Stock might have been converted immediately prior to such consolidation or merger. Such provision shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in paragraph 4(d). The foregoing provisions of this paragraph 4(e) shall similarly apply to successive mergers.

(ii) In case of any sale or conveyance to another person or entity of the property of the Corporation as an entirety, or substantially as an entirety, in connection with which shares or other securities or cash or other property shall be issuable, distributable, payable, or deliverable for outstanding shares of Common Stock, then, unless the right to convert such shares shall have terminated, lawful provision shall be made so that the Holders of Series J Preferred Stock shall thereafter have the right to convert each share of the Series J Preferred Stock into the kind and amount of shares of stock or other securities or property that shall be issuable, distributable, payable, or deliverable upon such sale or conveyance with respect to each share of Common Stock immediately prior to such conveyance.

(f) Whenever the number of shares to be issued upon conversion of the Series J Preferred Stock is required to be adjusted as provided in this paragraph 4, the Corporation shall forthwith compute the adjusted number of   shares to be so issued and prepare a certificate setting forth such adjusted conversion amount and the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Transfer Agent for the Series J Preferred Stock and the Common Stock; and the Corporation shall mail to each Holder of record of Series J Preferred Stock notice of such adjusted conversion price.

(g) In case at any time the Corporation shall propose:

(i) to pay any dividend or distribution payable in shares upon its Common Stock or make any distribution (other than cash dividends) to the holders of its Common Stock; or

(ii) to offer for subscription to the holders of its Common Stock any additional shares of any class or any other rights; or

(iii) any capital reorganization or reclassification of its shares or the merger of the Corporation with another corporation or entity (other than a merger in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification, conversion, or change of the outstanding shares of Common Stock); or

(iv) the voluntary dissolution, liquidation or winding-up of the Corporation; then, and in any one or more of said cases, the Corporation shall cause at least fifteen (15) days prior notice of the date on which (A) the books of the Corporation shall close or a record be taken for such stock dividend, distribution, or subscription rights, or (B) such capital reorganization, reclassification, merger, dissolution, liquidation or winding-up shall take place, as the case may be, to be mailed to the Transfer Agent for the Series J Preferred Stock and for the Common Stock and to the Holders of record of the Series J Preferred Stock.

(h) So long as any shares of Series J Preferred Stock or any obligation amount shall remain outstanding and the Holders thereof shall have the right to convert the same in accordance with provisions of this paragraph 4, the Corporation shall use its best efforts to reserve sufficient shares of its authorized and unissued Common Stock that would be necessary to allow conversion of the Series J Preferred Stock, and if it determines that its authorized and unissued shares of Common Stock are not sufficient to allow such conversion, it will amend its Articles of Incorporation and make appropriate filings with the Securities and Exchange Commission in order to increase its authorized capitalization.

(i) The term "Common Stock" as used in this Certificate of Designation shall mean the $.001 par value Common Stock of the Corporation as such stock is constituted at the date of issuance thereof or as it may from time to time be changed, or shares of stock of any class or other securities and/or property into which the shares of Series J Preferred Stock shall at any time become convertible pursuant to the provisions of this paragraph 4.

 
 

 
 
Exhibit 3.18
 
 
(j) The Corporation shall pay the amount of any and all issue taxes (but not income taxes) which may be imposed in respect of any issue or delivery of stock upon the conversion of any shares of Series J Preferred Stock, but all transfer taxes and income taxes that may be payable in respect of any change of ownership of Series J Preferred Stock or any rights represented thereby or of stock receivable upon conversion thereof, shall be paid by the person or persons surrendering such stock for conversion.

(k) In the event a Holder shall elect to convert any shares of Series J Preferred Stock as provided herein, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, or for any other reason unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of said shares of Series J Preferred Stock shall have been issued and the Corporation posts a surety bond for the benefit of such Holder in the obligation amount sought to be converted, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder in the event it obtains judgment.

5. Voting Rights. The Holder of shares of Series J Preferred Stock shall not have voting rights except as described in paragraph 6 hereof.

6. Restrictions and Limitations.

(a) Amendments to Charter. The Corporation shall not amend its Articles of Incorporation without the approval by the holders of at least 70% of the then outstanding shares of Series J Preferred Stock if such amendment would:

(i) reduce the amount payable to the Holders of Series J Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(ii) cancel or modify the conversion rights of the Holders of Series J Preferred Stock provided for in paragraph 4 herein; or

(iii) cancel or modify the rights of the Holders of the Series J Preferred Stock provided for in this paragraph 6.

7. Redemption. Holders of the Series J Preferred Stock shall have no right to have the Corporation redeem the Series J Preferred Stock. The Corporation shall have no right to redeem the Series J Preferred Stock.

8. Status of Converted Stock. In case any shares of Series J Preferred Stock shall be converted or repurchased or reacquired, the shares so converted or reacquired shall resume the status of authorized but unissued shares of Preferred Stock and shall no longer be designated as Series J Preferred Stock.

9. Authority to Amend. This Certificate of Designation was adopted by the Corporation's Board of Directors on June 20, 2008, and no stockholder consent was required for the adoption thereof pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation of said Corporation.

IN WITNESS WHEREOF, such Corporation has caused this Certificate of Designation to be signed by its Chief Executive Officer this 30th day of June 2008.

NUSTATE ENERGY HOLDINGS, INC.



By: /s/ Frank P. Reilly
    -------------------------------------------------------
     Frank P. Reilly, Chief Executive Officer and Secretary
 
 
 

 
 
Exhibit 3.18
 
 
EXHIBIT A

NOTICE OF CONVERSION

(To Be Executed By the Registered Holder in Order to Convert the Series J Convertible Preferred Stock of NuState Energy Holdings, Inc.)

The undersigned hereby irrevocably elects to convert $__________ of the Stated Value of the above Series J Convertible Preferred Stock into shares of Common Stock of NuState Energy Holdings, Inc. according to the conditions hereof, as of the date written below.

Date of Conversion:____________________

Applicable Conversion Price Per Share: $___________

Number of Common Shares Issuable Upon this Conversion:_____________

Select one:

[ ]      A Series J Convertible Preferred Stock certificate is being delivered herewith. The unconverted portion of such certificate should be reissued and delivered to the undersigned.

[ ]      A Series J Convertible Preferred Stock certificate is not being delivered herewith.


Signature:
                 ------------------------------------------------------------------

Printed Name:
                           ------------------------------------------------------------------

Address:
                 -------------------------------------------------------------------

                 -------------------------------------------------------------------

Deliveries Pursuant to this Notice of Conversion Should Be Made to:

                 ------------------------------------------------------------------

                 ------------------------------------------------------------------

                 ------------------------------------------------------------------
Exhibit 4.2

NEITHER  THIS  DEBENTURE  NOR  THE  SECURITIES  INTO  WHICH  THIS  DEBENTURE  IS CONVERTIBLE  HAVE  BEEN  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS  AMENDED (THE  "ACT")  OR  ANY  STATE  SECURITIES LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY BE  OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  SUCH  ACT AND SUCH LAWS OR AN EXEMPTION  FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF  COUNSEL  SATISFACTORY  TO  THE  COMPANY,  IS  AVAILABLE.

14.25% SECURED CONVERTIBLE DEBENTURE
 
 
$  _______   _________   ,2004
 
                   
FOR VALUE RECEIVED, POWER2SHIP, INC., a Nevada corporation (the "Company"), hereby  promises to pay to__________ (the "Holder") having an address at ______________ on  December  31,  2006,  or  earlier upon  prepayment  of  this  Debenture  as  provided  herein,  the  principal  sum  of ___________ DOLLARS ($______ ), together with simple interest (computed on the  basis  of  a 360-day year of twelve 30-day months) on the unpaid balance at the  rate  of  fourteen and one-quarter percent (14.25%) per annum from the date hereof  until  the  principal  hereof  shall  have  been  paid.

The Company  shall  pay  interest  semi-annually in arrears on June 30 and December  31  of each year that any portion of the principal balance is unpaid. Interest payments  shall  commence  on  June  30,  2004.

All  payments  of  principal  and interest shall be made to the Holder in lawful currency  of the United States of America to the address set forth above or such other  address  as  to  which the Holder shall notify the Company in writing ten (10)  days  prior  to the due date of any payment or upon any prepayment of this Debenture  as  provided  herein.
 
Subject to and in compliance with the provisions hereof, the Holder may, at its option, convert all or any portion of the outstanding principal balance of this Debenture, and all or any portion of the interest accrued hereon to such date, into shares of common stock of the Company (the "Common Stock") at a conversion price (the "Conversion Price") equal to the lesser of $0.80 per share or 90% of the average closing bid price of the Common Stock on the Over-the-Counter Bulletin Board or such other quotation system as the Common Stock may be principally quoted for the ten (10) trading days immediately preceding the date the registration statement registering the Common Stock underlying this Debenture is declared effective by the Securities and Exchange Commission. Notwithstanding the foregoing, if the registration statement is not declared effective by the one-year anniversary of the final closing of the Debentures, then the conversion price shall equal the lesser of $.80 per share or 90% of the average closing bid price of the common stock for the 10 trading days immediately preceding the one-year anniversary of the final closing of the Debentures, but in no event less than $0.25 per share. The Holder hereof shall communicate its intention to convert all or any portion of the principal amount of this Debenture and all or any portion of interest accrued through such conversion date by surrendering this Debenture, with the Form of Notice of Election to Convert attached as EXHIBIT "A" hereto duly completed and signed, to the Company at its address for notice set forth elsewhere herein.
 
 
 

 
 
Exhibit 4.2
 
 
The  Debenture  shall  automatically  convert  into  Common  Stock  upon satisfaction  of  the following conditions: (i) the Company is not in default of any  provision of this Debenture (not taking into account any cure period), (ii) the  Common Stock underlying the Debenture has been registered for sale with the Securities  and  Exchange  Commission  on  the  date  of such conversion and the Company  is  otherwise  in  compliance  with the terms of the Registration Right Agreement  (the "Registration Rights Agreement") of even date herewith and (iii) the  closing  bid  price of the Common Stock for the 20 consecutive trading days prior  to  conversion has been equal to at least 150% of the conversion price as determined  herein.  Upon satisfaction of such  conditions, the Company shall notify the Holder in writing of the conversion and shall promptly deliver to the Holder one or more stock certificates evidencing the Common Stock into which the Debenture  was  converted. Delivery of the stock certificates may be conditioned upon the Holder surrendering this Debenture or indemnifying the Company if such Debenture  is misplaced.

The Company may, at its option, redeem the outstanding portion of this Debenture as follows:


 
Redemption Date:   Redemption Price:
-------------------------------------------   ----------------------------------------------
     
Up to 1st Anniversary    110% of outstanding principal balance in cash, plus an additional 10% of the outstanding principal balance in Common Stock, plus accrued but unpaid interest in cash
     
After 1st Anniversary up to 2nd Anniversary   110% of outstanding principal balance in cash, plus an additional 5% of the outstanding principal balance in Common Stock, plus accrued but unpaid interest in cash
     
After 2nd Anniversary up to 3rd Anniversary   105% of outstanding principal balance in cash, plus an additional 5% of the outstanding principal balance in Common Stock, plus accrued but unpaid interest in cash
 
For  the  purposes  of  the  preceding paragraph, the Common Stock shall be valued  at  the  average  closing  bid  price  of  the  Common  Stock  on  the Over-the-Counter  Bulletin  Board  or  such other quotation system as the Common Stock  may  be  principally  quoted  for  the  ten (10) trading days immediately preceding  the date the conversion becomes effective.  To so redeem, the Company shall provide written notice to the Holder of its intent to redeem, which notice shall specify the amount of the Debenture that the Company intends to redeem and the closing date (which shall be on the fifteenth (15) business day after the date  of  such  notice).  The Holder may, at its option, convert any portion of this  Debenture  after  the  date  of  the  written  notice,  provided that such conversions  are received by the Company at least two (2) business days prior to the  closing  date  specified  in  the  written  notice.

If  the  Holder  elects to convert less than the entire principal amount of this  Debenture and interest accrued to the date of such conversion, the Company shall issue or cause to be issued and delivered to the Holder, at its expense, a new Debenture evidencing the outstanding amount of principal due hereunder after giving  effect  to  the  amount  applied to the conversion, which such Debenture shall, except as to the principal amount thereof, be identical to this Debenture in  all  respects.

If  the  Company, at any time while this Debenture is outstanding shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of  its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the  Company,  then  the  Conversion  Price shall be multiplied by a fraction of which  the  numerator  shall  be the number of shares of Common Stock (excluding treasury  shares,  if  any)  outstanding  before  such  event  and  of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment  made  pursuant  to  this Section shall become effective immediately after the record date for the determination of stockholders entitled to  receive such dividend or distribution and shall become effective immediately after  the  effective  date  in  the  case  of  a  subdivision,  combination  or re-classification.


 
 

 
 
Exhibit 4.2
 
 
If  the  Company  shall (i) fail to make a payment of principal or interest when  due;  or  (ii)  make  an  assignment for the benefit of creditors, files a petition  in  bankruptcy, be adjudicated insolvent or bankrupt, suffers an order for  relief  under any federal bankruptcy law, petition or apply to any tribunal for  the  appointment of a custodian, receiver or any trustee for the Company or any  substantial  part of its assets, or (iii) commence any proceeding under any bankruptcy,  reorganization,  arrangement,  readjustment of debt, dissolution or liquidation  law  or  statue  of  any  jurisdiction, whether now or hereafter in effect;  or  (iv)  have been filed any such petition or application, or any such proceeding  shall  have  been  commenced  against  the  Company,  which  remains undismissed,  unstayed  or unbonded for a period of thirty (30) days or more; or (v) by any act or omission shall indicate consent to, approve or acquiescence in any  such petition, application or proceeding or the appointment of a custodian, receiver  or  any  trustee for all or any substantial part of its properties, or (vi)  allow  such  custodianship,  receivership,  or  trusteeship  to  continue undischarged,  unstayed or unbonded for a period of thirty (30) days or more, or (vii)  violate  any  term or provision of this Debenture (except as set forth in subsection  (i) of this paragraph), the Security Agreements entered into between the  Company  and the Holders  (the "Security Agreements") of even date herewith or  the  Registration  Rights Agreement and same remains uncured for a period of ten  (10) business days after notice thereof by the Holder (unless a longer cure period  is  set  forth in any of the aforementioned agreements), then and in any such  event,  the  outstanding principal amount of this Debenture, together with all accrued and unpaid interest thereon, shall be and become immediately due and payable.  For purposes of (i), above, the payment of interest subsequent to its due  date  by  withdrawal from the account established under one of the Security Agreements  for the purpose of securing the payment of interest, shall be deemed to  have  been  paid  when  due.
 
This  Debenture  is  secured  by  the  Security  A greements.

All  notices  and other communications provided for herein shall be sent by certified  mail,  return  receipt  requested,  or  by  personal delivery or by a nationally  recognized  overnight courier to the Holder or the Company, at their respective  addresses  as set forth herein, or to such other address as to which either  party  may  advise  the  other  by  notice given in accordance with this provision. All such notices shall be deemed given upon the earlier of receipt or within  five  (5)  business  days  of  mailing  if  receipt  is  refused.

Notwithstanding  any other provision of this Debenture, interest under this Debenture  shall not exceed the maximum rate permitted by law; and if any amount is  paid  under  this Debenture as interest in excess of such maximum rate, then the amount so paid will not constitute interest but will constitute a prepayment on  account  of  the  principal  amount  of  this Debenture.  If at any time the interest rate under this Debenture would, but for the provision of the preceding sentence,  exceed  the  maximum  rate  permitted  by  law,  then the outstanding principal  balance  of  this  Debenture  shall,  on demand by the Holder of this Debenture,  become  and  be  due  and  payable.

All payments  under this Debenture shall be made without deduction for any taxes  of  any  nature  now  or  hereafter  imposed.

The provisions of  this  Debenture  shall  in  all  respects be construed according  to, and the rights and liabilities of the parties hereto and shall in all  respects  be governed by, the laws of the State of Florida.  This Debenture shall  be  deemed  a  contract made under the laws of the State of Florida to be fully  performed  therein, and the validity of this Debenture and all rights and liabilities  hereunder  shall be determined under the laws of said State without reference  to  the  conflicts  of  laws provisions thereof.  For purposes of any proceeding involving this Debenture, the Company and the Holder hereby submit to the  exclusive  jurisdiction  of  the  courts of the State of Florida and of the United  States  having  jurisdiction in the County of Broward, State of Florida, and  agree  not  to  raise  and waive any objection to or defense based upon the venue  of  any  such  court  or  based  upon  forum  non  conveniens.

 
 

 
 
Exhibit 4.2
 
 
In  the  event  this  Debenture  is  placed in the hands of an attorney for collection or for enforcement or protection of the security, or if Holder incurs any costs incident to the collection of the indebtedness evidenced hereby or the enforcement  or  protection of the security, the Company agrees to pay to Holder all  reasonable  attorneys'  fees so incurred, all court and other costs and the reasonable  costs  of any other collection efforts, including all costs incurred in  collecting  any judgment and in any appellate or bankruptcy proceeding.  The Company  agrees  to  pay  any documentary stamp taxes, intangible taxes or other taxes  which may now or hereafter apply to this Debenture or any payment made in respect  of  this  Debenture.

No delay or omission on the part of the Holder in the exercise of any right hereunder shall  operate  as a waiver of such right or of any other right under this  Debenture.  A  waiver by the Holder of any right or remedy conferred to it hereunder  on any one occasion shall not be construed as a bar to, or waiver of, any  such  right  and/or  remedy as to any future occasion.  The Company and all persons  now or hereafter becoming obligated or liable for the payment hereof do jointly  and  severally  waive demand, notice of non-payment, protest, notice of dishonor  and  presentment.  No failure to accelerate the indebtedness evidenced hereby  by  reason of default hereunder, acceptance of a past-due installment or other indulgences granted from time to time, shall be construed as a novation of this  Debenture  or as a waiver of such right of acceleration or of the right of the  Holder  thereafter  to insist upon strict compliance with the terms of this Debenture  or to prevent the exercise of such right of acceleration or any other right  granted  hereunder  or  by  applicable  law.

This  Debenture may be amended only by a written instrument executed by the Company  and  the  Holder.

THE COMPANY  HEREBY  KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT WHICH  IT  MAY  HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION  BASED  HEREON, OR ARISING OUT OF, UNDER OR IN ANY WAY CONNECTED WITH THE DEALINGS  BETWEEN  THE  HOLDER AND THE COMPANY, THIS DEBENTURE, OR ANY DOCUMENTS EXECUTED  IN  CONNECTION  HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS  (WHETHER  ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,  EQUITY  OR  OTHERWISE.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDERS EXTENDING THE  LOAN  EVIDENCED  BY  THIS  DEBENTURE.

 
 


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Exhibit 4.2
 

IN  WITNESS  WHEREOF,  POWER2SHIP,  INC.  has  caused  this  14.25% Secured Convertible  Debenture  to  be  executed  in  its  corporate  name  by its Chief Executive  Officer,  thereunto  duly  authorized.


Dated:   ____________,  2004

                              THE COMPANY:  ________________

                                   POWER2SHIP, INC.

                       By:    /s/ Richard Hersch
                                      Richard  Hersh

 
 

 
 
Exhibit 4.2

EXHIBIT "A"

NOTICE OF CONVERSION

(To be Executed by the Holder in order to Convert this Debenture)

The undersigned hereby elects to convert the attached 14.25% Secured Convertible Debenture into shares of common stock (the "Common Stock"), of Power2Ship, Inc. (the "Company") according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

Conversion calculations:
 
  _______________________________________
   Date to Effect Conversion
   
  _______________________________________
  Principal Amount of Debenture to be Converted
   
 
Payment of Interest  in  Kind       [ ] Yes
                                                         [ ] No
   
  If  yes,  $_______  of  Interest  Accrued  on Account of Conversion at Issue
   
  ---------------------------------------------
  Number of shares of Common Stock to be Issued
   
  ---------------------------------------------
  Applicable  Conversion  Price
   
  ---------------------------------------------
  Signature
   
  ---------------------------------------------
  Name
   
  ---------------------------------------------
  Address
 
                                                                             

                                                                                                                             
 
 
                                                                                                                                                                      
                                                                                                                                                                    
                                                                                                                                                                          
                                                                                    
                                                                                     

                                                                                    
                                                                                    
Exhibit 4.3
 
EXHIBIT A TO SETTLEMENT AGREEMENT

Promissory Note

FOR VALUE RECEIVED, NuState Energy Holdings, Inc. (“NuState”), a Nevada corporation, promises to pay to Stokes Logistics Consulting, LLC, a South Carolina limited liability company, or its order, One Hundred Thousand ($100,000.00) Dollars, as follows:

A.           The Note shall not bear any interest.

B.
The Note shall become due and payable one hundred and eighty (180) days from the reverse take over that NuState has initiated or by January 1, 2013, whichever comes first.

C.
If, when the Note becomes payable, the NuState stock has a value of at least five cents ($0.05) per share, then NuState will have the option to satisfy the Note by issuing Stokes Logistics Consulting, LLC non-restricted, common voting stock in NuState. The number of shares issued will be the dollar equivalent of the balance on the Note based on the market value of the stock when the Note became payable.

D.
If the Note is not paid or otherwise satisfied by January 1, 2013, then NuState shall execute a Confession of Judgment in favor of Stokes Logistics Consulting, LLC in the mount of One Hundred and Fifty Thousand ($150,000.00) Dollars.

E.
NuState may prepay the principal of this Note, in whole or in part, before the due date of the Note without further agreement, premium, or penalty.

F.
Except as otherwise provided herein, all payments under this Note are payable in lawful money of the United States of America.

G.
If this Note is placed in the hands of an attorney for collection or is collected through any legal proceedings, NuState promises to pay to the extent permitted by law, a reasonable attorney’s fee.

H.
NuState and all persons liable or to become liable on this Note waive presentment, protest and demand and dishonor of this Note, and consent to any and all renewals and extensions of the time of payment hereof.

I.
None of the rights and remedies of the holder hereunder are to be waived or affected by failure or delay to exercise them. All remedies conferred on a holder of this Note under the Note or any other instrument or agreement shall be cumulative, and none is exclusive. Such remedies may be exercised concurrently or consecutively at the holder’s option.

 
 

 
 
Exhibit 4.3
 
 
J.
This Note shall be governed as to validity, interpretation, construction, effect, and all other respects, by the laws and decisions of the State of South Carolina.

K.
It is understood and agreed that this Note shall be binding upon NuState, its successors, assigns, purchasers, agents, subsidiaries, partners, related companies, and all others claiming by or through it.

L.
Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but it any provision of this note or portion hereof shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note.

M.
It is expressly understood and agreed that any and all disputes arising out of or relating to this Agreement in any way shall be decided by arbitaration pursuant to the South Carolina Uniform Arbitration Act and the Federal Arbitration Act. The venue for the arbitration shall be Richland County, South Carolina. The prevailing party in any dispute shall be entitled to recover its attorney’s fees and costs.

NUSTATE UNDERSTANDS AND AGREES TO THE TERMS OF THIS PROMISSORY NOTE.

[Signatures on following page.]

 
 

 

Exhibit 4.3
 

NUSTATE ENERGY HOLDINGS, INC.
BY:    /s/ Kevin Yates                                    
Its:    CEO                                                        
Date:    10/12/2011                                         

SWORN TO AND SUBSCRIBED BEFORE ME
This 12 day of October, 2011
_ /s/ Kimberly Ward ______________________
Notary Public for South Carolina

My Commission Expires:_ 3/17/2021_________
 
Exhibit 4.4
 
TERM SHEET FOR
8% SECURED CONVERTIBLE PROMISSORY NOTE

ISSUER:
Fittipaldi Logistics, Inc., a Nevada corporation (the “Company”)
   
PURCHASER: State Petroleum Distributors, Inc. (the “Investor”)
   
AMOUNT: US $100,000
   
TERM: One year
   
INTEREST: 8% simple interest per annum shall accrue and become due on the maturity or redemption date of the Note and shall be payable, at the Company’s discretion, in cash or shares of the Company’s common stock. If interest is paid with common stock, then the price per share used in determining the number of shares to issue shall be the average closing price of the common stock for the ten trading days immediately preceding the maturity or redemption date.
   
CONVERSION: The Investor shall have the right, at any time, to convert up to the outstanding balance of the Note, and accrued interest thereon, into shares of the Company’s Common Stock at a conversion price of $0.025 per share.
   
RIGHT OF 1 ST REFUSAL: Until such time as the Note, and accrued interest thereon, has been paid in full, Investor shall have a right of first refusal to purchase CXT on the same terms and conditions as may be offered by any other party.
   
MERGER/ACQUISITION: In the event that a merger or acquisition between the Company and the Investor (the “Combined Company”) occurs prior to the maturity date of the Note, then the Note, and accrued interest thereon, shall be paid from the proceeds of the first funding of the Combined Company.
   
OPTION: If a merger or acquisition between the Company and the Investor and the funding of the Combined Company does not occur by December 31, 2007, then the Investor shall have an option to purchase CXT for either a) the forgiveness of the Note and accrued interest thereon and $900,000 paid on December 31, 2007 or b) the forgiveness of the Note and accrued interest thereon, $400,000 paid on December 31, 2007 and $1,000,000 to be paid $50,000 on the first of each month for 20 months commencing on February 1, 2008.
   
REDEMPTION: The Company shall have the right, in its sole discretion, to prepay up to the full amount of the Note, and accrued interest thereon, at any time without penalty by providing the Investor at least five business days notice of its intention, during which time the Investor may exercise its conversion rights.
   
CLOSING DATE: As soon as possible, but not later than September 27, 2007 unless extended by the Company, in its sole discretion.
   
  I/WE HEREBY DESIRE TO PURCHASE THE COMPANY’S $100,000 NOTE AS DESCRIBED HEREIN.
 
INVESTOR: STATE PETROLEUM
DISTRIBUTORS, INC.
FITTIPALDI LOGISTICS, INC.
       
BY: X_ /s/ Robert Lambert BY:        /s/ Richard Hersch _________________
       
PRINTED NAME: Robert Lambert _ PRINTED NAME: _ Richard Hersch __
TITLE: President/CEO __ TITLE: _ Chairman _______
DATE: April 26 , 2007 DATE: _ September 27 __, 2007
 
             
 
Exhibit 4.5
 
Canberra Financial Services II, Inc.
7865 Vallagio La.
Unit 411
Denver, Colorado, 80112
(954) 401-2888

February 8, 2008

NuState Energy, Inc. formerly Fittipaldi Logistics Inc.
ATTN: Frank Reilly, Chief Executive Officer
902 Clint Moore Road, Suite 204
Boca Raton, FL 33487


Dear Mr. Reilly:


This is to inform you that State Petroleum Distributors, Inc. has assigned its Promissory Note (the “Note”) executed on September 27, 2007 by Fittipaldi Logistics, Inc. (“Fittipaldi”) in the amount of $100,000 and its two payments made in October 2007 to Fittipaldi totaling $40,000, to Canberra Financial Services II, Inc. (“Canberra”), pursuant to an Assignment Agreement dated February 8, 2008, attached.

We hereby acknowledge that the Note is not due until September 27, 2008 and that we have agreed that $25,000 of the $40,000, as assigned to Canberra, will be added to the Note with interest accruing at the same rate as the Note (8%), interest being accrued on the $25,000 commencing January 1, 2008 and the $25,000 principal and accrued interest being due also on September 27, 2008. The $15,000 we acknowledge was used for equipment purchases and if such equipment is returned to NuState Energy, Inc. (“NuState”) then Canberra will receive a credit or additional payment to Canberra. If the equipment is not returned to NuState the $15,000 will not be repaid by NuState or be an obligation of NuState.

Please sign below as confirmation that you have been notified of this assignment and acknowledge the terms above, and fax this acknowledgment back to me in care of Milton Barbarosh at (561) 361-1867. For purposes of this acknowledgment a facsimile copy or email PDF will be treated as an original.

Very truly yours,
CANBERRA FINANCIAL SERVICES II, INC.


/s/ Harry Gelbard
Harry Gelbard,
President


I hereby confirm receipt and acknowledge the terms above and this assignment notification.

/s/ Frank Reilly
Frank Reilly, CEO
NuState Energy, Inc.
 
Exhibit 4.6
 
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED (THE “ ACT ”), OR ANY STATE SECURTIES LAWS AND THIS PROMISSORY NOTE NOR ANY INTEREST THEREON MAY BE OFFERED, SOLD, TRANFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS UNAVAILABLE.

12.5 % PROMISSORY NOTE

US $14,000         
                                                                                                  Columbia, SC

FOR VALUE RECEIVED in the form of legal services to the corporation, NuSTATE ENERGY HOLDINGS, Inc. , a Nevada corporation (the “Maker”), promises to pay to the order of George Stevens (the “Holder”), at 555 NE 34 Street, #603 Miami, Florida 33137 , or such address as the Holder may from time to time designate in writing to the Maker, the principal sum of Fourteen Thousand Dollars ($14,000) together with Twelve and a half Percent (12.5%) simple interest on the unpaid balance of this Note on the Maturity Date as hereinafter defined.

The principal amount of this Note and all accrued but unpaid interest shall be due and payable on the one year anniversary of this Note (the “Maturity Date”). Notwithstanding the foregoing, the Maker may, at its option, redeem the outstanding portion of this Note with no prepayment penalty. To so redeem, the Maker shall provie written notice to the Holder of its intent to redeem, which notice shall specifify the amount of the Note that the Company intends to redeem and the closing date (which shall be on the fifteenth (15) business day after the date of such notice).

The following shall constitute “Events of Default” under this Note:

 
1.
The Maker fails to make any payment required by this Note within 15 days of its due date.

 
2.
The Maker becomes insolvent or unable to pay its debts as they mature or makes an assignment for the benefit of creditors, or any proceeding is instituted by or against the Maker alleging that the Maker is insolvent or unable to pay its debts as they mature, and any proceeding, if involuntary, is not dismissed or stayed on appeal or otherwise within 30 days.

Time is hereby declared to be of the essence, and upon the occurance of an Event of Default, the entire unpaid principal amount of this Note together with accrued but unpaid interest thereon, shall at once become due and payable at the option of the Holder upon written notice to the Maker. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.

It is the intent of the parties that in no event shall the amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest permitted by applicable law, as may be in effect from time-to-time, and in the event the amount of interest due or payable hereunder exceeds such maximum rate, interest shall be reduced to the maximum amount that is permitted by applicable law and the payment of any such excess shall be deemed to be prepayment of principal.

This Note shall be governed and construed in accordance with the laws of the State of South Carolina, without regard to conflict of laws principles thereof. The Maker hereby consents to the jurisdiction of the courts located in Richland County, South Carolina as the exclusive forum to resolve any disputes arising out of this Note. The Maker hereby waives any objection it may have to the jurisdiction of such courts or the laying of venue in such counties.

 
 

 
 
Exhibit 4.6
 
The Maker agrees to pay or reimburse the Holder and any other holder hereof of all costs and expenses of preparing, seeking advice in regard to, enforcing, and preserving its rights under this Note or any guarantee, document or instrument executed in the connection herewith (including resonable attorney’s fees and costs and resonable time charges of attorneys who may be employees of the Holder, whether in or out of court, in original or appelate proceedings or in bankruptcy.)

Except as provided in this Note, presentment, protest, notice, notice of dishonor, demand for payment, notice of protest and notice of non-payment are hereby waived.

The failure or delay by the Holder of this Note in exercising any of his rights hereunder in any instance shall not constitute a waiver hereof in that or any other instance. The Holder of this Note may not waive any of its rights, except in an instrument in writing signd by the Holder.

This note may not be amended except in writing signed by the Maker.

 
By:
/s/ Kevin Yates  
    Kevin Yates, its Chief Executive Officer  
       
  Date:
October 1, 2011
 
 
Exhibit 4.7

 
FORM of
UNSECURED PROMISSORY NOTE
 

US$_____________
___________, 2005
Boca Raton, Florida

FOR VALUE RECEIVED, Power2Ship, Inc., a Nevada corporation (the "Maker"), promises to pay to the order of _____________ (the "Holder"), at ________________________________________, or such address as the Holder may from time to time designate in writing to the Maker, the principal sum of ________________________ Dollars (US$_________), with interest on the unpaid balance by the maturity date defined hereinafter.

Simple interest on this Note at the rate of  16% per annum shall accrue and be payable on the maturity date as hereinafter defined.

The principal amount of this Note and all accrued but unpaid interest shall be due and payable on _____________, 2005 (the "Maturity Date").

Notwithstanding anything herein to the contrary, it shall be mandatory for the Company to prepay the Note by the amount of any debt or equity capital received by the Company at any time during the term of the Note that exceeds the amount required by the Company to pay its payroll, carrier invoices, office rent and utilities, and miscellaneous accounts payable more than 30 days past due.

The following shall constitute "Events of Default" under this Note:
 
 
1.
The Maker fails to make any payment required by this Note within 15 days of its due date.
 
 
 
2.
The Maker becomes insolvent or unable to pay its debts as they mature or makes an assignment for the benefit of creditors, or any proceeding is instituted by or against the Maker alleging that the Maker is insolvent or unable to pay its debts as they mature, and any such proceeding, if involuntary, is not dismissed or stayed on appeal or otherwise within 30 days.
 
 
 
3.
Any transfer by the Maker of any of its assets or business, except in the ordinary course of business consistent with past practice.
 
 
Time is hereby declared to be of the essence, and upon the occurrence of an Event of Default, the entire unpaid principal amount of this Note together with accrued but unpaid interest thereon, shall at once become due and payable at the option of the Holder upon written notice to the Maker. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.
 
 
 

 
 
Exhibit 4.7
 
It is the intent of the parties that in no event shall the amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest permitted by applicable law, as may be in effect from time-to-time, and in the event the amount of interest due or payable hereunder exceeds such maximum rate, interest shall be reduced to the maximum amount that is permitted by applicable law and the payment of any such excess shall be deemed to be a prepayment of principal.

This Note shall be governed and construed in accordance with the laws of the State of Florida, without regard to conflict of laws principles thereof. The Maker hereby consents to the jurisdiction of the courts located in the counties of Palm Beach and Broward, State of Florida, as the exclusive forum to resolve any disputes arising out of this Note. The Maker hereby waives any objection it may have to the jurisdiction of such courts or the laying of venue in such counties.

The Maker agrees to pay or reimburse the Holder and any other holder hereof of all costs and expenses of preparing, seeking advice in regard to, enforcing, and preserving its rights under this Note or any guarantee, document or instrument executed in the connection herewith (including reasonable attorneys' fees and costs and reasonable time charges of attorneys who may be employees of the Holder, whether in or out of court, in original or appellate proceedings or in bankruptcy.)

Except as provided in this Note, presentment, protest, notice, notice of dishonor, demand for payment, notice of protest and notice of non-payment are hereby waived.

The failure or delay by the Holder of this Note in exercising any of his rights hereunder in any instance shall not constitute a waiver thereof in that or any other instance. The Holder of this Note may not waive any of its rights, except in an instrument in writing signed by the Holder.

This Note may not be amended except in a writing signed by the Maker.


POWER2SHIP, INC., a Nevada corporation     


By:  /s/ Richard Hersh
Richard Hersh
Chief Executive Officer
 
 
2 of 2
 

 
Exhibit 4.13
 
 
Form of Warrant for Series C 10% unsecured convertible debenture offering




NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT W2005-______

WARRANT TO PURCHASE COMMON STOCK OF

POWER2SHIP, INC.

This is to certify that _______________ (the "Holder") is entitled, subject to the terms and conditions hereinafter set forth, to purchase ______________________(______) shares of Common Stock, par value $.001 per share (the "Common Shares"), of Power2Ship, Inc. a Nevada corporation (the "Company"), from the Company at the price per share and on the terms set forth herein and to receive a certificate for the Common Shares so purchased on presentation and surrender to the Company with the subscription form attached, duly executed and accompanied by payment of the purchase price of each share purchased either in cash or by certified or bank cashier's check or other check acceptable to the Company, payable to the order of the Company.

The purchase rights represented by this Warrant are exercisable commencing with the date hereof through and including October 31, 2008 at a price per Common Share of $0.15.

Notwithstanding any provisions herein to the contrary, the Holder may, by electing on the attached Subscription Form, exercise the Warrant for a number of Common Shares determined in accordance with the following formula:
 
X = Y(A-B)
A

Where:
X = The number of Common Shares to be issued to the Holder
Y = The number of Common Shares for which this Warrant is being exercised
A = The fair market value of one share Common Share
B = Exercise Price per Common Share (as adjusted to the date of such exercise)


For purposes of the foregoing calculation, the "fair market value" per share shall be the closing price of the Common Shares on the exchange or electronic quotation service on which the Common Shares are then listed or quoted, or if such a price is not available, the average of the high and low bid and asked prices for the Common Shares on such date.

The purchase rights represented by this Warrant are exercisable at the option of the registered owner hereof in whole or in part, from time to time, within the period specified; provided, however, that such purchase rights shall not be exercisable with respect to a fraction of a Common Share. In case of the purchase of less than all the Common Shares purchasable under this Warrant, the Company shall cancel this Warrant on surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares purchasable hereunder.
 
This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder of the Company, or to any other rights whatever except the rights herein expressed and such as are set forth, and no dividends shall be payable or accrue in respect of this Warrant or the interest represented hereby or the Common Shares purchasable hereunder until or unless, and except to the extent that, this Warrant shall be exercised.

In the event that the outstanding Common Shares hereafter are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

(a) The aggregate number, price and kind of Common Shares subject to this Warrant shall be adjusted appropriately;
 
 
2

 
 
Exhibit 4.13
 
(b) Rights under this Warrant, both as to the number of subject Common Shares and the Warrant exercise price, shall be adjusted appropriately; and

(c) In the event of dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, this Warrant shall terminate, but the registered owner of this Warrant shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise this Warrant in whole or in part to the extent that it shall not have been exercised.

The foregoing adjustments and the manner of application of the foregoing provisions may provide for the elimination of fractional share interests.

The Company shall not be required to issue or deliver any certificate for Common Shares purchased on exercise of this Warrant or any portion thereof prior to fulfillment of all the following conditions:


(a) The completion of any required registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other government regulatory body which is necessary;

(b) The obtaining of any approval or other clearance from any federal or state government agency which is necessary;

(c) The obtaining from the registered owner of the Warrant, as required in the sole judgment of the Company, a representation in writing that the owner is acquiring such Common Shares for the owner's own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof, if the Warrants and the related shares have not been registered under the Securities Act; and

(d) The placing on the certificate, as required in the sole judgment of the Company, of an appropriate legend and the issuance of stop transfer instructions in connection therewith if this Warrant and the related shares have not been registered under the Act to the following effect:

"THE SECURITUIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR THE LAWS OF ANY STATE AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION PERTAINING TO SUCH SECURITIES AND PURSUANT TO A REPRESENTATION BY THE SECURITY HOLDER NAMED HEREON THAT SAID SECURITIES HAVE BEEN ACQUIRED FOR PURPOSES OF INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED."
 
 
of 3

 
 
Exhibit 4.13
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by the signature of its duly authorized officer.

 
POWER2SHIP, INC.
 
       
 
By:
   
   
Richard Hersh, Chief Executive Officer
 
  Dated:
________________, 2005
 
 
 
of 3

 

Exhibit 4.13
 
SUBSCRIPTION FORM

(To be executed by the registered holders to exercise the rights to purchase Common Shares evidenced by the within Warrant.)


Power2Ship, Inc.
903 Clint Moore Road
Boca Raton, Florida 33487

The undersigned, being the registered holder of the Warrant issued by Power2Ship, Inc. for the purchase of _______________ Common Shares issued ___________________ , 2005 accompanying this letter, hereby irrevocably exercises such Warrant for __________ Common Shares and herewith makes payment therefore by (check one): ____ check accompanying this Subscription Form or _____ cashless exercise in accordance with the Warrant, and requests that a certificate for such Common Shares be issued in the name of the undersigned and be delivered to the undersigned at the address stated below.

If such number of Common Shares shall not be all of the Common Shares issuable upon exercise of the attached Warrant, then a new Warrant shall be issued in the name of the undersigned for the balance remaining of such Common Shares less any fraction of a Common Share paid in cash.

Dated: _______________
             
         
     
Print Name of Investor
 
               
         
     
Print Name of Joint Investor
 
     
(if applicable)
 
               
         
     
Signature of Investor
 
               
         
     
Signature of Joint Investor
 
     
(if applicable)
 

 
Signature of Joint Investor
(if applicable)

 
Address :_________________________


 

Exhibit 4.14
 
THIS DEBENTURE IS ONE OF A SERIES OF DEBENTURES OF LIKE TENOR AND TERMS.

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS AVAILABLE.

SERIES D 8% UNSECURED CONVERTIBLE DEBENTURE

US$____________ 
_____________, 2006

         FOR VALUE RECEIVED, POWER2SHIP, INC., a Nevada corporation (the "Company"), hereby promises to pay to ________________ (the "Holder") having an address at __________________________________________ on the earlier to occur of i) June 30, 2008 or ii) the date the Company receives the proceeds from the sale of its securities in a private or public financing resulting in gross proceeds of at least Five Million Dollars ($5,000,000), subject to Holder's conversion and exchange rights as set forth elsewhere herein, the principal sum of ________________________________ ($_________), together with simple interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid balance at the rate of eight percent (8%) per annum from the date hereof until the principal hereof shall have been paid or converted. The Company shall provide Holder with at least ten (10) business days written notice prior to making such repayment during which time the Holder may elect to exercise their conversion or exchange right as set forth elsewhere herein.

         The Company shall pay interest semi-annually in arrears on June 30 and December 31 of each year that any portion of the principal balance is unpaid. Interest payments shall commence on December 31, 2006 and, at the sole discretion of the Company, may be paid in cash or with shares of common stock of the Company. If shares of common stock are used to pay interest, then the number of shares to be issued shall be calculated using the average closing price of the common stock for the ten (10) trading days immediately prior to the due date of the interest payment.

         All payments of principal and interest shall be made to the Holder at the address set forth above or such other address as the Holder shall notify the Company in writing ten (10) days prior to the due date of any payment or upon  any prepayment of this Debenture as provided herein.

         Subject to and in compliance with the provisions hereof, the Holder may, at its option, convert all or any portion of the outstanding principal balance of this Debenture, and all or any portion of the interest accrued thereon to such date, into shares of common stock of the Company (the "Common Stock") at a conversion price (the "Conversion Price") equal to eighty percent (80%) of the price per common share the Company offers in any subsequent private offering at any time prior to the full repayment or conversion of the Debenture and interest accrued thereon, but in no event shall the Conversion Price be less than $0.02 per share or greater than $0.10 per share. Also, the Holder may, at  its option, exchange all or any portion of the outstanding principal balance of this Debenture, and all or any portion of the interest accrued thereon to such date, for any securities being offered by the Company at any time prior to the full repayment or conversion of the Debenture and interest accrued thereon.

         The Holder hereof shall communicate their intention to convert all or any portion of the principal amount of this Debenture, and all or any portion of interest accrued through such conversion, by surrendering this Debenture with the Form of Notice of Election to Convert attached hereto duly completed and signed, to the Company at its address for notice set forth elsewhere herein. The Holder hereof shall communicate their intention to exchange all or any portion of the principal amount of this Debenture, and all or any portion of interest accrued through such conversion date, by surrendering this Debenture with properly completed subscription documents related to the subsequent offering into which they seek to invest, to the Company at its address for notice set forth elsewhere herein.

 
 

 
 
Exhibit 4.14
        
 
If the Holder elects to convert or exchange less than the entire principal amount of this Debenture and interest accrued to the date of such conversion, the Company shall issue or cause to be issued and delivered to the Holder, at its expense, a new Debenture evidencing the outstanding amount of principal due hereunder after giving effect to the amount applied to the conversion, which such Debenture shall, except as to the principal amount thereof, be identical to this Debenture in all respects.

         The Company may, at its option, redeem the Debenture for an amount equal the total outstanding principal amount of this Debenture and accrued but unpaid interest thereon. To so redeem, the Company shall provide written notice to the Holder of its intent to redeem, which notice shall specify the amount of the Debenture that the Company intends to redeem and the closing date (which shall be on the fifteenth (15) business day after the date of such notice). The Holder may, at its option, convert or exchange as defined herein, any portion of this Debenture and accrued interest thereon after receiving the written redemption notice, provided that the Company receives Holders' written notice of their intent to convert or exchange is received by the Company at least two (2) business days prior to the closing date specified in the written redemption notice.

         If the Company, at any time while this Debenture is outstanding shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

         Subject to receipt by Company of notice from Holders representing in excess of 50% of the principal amount of Debentures then outstanding, the Company shall be in default under the terms of this Debenture if it (i) fails to make a payment of principal or interest when due; or (ii) makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, suffers an order for relief under any federal bankruptcy law, petitions or applies to any tribunal for the appointment of a custodian, receiver or any trustee for the Company or any substantial part of its assets, or (iii) commences any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect; or (iv) has any such petition or application, or any such proceeding, filed or commenced against it, which remains undismissed, unstayed or unbonded for a period of thirty (30) days or more; or (v) by any act or omission, shall indicate consent to, approve or acquiescence in any such petition, application or proceeding or the appointment of a custodian, receiver or any trustee for all or any substantial part of its properties, or (vi) allows such custodianship, receivership, or trusteeship to continue undischarged, unstayed or unbonded for a period of thirty (30) days or more, or (vii) violates any term or provision of this Debenture (except as set forth in subsection (i) of this paragraph) and same remains uncured for a period of ten (10) business days after notice thereof has been received from Holders representing in excess of 50% of the principal amount of Debentures then outstanding (unless a longer cure period is set forth in any of the aforementioned agreements), and the outstanding principal amount of this Debenture, together with all accrued and unpaid interest thereon, shall be and become immediately due and payable.

         Notwithstanding any other provision of this Debenture, interest under this Debenture shall not exceed the maximum rate permitted by law; and if any amount is paid under this Debenture as interest in excess of such maximum rate, then the amount so paid will not constitute interest but will constitute a prepayment on account of the principal amount of this Debenture. If at any time the interest rate under this Debenture would, but for the provision of the preceding sentence, exceed the maximum rate permitted by law, then the outstanding principal balance of this Debenture shall, on demand by the Holder
of this Debenture, become and be due and payable.

         All payments under this Debenture shall be made without deduction for any taxes of any nature now or hereafter imposed.

 
 

 
         
Exhibit 4.14
 
The provisions of this Debenture shall in all respects be construed according to, and the rights and liabilities of the parties hereto and shall in all respects be governed by, the laws of the State of Florida. This Debenture shall be deemed a contract made under the laws of the State of Florida to be fully performed therein, and the validity of this Debenture and all rights and liabilities hereunder shall be determined under the laws of said State without reference to the conflicts of laws provisions thereof. For purposes of any proceeding involving this Debenture, the Company and the Holder hereby submit to the exclusive jurisdiction of the courts of the State of Florida and of the United States having jurisdiction in the County of Palm Beach, State of Florida, and agree not to raise and waive any objection to or defense based upon the venue of any such court or based upon forum non conveniens.

         In the event this Debenture is placed in the hands of an attorney for collection or for enforcement or protection of the security, or if Holder incurs any costs incident to the collection of the indebtedness evidenced hereby or the enforcement or protection of the security, the Company agrees to pay to Holder all reasonable attorneys' fees so incurred, all court and other costs and the reasonable costs of any other collection efforts, including all costs incurred in collecting any judgment and in any appellate or bankruptcy proceeding. The Company agrees to pay any documentary stamp taxes, intangible taxes or other taxes which may now or hereafter apply to this Debenture or any payment made in respect of this Debenture.

         No delay or omission on the part of the Holder in the exercise of any right hereunder shall operate as a waiver of such right or of any other right under this Debenture. A waiver by the Holder of any right or remedy conferred to it hereunder on any one occasion shall not be construed as a bar to, or waiver of, any such right and/or remedy as to any future occasion. The Company and all persons now or hereafter becoming obligated or liable for the payment hereof do jointly and severally waive demand, notice of non-payment, protest, notice of dishonor and presentment. No failure to accelerate the indebtedness evidenced hereby by reason of default hereunder, acceptance of a past-due installment or other indulgences granted from time to time, shall be construed as a novation of this Debenture or as a waiver of such right of acceleration or of the right of the Holder thereafter to insist upon strict compliance with the terms of this Debenture or to prevent the exercise of such right of acceleration or any other right granted hereunder or by applicable law.

         This Debenture may be amended only by a written instrument executed by the Company and the Holder.

         IN WITNESS WHEREOF, POWER2SHIP, INC. has caused this Series D Unsecured Convertible Debenture to be executed in its corporate name by its Chief Executive Officer, thereunto duly authorized.

Dated: ___________, 2006

                                           POWER2SHIP, INC.



                                           By:  ______________________________
                                                Richard Hersh
 
 
 

 
 
Exhibit 4.14

 
 

FORM OF

NOTICE OF ELECTION TO CONVERT

(To be Executed by the Holder in order to Convert this Debenture)

The undersigned hereby elects to convert the attached Series D Unsecured Convertible Debenture into shares of common stock (the "Common Stock"), of Power2Ship, Inc. (the "Company") according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if
any.

Conversion calculations:          ______________________________________________                                
  Date to Effect Conversion  
     
     
     
  Principal Amount of Debenture to be Converted  
     
  Payment of Interest in Kind       [ ] Yes  
                                        [ ] No  
     
  If yes, $ _________ of Interest Accrued on  
                             Account of Conversion at  
                             Issue  
     
     
 
Number of shares of Common Stock to be Issued
 
     
     
 
Applicable Conversion Price
 
     
     
 
Signature
 
     
     
  Name  
     
     
 
Address
 
 
 
Exhibit 4.15
 
NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”) OR ANY STATE SECURITIES LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISRTARTION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS AVAILABLE.

10% CONVERTIBLE DEBENTURE

US $ __________ 
                                                                                               Boca Raton, Florida

FOR VALUE RECEIVED, NuState Energy Holdings, Inc., a Nevada corporation (the “Maker”), with offices located at 902 Clint Moore Road, Suite 204, Boca Raton, Florida 33487, promises to pay to the order of _____________ (the “Holder”), residing at ___________________________, or such address as the Holder may from time to time designate in writing to the Maker, the principal sum of __________________ (US$______) together with interest accrued on unpaid balance at the rate of Ten Percent (10%) per annum on ______________.

Subject to and in compliance with the provisions hereof, until this Debenture and all accrued interest thereon has been repaid in full, the Holder shall have the option of converting all or any portion of the outstanding principal balance of this Debenture, and all or any portion of the interest accrued thereon to such date, into shares of common stock, par value $0.001, of the Maker (the “Common Stock”) at a conversion price (the “Conversion Price”) equal to Fifty Percent (50%) discount to the average closing of the common stock for ten (10) trading days immediately preceding the conversion date subject to a minimum Conversion Price of One Cent ($0.01) per share. The Holder hereof shall communicate its intention to convert all or any portion of the principal amount of this Debenture and all or any portion of interest accrued through such conversion date by surrendering this Debenture, with the Form of Notice of Election to Convert attached as Exhibit “A” hereto duly completed and signed, to the Maker at its address for notice set forth elsewhere herein.

The following shall constitute “Events of Default” under this Debenture:

 
1.
The Maker fails to make any payment required by this Debenture within 15 days of its due date.
2.           The Maker becomes insolvent or unable to pay its debts as they mature or makes an assignment for the benefit of creditors, or any proceeding is instituted by or against the Maker alleging that the Maker is insolvent or unable to pay its debts as they mature, and any such proceeding, if involuntary, is not dismissed or stayed on appeal or otherwise within 30 days.

 
 

 
 
Exhibit 4.15
 
Time is hereby declared to be of the essence, and upon the occurrence of an Event of Default, the entire unpaid principal amount of this Debenture together with accrued but unpaid interest thereon, shall at once become due and payable at the option of the Holder upon written notice to the Maker. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.

It is the intent of the parties that in no event shall the amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest permitted by applicable law, as may be in effect from time-to-time, and in the event the amount of interest due or payable hereunder exceeds such maximum rate, interest shall be reduced to the maximum amount that is permitted by applicable law and the payment of any such excess shall be deemed to be a prepayment of principal.

This debenture shall be governed and construed in accordance with the laws of the State of Florida, without regard to conflict of laws principles thereof. The Maker hereby consents to the jurisdiction of the courts located in Palm Beach County, Florida, as the exclusive forum to resolve any disputes arising out of this Debenture. The Maker hereby waives any objection it may have to the jurisdiction of such courts or the laying of venue in such counties.

The Maker agrees to pay or reimburse the Holder and any other holder hereof of all costs and expenses of preparing, seeking advice in regard to, enforcing, and preserving its rights under this Debenture or any guarantee, document or instrument executed in the connection herewith (including reasonable attorneys’ fees and costs and reasonable time charges of attorneys who may be employees of the Holder, whether in or out of court, in original or appellate proceedings or in bankruptcy.)

Except as provided in this Debenture, presentment, protest, notice, notice of dishonor, demand for payment, notice of protest and notice of non-payment are hereby waived.

The failure or delay by the Holder of this Debenture in exercising any of his rights hereunder in any instance shall not constitute a waiver thereof in that or any other instance. The Holder of this Debenture may not waive any of its rights, except in an instrument in writing signed by the Holder.

This Debenture may not be amended except in writing signed by the Maker.
 
  By: /s/ Frank Reilly  
    Frank P. Reilly, its Chief Executive Officer  
       
  Date:    
 
Exhibit 4.23
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 10,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due November 30, 2011
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Amber Capital Fund   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TEN THOUSAND Dollars ( $ 10,000 ) together with accrued but unpaid interest on or before NOVEMBER 30, 2011 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
2

 
 
Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
3

 
 
(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
5

 
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

 
Exhibit 4.24
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 5,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due November 30, 2011
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Arthur Notini   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   FIVE THOUSAND Dollars ( $ 5,000 ) together with accrued but unpaid interest on or before NOVEMBER 30, 2011 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.
     
  By:
  Name:
S. Kevin Yates
  Title:
Chairman of the Board

 
8

 
 
EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

 
Exhibit 4.25
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 25,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due December 21, 2011
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Carmelo Luppino   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY FIVE THOUSAND Dollars ( $ 25,000 ) together with accrued but unpaid interest on or before December 21, 2011 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
2

 
 
Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
3

 
 
(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
5

 
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
8

 
 
EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.26
 

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 25,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due December 21, 2011
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Amber Capital Fund   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY FIVE THOUSAND Dollars ( $ 25,000 ) together with accrued but unpaid interest on or before December 21, 2011 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.27
 

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 20,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due March 15, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Amber Capital Fund   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY THOUSAND Dollars ( $ 20,000 ) together with accrued but unpaid interest on or before MARCH 15, 2012 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.28


 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 20,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due March 21, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Luppino Landscaping   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY THOUSAND Dollars ( $ 20,000 ) together with accrued but unpaid interest on or before MARCH 21, 2012 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 
 
 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.29
 
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 5,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due May 8, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Lu Hong Yue   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   FIVE THOUSAND Dollars ( $ 5,000 ) together with accrued but unpaid interest on or before MAY 8, 2012 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.30
 

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 20,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due May 8, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Xiacyue Zhen   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY THOUSAND Dollars ( $ 20,000 ) together with accrued but unpaid interest on or before MAY 8, 2012 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

Exhibit 4.31
 

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 25,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due April 30, 2013
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Amber Capital Fund   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY   FIVE THOUSAND Dollars ( $ 25,000 ) together with accrued but unpaid interest on or before April 30, 2013 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve  (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceeding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
7

 
 
Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
8

 
 
EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9
 
Exhibit 4.32
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
$ 25,000
NuState Energy Holdings, Inc.

18% Convertible Note

Due August 22, 2012

This 18% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada corporation ( the “Obligor” ), to Amber Capital Fund ( the “Holder” ).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of TWENTY FIVE THOUSAND Dollars ($ 25,000) together with accrued but unpaid interest on or before August 22, 2012 ( the “Maturity Date” ) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to eighteen percent (18%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):

Section 1. Right of Redemption . The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.

Section 2. Events of Default.

(a) An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i) Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
 
 

 
 
(ii) The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or

(iii) The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b) During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.

Section 3 . Conversion.

(a) Conversion at Option of Holder.

(i) This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30th) day after a Conversion Date.

(ii) The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A”   (a “Conversion Notice” ). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15th) day after the applicable Conversion Date.

 
 

 
 
(b) Conversion Price and Adjustments to Conversion Price .

(i) The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 or more than $0.10.
 
(ii) If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

(iii) If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv) If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

 
 

 
 
(v) In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi) The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii) All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.

(viii) In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d) No Taxes on Certificates . The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

 
 

 
 
Section 4 . Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5. Definitions . For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.

“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6. Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
 
or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

 
 

 
 
Section 7. No Stockholder Rights . This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

Section 8. Replacement . If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9. Ranking; Seniority . This Note is a direct obligation of the Obligor. This Note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10. Enforcement Expenses . If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Section 11. Waiver . Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12. Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13. Payment Dates . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 
 

 
 
Section 14 . WAIVER OF TRIAL BY JURY . THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15. Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
 
 
NuState Energy Holdings, Inc.
   
 
By: /s/ Kevin Yates
 
Name: S. Kevin Yates
 
Title: Chairman of the Board
 
 
 

 
 
EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
Exhibit 4.33
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 12,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due April 30, 2013
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Robert Green   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWELVE THOUSAND Dollars ( $ 12,000 ) together with accrued but unpaid interest on or before April 30, 2013 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceeding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 
 
 
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EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
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Exhibit 4.34
 

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 10,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due May 8, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Yick-Fan Suen   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TEN THOUSAND Dollars ( $ 10,000 ) together with accrued but unpaid interest on or before MAY 8, 2012 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share.  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
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“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
     
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”
 
 
NOTICE OF CONVERSION
 
 
(To be executed by the Holder in order to convert this 12% Convertible Note)
 

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn:  Chief Executive Officer

The undersigned hereby irrevocably elects to convert $_______________ of the principal amount of the above Note into shares of Common Stock and a share purchase Warrant of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.
 
 
Conversion Date:
   
 
Amount of Note to be converted:
 
$
 
Amount of Note remaining after conversion:
 
$
 
Conversion Price per share:
 
$0.005
 
Number of shares of Common Stock to be issued:
   
 
3-year Warrant to purchase the following number of shares of Common Stock at $0.025 per share:
   
 
Authorized Signature:
 
   
 
Printed Name:
   
 
Title:
   
 
Phone Number:
   
 
Address:
 
 
   

 
Exhibit 4.35
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $ 20,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due April 30, 2013
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to   Carmelo Luppino   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY   THOUSAND Dollars ( $ 20,000 ) together with accrued but unpaid interest on or before April 30, 2013 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve  (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceeding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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                               (iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9
 
 
 
Exhibit 4.36
 
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED (THE “ ACT ”), OR ANY STATE SECURTIES LAWS AND THIS PROMISSORY NOTE NOR ANY INTEREST THEREON MAY BE OFFERED, SOLD, TRANFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS UNAVAILABLE.

12.5 % PROMISSORY NOTE

US $18,000             
                                                                                              Columbia, SC

FOR VALUE RECEIVED in the form of legal services to the corporation, NuSTATE ENERGY HOLDINGS, Inc. , a Nevada corporation (the “Maker”), promises to pay to the order of Thomas P. Murphy (the “Holder”), at 555 NE 34 Street, #603 Miami, Florida 33137 , or such address as the Holder may from time to time designate in writing to the Maker, the principal sum of Eighteen Thousand Dollars ($18,000) together with Twelve and a half Percent (12.5%) simple interest on the unpaid balance of this Note on the Maturity Date as hereinafter defined.

The principal amount of this Note and all accrued but unpaid interest shall be due and payable on the one year anniversary of this Note (the “Maturity Date”). Notwithstanding the foregoing, the Maker may, at its option, redeem the outstanding portion of this Note with no prepayment penalty. To so redeem, the Maker shall provie written notice to the Holder of its intent to redeem, which notice shall specifify the amount of the Note that the Company intends to redeem and the closing date (which shall be on the fifteenth (15) business day after the date of such notice).

The following shall constitute “Events of Default” under this Note:

 
1.
The Maker fails to make any payment required by this Note within 15 days of its due date.

 
2.
The Maker becomes insolvent or unable to pay its debts as they mature or makes an assignment for the benefit of creditors, or any proceeding is instituted by or against the Maker alleging that the Maker is insolvent or unable to pay its debts as they mature, and any proceeding, if involuntary, is not dismissed or stayed on appeal or otherwise within 30 days.

Time is hereby declared to be of the essence, and upon the occurance of an Event of Default, the entire unpaid principal amount of this Note together with accrued but unpaid interest thereon, shall at once become due and payable at the option of the Holder upon written notice to the Maker. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.

It is the intent of the parties that in no event shall the amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest permitted by applicable law, as may be in effect from time-to-time, and in the event the amount of interest due or payable hereunder exceeds such maximum rate, interest shall be reduced to the maximum amount that is permitted by applicable law and the payment of any such excess shall be deemed to be prepayment of principal.

This Note shall be governed and construed in accordance with the laws of the State of South Carolina, without regard to conflict of laws principles thereof. The Maker hereby consents to the jurisdiction of the courts located in Richland County, South Carolina as the exclusive forum to resolve any disputes arising out of this Note. The Maker hereby waives any objection it may have to the jurisdiction of such courts or the laying of venue in such counties.

 
 

 
 
The Maker agrees to pay or reimburse the Holder and any other holder hereof of all costs and expenses of preparing, seeking advice in regard to, enforcing, and preserving its rights under this Note or any guarantee, document or instrument executed in the connection herewith (including resonable attorney’s fees and costs and resonable time charges of attorneys who may be employees of the Holder, whether in or out of court, in original or appelate proceedings or in bankruptcy.)

Except as provided in this Note, presentment, protest, notice, notice of dishonor, demand for payment, notice of protest and notice of non-payment are hereby waived.

The failure or delay by the Holder of this Note in exercising any of his rights hereunder in any instance shall not constitute a waiver hereof in that or any other instance. The Holder of this Note may not waive any of its rights, except in an instrument in writing signd by the Holder.

This note may not be amended except in writing signed by the Maker.

       
 
By:
/s/ Kevin Yates  
    Kevin Yates, its Chief Executive Officer  
       
  Date: October 1, 2011  
 
Exhibit 4.37
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
 
No.     $30,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due June 30, 2013
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to Jeff Zimmerman ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of Thirty Thousand Dollars ($30,000) together with accrued but unpaid interest on or before June 30, 2013 ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ), a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after six months of the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the market price based on a 30 day trading average, as adjusted pursuant to the other terms of this Section 3(b) providing the conversion price cannot be less than $0.01 per share (the “ Conversion Price ”).

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
 
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(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
 
5

 
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
6

 
 
Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
7

 
 
Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
     
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 
 
 
8

 
 
EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9
 
 
Exhibit 4.38
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         $ 15,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due March 24, 2012

This 12% Convertible Note (“ this note ”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “ Obligor ”), to _ Elisha Cheung _ (the “ Holder ”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of _ FIFTEEN THOUSAND Dollars ($ 15,000 ) together with accrued by unpaid interest on or before MARCH 24, 2012 (the “ Maturity Date ”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “ Redemption Notice ”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “ Redemption Amount ”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “ Event of Default ,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 
 

 
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.


 
 

 
 
Section 3.                        Conversion

(a)            Conversion at Option of Holder.
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.

(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“ Common Stock Equivalents ”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
 

 
 
(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “ Dilutive Option ”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.

 
 

 
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.

 
 

 
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
   
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
 
Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

 
 

 
 
Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                        Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 
 

 
 
Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 
 
 
Exhibit 4.39
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $10,000
 

 
NuState Energy Holdings, Inc.
 
12% Convertible Note
 
Due April 30, 2013
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to Elisha Cheung ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TEN THOUSAND Dollars ( $ 10,000 ) together with accrued but unpaid interest on or before _APRIL 30, 2013_ ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to eighteen percent (12%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 
 
 
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EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9
 
 
Exhibit 4.40
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $25,000
 

 
NuState Energy Holdings, Inc.
 
18% Convertible Note
 
Due June 20, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada  corporation ( the “Obligor” ), to Elisha Cheung   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY FIVE THOUSAND Dollars ( $ 25,000 ) together with accrued but unpaid interest on or before _JUNE 20, 2012_ ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to eighteen percent (18%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9

 
 
 
Exhibit 4.41
 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( THE “SECURITIES ACT” ), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
  $25,000
 

 
NuState Energy Holdings, Inc.
 
18% Convertible Note
 
Due June 12, 2012
 
This 12% Convertible Note ( “this Note” ) is issued by NuState Energy Holdings, Inc., a Nevada corporation ( the “Obligor” ), to Arthur Notini   ( the “Holder” ).
 
FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of   TWENTY FIVE THOUSAND Dollars ( $ 25,000 ) together with accrued but unpaid interest on or before _JUNE 12, 2012_ ( the “Maturity Date” ) in accordance with the following terms:
 
Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to eighteen percent (18%).  Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes.  In the event a portion or all of this Note is converted into the Obligor’s common stock ( “Common Stock” ) pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately.  All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.
 
This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters -- i.e. initial capital letters):
 
Section 1 .                        Right of Redemption .   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice ( the “Redemption Notice” ) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date.  In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount” ).  The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30th) business day after the Redemption Notice.
 
 
 

 
 
Section 2 .                       Events of Default .
 
(a)            An “Event of Default” , wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notice to Obligor of such failure to pay;
 
(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured with in the time prescribed; or
 
(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.
 
(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration, at the Holder’s election, shall become immediately due and payable in cash.  In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below).  The Holder need not provide and the Obligor hereby waives any presentment, demand, protest or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law.  Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder.  No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
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Section 3 .                       Conversion .
 
(a)            Conversion at Option of Holder .
 
(i)            This Note shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below).  A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note.  The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below).  The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice” ).  The date on which a Conversion Notice is delivered is the “Conversion Date.”   The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion.  In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof.  Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fiftieth (15 th ) day after the applicable Conversion Date. .
 
(b)            Conversion Price and Adjustments to Conversion Price .
 
 
(i)           The conversion price in effect on any Conversion Date shall be equal to 80% of the average closing price of the Common Stock for the 30 trading days immediately preceding the date Subscriber submits a Conversion Notice to the Company, as adjusted pursuant to the other terms of this Section 3(b) (the “Conversion Price” ). Notwithstanding the foregoing, in no event shall the Conversion Price per share be less than $0.005 per or more than $0.10.

(ii)           If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that are convertible into or exchangeable for shares of Common Stock ( “Common Stock Equivalents” ) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B)  upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

 
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(iii)           If the Obligor, at any time while this Note is outstanding, shall (a)  pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options or warrants (a “Dilutive Option” ) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option.  However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed.  Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.
 
(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to: (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share exchange, and the Holder of this Note shall be entitled upon such event to receive such amount of securities, cash or property as the shares of the Common Stock of the Obligor into which the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note could have been converted immediately prior to such reclassification or share exchange would have been entitled, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon.  The entire prepayment price shall be paid in cash.  This provision shall similarly apply to successive reclassifications or share exchanges.
 
(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.
 
 
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(vii)            All calculations under this Section 3 shall be rounded up to the nearest $0.001 or whole share of Common Stock.
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into another Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued.  In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction.  The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event.  This provision shall similarly apply to successive such events.
 
(d)             No Taxes on Certificates .   The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.
 
Section 4 .                        Exchange .   In the event that (a) the Obligor shall issue any convertible debt instrument ( “New Convertible Debt Security” ) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange” ); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board).  Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.
 
Section 5 .                        Definitions .   For the purposes hereof, the following terms shall have the following meanings:
 
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
 
“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
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“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.
 
“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.
 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
 
“Transaction Documents” means this Note or any other agreement including, without limitation, the Warrant.
 
“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
 
Section 6 .                        Notices .                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:   (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) The addresses and facsimile numbers for such communications shall be:
 
If to the Obligor, to:
NuState Energy Holdings, Inc.
 
1201 Main Street, Suite 1980  
 
Columbia, SC 29201
 
Attn:  S. Kevin Yates
 
Fax No.:   (866) 695-9680
 
   
If to the Holder:
To the address set forth under such Purchaser’s name on the signature page attached hereto.

or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.
 
Section 7 .                        No Stockholder Rights .   This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 8 .                        Replacement .   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.
 
 
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Section 9 .                        Ranking; Seniority .   This Note is a direct obligation of the Obligor.  This Note ranks pari passu   with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein.  No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.
 
Section 10 .                        Enforcement Expenses .   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses of the Holder in any action in connection with this Note that are incurred: (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b)  collecting any sums which become due to the Holder, (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.
 
Section 11 .                        Waiver .   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver must be in writing.
 
Section 12 .                        Severability .   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest.  The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.
 
Section 13 .                        Payment Dates .   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
Section 14 .                        WAIVER OF TRIAL BY JURY .   THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
 
 
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Section 15 .                        Governing Law .   This Note shall be governed by and construed in accordance with the laws of the State of South Carolina, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the state courts of the State of South Carolina sitting in Richland County, South Carolina in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.
 
IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
  By:
/s/ Kevin Yates
 
  Name:
S. Kevin Yates
 
  Title:
Chairman of the Board
 

 
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EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert this 18% Convertible Note)

To:
NuState Energy Holdings, Inc.
1201 Main Street, Suite 1980
Columbia, SC 29201
Attn: S. Kevin Yates

The undersigned hereby irrevocably elects to convert $_____________ of the principal amount of the above Note into shares of Common Stock of NuState Energy Holdings, Inc., according to the conditions stated therein, as of the Conversion Date written below.

Conversion Date:
Applicable Conversion Price:
Signature:
Name:
Address:
Amount to be converted: $
Amount of Note unconverted: $
Conversion Price per share:
Number of shares of Common
Stock to be issued:
Please issue the shares of
Common Stock in the following
name and to the following
address:
Issue to:
Authorized Signature:
Name:
Title:
Phone Number:
 
9
 
 
Exhibit 4.42
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         $   15,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due _ March 14, 2012

This 12% Convertible Note (“this note”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “Obligor”), to _ Arthur Notini   (the “Holder”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of _ FIFTEEN THOUSAND Dollars ($15,000 ) together with accrued by unpaid interest on or before _ MARCH_14, 2012 (the “Maturity Date”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “Redemption Notice”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 
 

 
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.

 
 
 

 
 
Section 3.                        Conversion

(a)            Conversion at Option of Holder.
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.

(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.
 
 
 

 
 
(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distribtuions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “Dilutive Option”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.
 
 
 

 
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
 

 
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
   
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
 
Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
 
 

 
 
Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                        Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
 
 

 
 
Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
 
NuState Energy Holdings, Inc.
 
       
       
       
 
By: /s/ Kevin Yates  
  Name: S. Kevin Yates  
  Title: Chairman of the Board  
 
Exhibit 4.43
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         $   25,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due _ December 21, 2011

This 12% Convertible Note (“this note”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “Obligor”), to _ Carmelo Luppino   (the “Holder”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of _ TWENTY FIVE THOUSAND Dollars ($25,000 ) together with accrued by unpaid interest on or before _ DECEMBER_21, 2011 (the “Maturity Date”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “Redemption Notice”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 
 

 
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.
 
 
 

 
 
Section 3.                        Conversion

(a)            Conversion at Option of Holder.
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Ten Thousand Dollars ($10,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.

(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.
 
 
 

 
 
(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distribtuions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “Dilutive Option”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.
 
 
 

 
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
 

 
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
   
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
 
Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
 
 

 
 
Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                        Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
 
 

 
 
Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
  NuState Energy Holdings, Inc.  
       
       
       
  By: /s/ Kevin Yates  
 
Name:
S. Kevin Yates  
  Title: Chairman of the Board  
Exhibit 4.44
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

          $  10 ,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due _ February 24, 2013

This 12% Convertible Note (“this note”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “Obligor”), to _ Pocket MD, LLC   (the “Holder”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of _ TEN THOUSAND Dollars ($10,000 ) together with accrued by unpaid interest on or before _ February_24, 2013 (the “Maturity Date”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “Redemption Notice”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
 
 

 

(i)              Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)              The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.

Section 3.                        Conversion

(a)            Conversion at Option of Holder.

(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Five Thousand Dollars ($5,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.

 
 

 
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.

(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distribtuions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.
 
 
 

 

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “Dilutive Option”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.
 
 
 

 

(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
 

 

“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 

 
If to the Obligor, to:   NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
 
                                                                                                           

If to the Holder:                                                             To the address set forth under such Purchaser’s name on the signature pages attached hereto.

Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
 
 

 

Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                       Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
 
 

 

Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.
 
 
NuState Energy Holdings, Inc.
 
     
     
       
 
By:
/s/ Kevin Yates  
  Name:  S. Kevin Yates  
  Title:  Chairman of the Board  
       

 
Exhibit 4.45
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         $25,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due September 20, 2013

This 12% Convertible Note (“ this Note ”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “ Obligor ”), to Carmine Luppino   (the “Holder”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of  Twenty Five Thousand Dollars ($25,000) together with accrued by unpaid interest on or before September 20, 2013 (the “ Maturity Date ”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “Redemption Notice”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 
 

 
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.

Section 3.                        Conversion
 
(a)            Conversion at Option of Holder.
 
 
 

 
 
(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Five Thousand Dollars ($5,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.

(ii)            The Holder shall effect conversions by delivering to the Obligor a
completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.
 
 
 

 
 
(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distribtuions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “Dilutive Option”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.
 
 
 

 
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
 

 
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
                                          
Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
 
 

 
 
Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                        Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
 
 

 
 
Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.

NuState Energy Holdings, Inc.



By: _ /s/ Kevin Yates ____________
Name: S. Kevin Yates
Title: Chairman of the Board
 
Exhibit 4.46
 
NEITHER THIS NOTE NORE THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURTIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN AN TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         $10,000


NuState Energy Holdings, Inc.

12% Convertible Note

Due April 26, 2013

This 12% Convertible Note (“this Note”) is issued by NuState Energy Holdings, Inc., a Nevada corporation (the “Obligor”), to Art Notini  (the “Holder”).

FOR VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or his, her or its successors and assigns the principal sum of  ten thousand Dollars ($10,000) together with accrued by unpaid interest on or before April 26, 2013 (the “Maturity Date”) in accordance with the following terms:

Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to Twelve (12%). Interest shall be calculated as simple interest on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid to the Holder (such reference and all subsequent references to the “Holder” shall include his, her or its permitted and recognized successors and assigns) in whose name this Note is registered on the records of the Obligor regarding registration and transfers of Notes. In the event a portion or all of this Note is converted into the Obligor’s common stock (“Common Stock”) and share purchase warrants pursuant to Section 3 below, a pro rata portion (based on the percentage of this Note converted) of the accrued interest shall be due immediately. All accrued interest not paid in accordance with preceding sentence shall be paid on the Maturity Date.

This Note is subject to the following additional provisions (including the defined terms in Section 5 below that are spelled in title case letters –i.e. initial capital letters):

Section 1.  Right of Redemption.   The Obligor at its option shall have the right, by giving thirty (30) days advance written notice (the “Redemption Notice”) to the Holder, to redeem a portion or all amounts outstanding under this Note prior to the Maturity Date. In such event, the Obligor shall pay an amount equal to the principal amount being redeemed plus a pro rata portion (based upon the percentage of this Note being redeemed) of accrued interest (collectively referred to as the “Redemption Amount”). The Obligor shall deliver to the Holder the Redemption Amount on the thirtieth (30 th ) business day after the Redemption Notice.

Section 2.  Events of Default.

(a)            An “Event of Default,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
 
 

 
 
(i)            Any default in the payment of the principal of, interest on, or other charges in respect of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) and such payment is not paid within thirty (30) days after delivery of written notices to Obligor of such failure to pay;

(ii)            The Obligor shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Note (except as may be covered by Section 2(a)(i) hereof) or any Transaction Document (as defined in Section 6 below) which is not cured within the time prescribed; or

(iii)            The Obligor or any subsidiary of the Obligor shall commence, or there shall be commenced against the Obligor or any subsidiary of the Obligor, a proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Obligor or any subsidiary of the Obligor shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect, relating to the Obligor or any subsidiary of the Obligor; or there is commenced against the Obligor or any subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty-one (61) days; or the Obligor or any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of relief or other order approving such case or proceeding is entered; or the Obligor or any subsidiary of the Obligor suffers any appointment of any custodian, private or court appointed receiver or the link for it or any substantial part of its property, which continues undischarged or unstayed for a period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor makes a general assignment for the benefit of creditors; or the Obligor or any subsidiary of the Obligor shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Obligor or any subsidiary of the Obligor shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Obligor or any subsidiary of the Obligor for the purpose of effecting any of the foregoing.

(b)            During the time that any portion of this Note is outstanding, if any Event of Default has occurred, the full principal amount of this Note, together with interest and other amounts owing in respect thereof to date of acceleration, at the Holder’s election, shall become immediately due and payable in cash. In addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Note at any time after an Event of Default at the Conversion Price (as defined in Section 3(b)(i) below). The Holder need not provide and the Obligor hereby waives any presentment, demand, protest, or other notice of any kind; and immediately and without expiration of any grace period, the Holder may enforce any and all rights and remedies hereunder and all other remedies available under applicable law. Furthermore, a declaration of an Event of Default may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect or impair any of the Holder’s rights with respect to any subsequent Event of Default.

Section 3.                        Conversion

(a)            Conversion at Option of Holder.

(i)            This Note shall be convertible into shares of Common Stock and share purchase warrants at the option of the Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as defined in Section 5 below). The Holder shall be entitled to one warrant for every two common shares issued. The warrants shall have an expiry term of three years and an exercise price of $0.025 per share. A partial conversion shall be at least in the amount of Five Thousand Dollars ($5,000) of principal under this Note. The number of shares of Common Stock that may be issued upon a conversion hereunder equals the quotient obtained by dividing (x) the outstanding amount of this Note to be converted by (y) the Conversion Price (as defined in Section 3(b)(i) below). The Obligor shall deliver the applicable stock certificate to the Holder prior to the close of the thirtieth (30 th ) day after a Conversion Date.
 
 
 

 
 
(ii)            The Holder shall effect conversions by delivering to the Obligor a
completed notice in the form attached hereto as Exhibit “A” (a “Conversion Notice”). The date on which a Conversion Notice is delivered is the “Conversion Date.” The Holder shall physically surrender this Note to the Obligor in order to effect a conversion, whether a partial conversion or a total conversion. In the event of a partial conversion, in order to reflect the reduction in the outstanding principal amount of this Note and the reduction in the accrued and unpaid interest, the Obligor shall prepare and deliver to the Holder a new Note, identical in all respects to the surrendered Note except for the principal amount outstanding reflected on the first page hereof. Such replacement Note (resulting from the partial conversion) shall be delivered to the Holder prior to the close of the fifteenth (15 th ) day after the applicable Conversion Date.


(b)             Conversion Price and Adjustments to Conversion Price.

(i)            The conversion price in effect on any Conversion Date shall be $0.005 per share of Common Stock, as adjusted pursuant to the other terms of this Section 3(b) (the “ Conversion Price ”).

(ii)            If the Obligor or any subsidiary thereof, as applicable, at any time while this Note is outstanding, shall issue shares of Common Stock or rights, warrants, options, or other securities or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less than the Conversion Price, then, at the sole option of the Holder, the Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustments shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment to the Conversion Price shall be made (A) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the Original Issue Date or upon the conversion of any of the $500,000 in notes issued by the Obligor in the note offering that included this Note; (B) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any option plan, restricted stock plan or employee benefit plan of the Obligor now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the members of the Board of Directors of the Obligor; and (C) as long as the valuation of the Common Stock subsequently issued or any other securities convertible into Common Stock that are subsequently issued is at least equal to the Conversion Price, regardless of whether the issuance of securities pertains to the settlement of a debt, the consideration for a merger, consolidation or purchase of assets, strategic alliance, business relationship, partnership or joint venture (in each case, the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Obligor.
 
 
 

 
 
(iii)            If the Obligor, at any time while this Note is outstanding, shall (a) pay a stock or dividend or otherwise make a distribution or distribtuions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combined (including by way of reverse stock split) outstanding shares of Common Stock into a small number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Obligor, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, or combination or re-classification.

(iv)            If the Obligor, at any time while this Note is outstanding, shall issue rights, options, or warrants (a “Dilutive Option”) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Conversion Price, then the Conversion Price shall be reduced to the Exercise Price of such Dilutive Option. Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such Dilutive Option. However, upon the expiration of any such Dilutive Option to purchase shares of the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section, if any such right, option or warrant shall not have been exercised, immediately upon such expiration, the Conversion Price shall be recomputed. Effective immediately upon such expiration, the Conversion Price shall be increased to the price which it would have been had the adjustment of the Conversion Price due to the expired right, option or warrant causing the decrease in the Conversion Price not occurred; however such increase in the Conversion Price shall only apply to the extent such rights, options or warrants were not exercised prior to their expiration.

(v)            In case of any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, the Holder shall have the right thereafter to, at his, her or its option, to : (A) convert the then outstanding principal amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in respect of this Note into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of the Common Stock following such reclassification or share securities, cash or property as the shares of the Common Stock of the Obligor into which the then owing hereunder in respect of this Note could have been converted immediately prior to such outstanding principal amount of this Note, or (B) require the Obligor to prepay the outstanding principal amount of this Note, plus all interest and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This provision shall similarly apply to successive reclassifications or share exchanges.

(vi)            The Obligor shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock to be issued upon conversion of all outstanding amounts under this Note; and within sixty (60) calendar days following the receipt by the Obligor or a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Obligor shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(vii)            All calculations under this Section 3 shall be rounded up to the neared $0.001 or whole share of Common Stock.
 
 
 

 
 
(viii)            In case of any (1) merger or consolidation of the Obligor or any subsidiary of the Obligor with or into Person, or (2) sale by the Obligor or any subsidiary of the Obligor of more than one-half of the assets of the Obligor in one or a series of related transactions, a Holder shall have the right to: (A) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (B) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible note with a principal amount equal to the aggregate principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible note shall have terms identical (including those with respect to conversion) to the terms of this note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Notes were issued. In the case of Clause (B) above, the conversion price applicable for the newly issued shares of convertible preferred stock or convertible notes shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(d)             No Taxes on Certificates. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate.

Section 4.                        Exchange . In the event that (a) the Obligor shall issue any convertible debt instrument (“New Convertible Debt Security”) to any other Person after the final Closing and (b) such New Convertible Debt Security includes, and is issued pursuant to, different terms and conditions than this Notes, the Obligor shall have the option, in its sole discretion, to exchange such New Convertible Debt Security for this Note (an “Exchange”); provided, however, that no Exchange will be permitted if the New Convertible Debt Security includes or is issued pursuant to terms and conditions that are less favorable economically in the aggregate to the Holder (as determined by a majority of the independent members of the Board). Upon an Exchange, the Holder also shall be assigned all rights (and assume all obligations) provided in the definitive agreements pursuant to which the New Convertible Debt Security was sold.

Section 5.                        Definitions.                       For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

“Common Stock” means the common stock, no par value, of the Obligor and stock of any other class into which such shares may hereafter be changed or reclassified.
 
 
 

 
 
“Conversion Date” shall mean the date upon which the Holder gives the Obligor notice of their intention to effectuate a conversion of this Note into shares of the Common Stock as outlined herein.

“Original Issue Date” shall mean the date of the first issuance of this Note regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Transaction Documents” means this Note or any other agreement including, without limitation, the Security Agreement and the Warrants.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.

Section 6.                        Notices.                       Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party). The addresses and facsimile numbers of such communications shall be:
 
If to the Obligor, to: NuState Energy Holdings, Inc.
  1201 Main Street, Suite 1980
  Columbia, SC 29201
  Attn: S. Kevin Yates
  Fax No.: (866) 695-9680
   
   
If to the Holder: To the address set forth under such Purchaser’s name on the signature pages attached hereto.
 
Or at such other address and facsimile number and to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile, or receipt from a nationally recognized overnight delivery service in accordance with Clauses (i), (ii) or (iii) above, respectively.

Section 7.                        No Stockholder Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Obligor, including without limitation, the right to vote, to receive dividends or other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Obligor, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
 
 

 
 
Section 8.                        Replacement.   If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such note, and of the ownership hereof, a payment for the cost to Obligor of such replacement and related verifications, and an agreement to indemnify Obligor for any resulting claims, all reasonably satisfactory to the Obligor.

Section 9.                        Ranking; Seniority.   This Note is a direct obligation of the Obligor. This note ranks pari passu with all other Notes included in the $500,000 aggregate offering of such securities now or hereafter issued under the terms set forth herein. No indebtedness of the Obligor is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise. Without the Holder’s consent, the Obligor shall not and shall not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest herein or any income or profits there from that is senior in any respect to the obligations of the Obligor under this Note.

Section 10.                        Enforcement Expenses.   If the Obligor fails to strictly comply with the terms of this Note, then the Obligor shall reimburse the Holder promptly for all reasonable fees, costs and expenses, including, without limitation, reasonable attorneys’’ fees and expenses of the Holder in any action in connection with this Note that are incurred; (a) during any workout, attempted workout, and in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations; (b) collecting any sums which become due to the Holder; (c) defending or prosecuting any proceeding or any counterclaim to any proceeding or appear; or (d) the protection, preservation or enforcement of any rights or remedies of the Holder.

Secion 11.                        Waiver.   Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

Section 12.                        Severability.   If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision in inapplicable to any person or circumstance, it shall nevertheless remain inapplicable to all other person and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Obligor from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

Section 13.                        Payment Dates.   Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 
 
 

 
 
Section 14.                        WAIVER OF TRIAL BY JURY. THE PARTIES HEREBY KNOWLINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

Section 15.                        Governing Law.   This Note shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the state courts of the State of Florida sitting in Miami-Dade County, Florida in connection with any dispute arising under this Note and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

IN WITNESS WHEREOF, the Obligor has caused this Note to be duly executed by a duly authorized officer as of the date set forth above.

NuState Energy Holdings, Inc.



By: _ /s/ Kevin Yates ____________
Name: S. Kevin Yates
Title: Chairman of the Board
 
Exhibit 10.19
 
Agreement between NuState Energy Holding, Inc.,
Rentar Environmental Solutions, Inc., and Rentar Logic, Inc.


THIS binding Agreement is entered into between Rentar Environmental Solutions, Inc. (“Rentar”) with an address at 11586 Pierson Road, West Palm Beach, Florida 33414. Rentar Logic Inc. (“Rentar Logic”) with an address at 11586 Pierson Road, West Palm Beach, Florida 33414 and NuState Energy Holdings, Inc. (“NuState”), with an address at _______ (collectively the “Parties” and individually a “Party”) as of the 7 th day of April 2010. The Parties agree as follows:

WHEREAS, Rentar Environmental Solutions, Inc. (“Rentar Environmental”) formed a Delaware company called Rentar Logic, Inc. (“Rentar Logic”) in April 2008, and;

WHEREAS Rentar Logic purchased certain NuState Energy Holdings intellectual property some of which is known as “My Driver’s Seat” (“Intellectual Property”) for one million nine hundred twenty one thousand eight hundred thirty dollars ($1,921,830) in debt and 49% of Rentar Logic common stock, and

WHEREAS, the Parties intend to settle the balance of the Rentar outstanding debt to NuState of one million nine hundred twenty one thousand eight hundred thirty dollars ($1,921,830) through a release of a pro-rata amount of the escrowed common shares of Rentar based upon an agreed value of five dollars ($5.00) per share which equals 384,366 shares as provided herein;

WHEREAS, NuState and Rentar mutually agree to terminate their present relationship in all respects (except for that certain Master Distribution Agreement – Exhibit 1) and mutual involvement in Rentar Logic as provided herein and ;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and understandings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
 
 
1.
Recitals .
The Parties agree that the recitals are true and correct and incorporated herein as part of this Agreement.
 
 
2.
Rentar Debt to NuState and Certain Transfers .
 
a)            Termination of Rentar Debt to NuState .  The Rentar outstanding debt to NuState of one million nine hundred twenty one thousand eight hundred thirty dollars ($1,921,830) is terminated as provided in this Agreement.
 
b)            Release of Escrowed Rentar Shares to NuState and to Rentar . The Parties shall jointly instruct the Escrow Agent to release to NuState of a pro-rata amount of the escrowed common shares of Rentar based upon the agreed value of five dollars ($5.00) per share which equals 284,366 shares of Rentar and that Rentar and Rentar Logic shall have no claim, right, title or interest of any kind in such 384,366 shares of Rentar. The parties agree that the remaining 215,634 shares of Rentar are to be released to Rentar and that NuState shall have no claim, right, title or interest of any kind to such 215,634 shares of Rentar.
 
 
1

 
 
Exhibit 10.19
 
c)            NuState Transfer to Rentar Logic Shares to Rentar .  NuState irrevocably agrees to transfer the 49% equity interest represented by shares in Rentar Logic to Rentar and agrees to execute all transfer documents to effectuate such transfer simultaneously with the Parties executing this Agreement. NuState appoints Rentar Logic as its attorney-in-fact to execute all documents necessary to transfer for the benefit of Rentar the shares in Rentar Logic held by NuState, to cancel the same and for Rentar Logic to issue a new share certificate in the name of Rentar for the same number of shares and Rentar Logic agrees to so act.
 
d)            Transfer of Non-exclusive copy of Rentar Logic to NuState .  Upon execution of this Agreement, Rentar shall deliver to NuState a complete non-exclusive copy of the Intellectual Property received by Rentar from John Urabnowics on April 6, 2010.
 
e)            Master Distribution Agreement .  See Exhibit Z.
 
f)            Certain C. H. Robinson Matters .  NuState shall hold harmless Rentar with respect to the litigation involving C. H. Robinson and _____ styled as ______. Upon execution of this Agreement, NuState shall provide Rentar with a notarized statement that Rentar is not involved in the Robinson Matters as provided in Exhibit 2.
 
3.       Mutual General Release .  Except as to the obligations of this Agreement, each Party, and their heirs, legal representatives, successors, agents, assigns, hereby fully release, acquit, remise, and forever discharge the other Parties, and their heirs, legal representatives, successors, agents, assigns, officers, directors, stockholders, attorneys, insurance carriers, employees, affiliates, and partners, whether current or former, from any and all claims, demands, suits, debts, dues, contracts, accounts, agreements, promises, damages, interest, attorney’s fees and causes of action of whatever kind or nature, including all unknown, unforeseen, unanticipated and unsuspected claims or causes of action and the consequences thereof, as well as those now disclosed and known to exist, whether asserted or not asserted.
 
 
4.
Escrow Agent Instructions and Release .
 
a)            Instructions to Escrow Agent .  The Parties jointly and irrevocably instruct the Escrow Agent to release from escrow the 600,000 shares of Rentar and to deliver 384,366 shares of Rentar to NuState and 215,634 shares of Rentar to Rentar. Upon such distribution, the Escrow shall be terminated. The joint letter of instruction is attached as Schedule A.
 
 
2

 
 
Exhibit 10.19
 
b)            Release of Escrow Agent .  The Parties and their heirs, legal representatives, successors, agents, assigns, hereby fully release, acquit, remise, and forever discharge the Escrow Agent (Whisenand & Turner P.A. and its officers, directors, shareholders, agents and employees), and their heirs, legal representatives, successors, agents, assigns, officers, directors, stockholders, attorneys, insurance carriers, employees, affiliates, and partners, whether current or former, from any and all claims, demands, suits, debts, dues, contracts, accounts, agreements, promises, damages, interest, attorney’s fees and causes of action of whatever kind or nature, including all unknown, unforeseen, unanticipated and unsuspected claims or causes of action and the consequences thereof, as well as those now disclosed and known to exist, whether asserted or not asserted.
 
c)            Advice of Counsel .  Each of the Parties represents and warrants that each Party has had a reasonable time to seek advice of counsel and has sought such advice as the Party deems appropriate prior to the execution of this Agreement.
 
5.       Corporate Authority Representation and Warranty .  Each of the Parties executing this Agreement expressly warrant and represent to the other two parties, respectively, and each of the other two parties is expressly relying on the representation and warranty that: (a) the Party is a duly formed corporation in good standing in its respective place of domicile; (b) the execution of this Agreement is fully authorized by the Party on its own behalf and on behalf of all persons acting by, through or under any of them and that no other corporate authorization of any kind is necessary to make the execution of this Agreement binding on the Party; (c) the person executing this Agreement has the necessary and appropriate authority to do so from the corporate Party effective to bind the corporate Party; (d) and (e) there are no pending agreements, transactions or negotiations to which the Party is a party that would render this Agreement or any part thereof void, voidable, or unenforceable.
 
6.       General Provisions .
 
a)            Severability . If any provision of this Agreement or the application of any provision of this Agreement to any Party or circumstance is, to any extent, adjudged invalid or unenforceable, the application of the remainder of such provision to such Party or circumstance, the application of such provision to other Parties or circumstances, and the application of the remainder of this Agreement will not be affected thereby.
 
b)            Governing Law .  This Agreement will be governed by and construed and enforced in accord with the laws of the State of Florida, without regard to principles of conflicts of law that would make the laws of another jurisdiction applicable. Venue will be in the State Courts of Miami-Dade County.
 
c)            Successors and Assigns and Transferees .  Except as expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Parties hereto.
 
 
3

 
 
Exhibit 10.19
 
d)            Entire Agreement; Amendment . This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated orally, except by a written instrument signed by all Parties. No waiver of any term, provision or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a further waiver of any such term, provision or condition or as a waiver of any other term, provision or condition.
 
e)            Counterparts .   This Agreement may be executed in multiple counterparts with the same effect as if all signing parties had signed the same document.  All counterparts when signed and assembled together will constitute a single, fully-executed instrument.  Facsimile and .pdf executed instruments shall have the same validity as originally executed instruments.
 
f)            Dispute Resolution .  Any disputes regarding or relating to any aspect of this Agreement’s formation, meaning, performance or breach, or arising out of or relating in any way to this Agreement, shall be determined exclusively by arbitration before a single arbitrator pursuant to the commercial arbitration procedures of the American Arbitration Association (“AAA”), and administered by AAA in accordance with its commercial arbitration rules.  The Parties shall endeavor in good faith first to attempt to resolve the controversy or claim through mediation administered by the AAA, before commencing any arbitration.  Any mediation or arbitration shall be confidential (except as may be required in any judicial proceeding brought to enforce these arbitration provisions or any award rendered hereunder) and shall be conducted in Miami-Dade County, Florida and the parties hereto irrevocably submit to the exclusive jurisdiction of the state courts of Florida for any proceedings incidental to arbitration or for the confirmation and enforcement of any award.  The prevailing Party in such arbitration shall be entitled to recover its reasonable costs and attorneys’ fees as shall be determined by the arbitrator.
 
g)            Attorneys’ Fees .   In any legal proceeding that arises out of or in connection with this Agreement, the prevailing Party or Parties in any such action shall be entitled to have their reasonable attorneys’ fees (including all related costs and expenses and the same related to or associated with any appeal) paid by the non-prevailing Party or Parties in such action. 
 
h)            Faxes Binding .  The Parties agree that any facsimile document with a signature is deemed to be an original signature and binding on all Parties.
 
i)            No Assignment of Claims.   The Parties hereby represent and warrant to each other that they have not assigned, sold or transferred any of the claims or rights that are being released under this Agreement.
 
j)            No Admission of Liability .  This Agreement and all negotiations, statements, and proceedings in connection herewith (i) shall not constitute or in any manner be or be deemed to be evidence of an admission or concession of any liability, fault, or wrongdoing which is hereby expressly denied and disclaimed by each Party and (ii) shall not be offered or received in evidence in any action or proceeding in any court or tribunal, or used in any way as an admission, concession, or evidence of any liability, fault, or wrongdoing of any nature on the part of either Party in any proceeding, except that this Agreement may be offered in evidence in a proceeding where enforcement of this Agreement is sought.
 
 
4

 
 
Exhibit 10.19
 
k)            Covenant .  With the exception of the obligations provided for in this Agreement, the Parties covenant and agree that they will not commence any action or suit or claim or prosecute any pending action or suit or claim, in law or in equity, against any other Party to this Agreement on account of any action or cause of action which now exists or which may hereafter accrue in the Party’s favor which is released hereunder. In addition to any other liability which shall accrue upon the breach of this covenant, the Party adjudicated to be in breach of this covenant shall be liable to pay all reasonable attorney’s fees and costs incurred by the other Party in the defense of such action, suit, or claim.
 
l)            Notices .  Any notice to any Party under this Agreement shall be addressed to the address stated on page one and shall be effective upon transmittal by confirmed hand delivery, or confirmed delivery by recognized courier (such as FedEx, UPS, etc.).
 


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year written below.
 
 
NuState Energy Holdings, Inc.   NuState Energy Holdings, Inc.  
       
By: /s/ Kevin Yates   By: /s/ Tom Murphy  
Kevin Yates – Chairman   George Q. Stevens - CEO  
       
Rentar Environmental Solutions, Inc.   Rentar Logic, Inc  
       
By: /s/ Joel Ratner   By:
/s/ Joel Ratner
 
Joel Ratner – Chairman  
Joel Ratner – Chairman
 
                                                           
Exhibits
 
A.           Joint Letter of Instruction to Escrow Agent
 
B.           C.H. Robinson Letter
 
C.           Master Distribution Agreement dated January 5, 2007 – Terminated
 
Z.           Yellow Sheet Addendum
 
1.           Mutual Cancellation and Non-Compete
 
 
5

 
 
Exhibit 10.19
 
EXHIBIT 1
 
MUTUAL CANCELLATION
 
AND
 
NON-COMPETE AGREEMENT
 

 
Rentar Environmental Solutions, Inc. and NuState Energy Holdings, Inc. upon execution of this document, agree to mutually cancel the existing Distributor Agreement dated January 5, 2007 in consideration of NuState entering into the Non-compete Agreement.
 
It is understood and agreed between Nustate Energy Holdings, Inc. (“NuState”) and Rentar Environmental Solutions, Inc. (“Rentar”) as to the following:
 
1.   Covenant Not To Compete.   NuState covenants and agrees that they, their associates, officers, directors, employees or related parties will not, during the term hereof and for a period of two (2) years (the “Restricted Period”), directly or indirectly engage in the business of the manufacture or sale of any precombustion technology. This agreement specifically prevents NuState from doing business with Rexecon International Corporation regarding any precombustion technology during the applicable term and Restricted period.
 
2. Injunctive Relief.   NuState directly or indirectly recognizes that a break of any of the provisions of this Article would cause irreparable damage to Rentar and that damage is difficult to measure. Therefore, in the event of a violation or a threatened violation by NuState, or related parties, NuState hereby acknowledges and agrees that Rentar will have the right, in addition to all other remedies available to it by law, in equity and under this Agreement, to affirmative or negative injunctive relief from a court of competent jurisdiction restraining NuState or related parties, from violating paragraph 1 above.
 
3.  If any part of this Agreement is determined to be unenforceable, the Agreement will adjust to what is determined to be enforceable. Venue will be Miami-Dade County, Florida under Florida law. Prevailing party will be entitled to all reasonable attorneys fees.
 
UNDERSTOOD AND AGEED THIS 7 TH DAY OF APRIL, 2010.
 
NuState Energy Holdings, Inc.   Rentar Environmental Solutions, Inc.  
       
By: /s/ Kevin Yates   By: /s/ Joel Ratner  
Kevin Yates – Chairman  
Joel S. Ratner – Chairman
 
 
 
6

 
 
Exhibit 10.19
 
 
EXHIBIT 2
 
HOLD HARMLESS AFFIDAVIT
 
I, Kevin Yates, as Chairman of NuState Energy Holdings, Inc., hereby hold harmless and indemnify Rentar Environmental Solutions, Inc. from any and all claims regarding the litigation involving C.H. Robinson and further state that Rentar is not involved in the Robinson matters.
 
IN WITNESS WHEREOF, Kevin Yates has hereunto set his hand and seal on April 7, 2010.
 
Signed, sealed and delivered in our presence:
 
NuState Energy Holdings, Inc.
 
BY: _/s/ Kevin Yates___________
Kevin Yates – Chairman
 

 
__________________________
STATE OF FLORIDA
COUNTY OF MIAMI-DADE
 
The foregoing instrument was acknowledged before me this 7 th day of April, 2010 by Kevin Yates, as Chairman of NuState Energy Holdings, Inc., who is personally known to me or who has produced South Carolina Driver’s License # _____________Expires ____________ as identification.
 
_/s/ Lorainne Mongeon____________
Print Name
NOTARY PUBLIC—STATE OF
FLORIDA
Commission No:
My Commission
Expires:
 
 
(Seal)
 
 
7

 
 
Exhibit 10.19
 
EXHIBIT A
 
[DATE]
 
Whisenand & Turner P.A.
501 Brickell Key Drive
Suite 602
Miami, FL 33131
 
 
Re:          Escrow Agreement –Nustate Energy Holdings, Inc. (“NuState”) –Rentar
Environmental Solutions, Inc. (“Rentar”) –Rentar Logic, Inc. (“Rentar Logic”)
 
Ladies/Gentlemen:
 
This is an Irrevocable Joint Letter of Instruction to you from the duly authorized representatives of NuState, Rentar, and Rentar Logic upon which you, as Escrow Agent, are entitled to rely without liability. NuState, Rentar and Rentar Logic irrevocably instruct you to take the following action:
 
 
1.
Release and deliver to NuState the Rentar Shares held in Escrow in the amount of 384,366 shares of Rentar.
 
 
2.
Release and deliver to Rentar and Rentar Shares held in Escrow in the amount of 215,634 shares of Rentar.
 
Upon release and delivery of the referenced shares to NuState and Rentar, the escrow shall be terminated. The Escrow Agent is hereby further released and by NuState, Rentar and Rentar Logic and each of NuState, Rentar and Rentar Logic agree to hold harmless and indemnify the Escrow Agent in all matters arising out of acting as the Escrow Agent.
 
     
Sincerely,
 
         
  NuState Energy Holdings, Inc.   NuState Energy Holdings, Inc.  
 
By: _/s/ Kevin Yates_____________
  By: _/s/ Tom Murphy_________  
  Kevin Yates-Chairman   George Q. Stevens – CEO  
         
  Rentar Environmental Solutions, Inc.   Rentar Logic, Inc.  
 
By: _/s/ Joel Ratner _______________
  By: _/s/ Joel Ratner _________  
 
Joel Ratner – Chairman
  Joel Ratner-Chairman  
 
 
8

 
 
Exhibit 10.19
 
EXHIBIT Z
 
YELLOW SHEET ADDENDUM
 
Insert (a) to replace 2.e.
 
The existing “Distributor Agreement” is hereby terminated. The parties agree to the mutual cancellation and non-compete agreement which is attached as “Exhibit 1.”
 
Rentar agrees to pay NuState a 28% commission on $79,000 within 72 hours. This commission will be paid in Rentar common stock at the previously agreed upon valuation of $5.00 per share.
 
The parties agree to assign Nustate’s 49% interest in Rentar Logic to Rentar Environmental Solutions, Inc. as a result of NuState’s loss of their stock certificate in Rentar Logic.
 
Insert (b) to replace language in 2.f.
Delete from sentence 1 “and ____ styled as _____”
Add “Exhibit 2”
 
 
9

 
 
Exhibit 10.19
 
RECEIPT FOR THE INTELLECTUAL PROPERTY
 
NuState Energy Holdings, Inc. through its Chairman herewith acknowledges receipt of the Intellectual Property as supplied to both Rentar and NuState by John Urbanowicz as per the Dissolution Agreement executed this date.
 
NuState Energy Holdings, Inc.
 
By: _/s/ Kevin Yates __________
Kevin Yates, Chairman
 
 
10

 
 
Exhibit 10.19
 
RECEIPT FOR RENTAR STOCK
 
NuState Energy Holdings, Inc. through its Chairman herewith acknowledges receipt of 384,366 shares of Rentar Environmental Solutions, Inc. common stock as per the Dissolution Agreement executed this date.
 
NuState Energy Holdings, Inc.
 
By: _/s/ Kevin Yates _____
Kevin Yates, Chairman
 
 
11

 
 
Exhibit 10.19
 
LIMITED POWER OF ATTORNEY
 
KNOW ALL PERSONS BY THESE PRESENTS:
 
WHEREAS, geography and time factors may prevent my personal attendance at meetings to be held in Florida from April 5, 2010 through April 9, 2010 regarding the change of control of NuState Energy Holdings, Inc. including the appointment of Kevin Yates as Chairman, the appointment of myself, George Q. Stevens as CEO, the resignation of Richard Hersch as Chairman, the award of Non-Voting Preferred Shares to Richard Hersch and other meetings regarding an Agreement between NuState Energy Holdings, Inc. and Rentar Environmental, Inc. and a Global Settlement Agreement between NuState Energy Holdings, Inc. and Rentar Environmental, Inc. and;
 
WHEREAS , unforeseen circumstances may require my authorization or someone to sign on my behalf at one or more of the meetings:
 
NOW, THEREFORE, the undersigned hereby, VIA FACSIMILE, constitutes and appoints THOMAS P. MURPHY as my attorney-in-fact and agent, with full power of substitution and re-substitution, for such person and in my name, place and stead, in any and all capacities, to sign any and all contracts and documents, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes I might of could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or substitute may lawfully do and cause to be done by virtue hereof specifically regarding the aforementioned April meetings in Florida.
 
IN WITNESS WHEREOF,  the undersigned has hereunto set his hand on April 5, 2010.
 
  /s/ George Stevens
 
GEORGE Q. STEVENS
 
12
 
Exhibit 10.20
 
EXECUTIVE EMPLOYMENT AGREEMENT

         This Executive Employment Agreement is entered into by and between NuState Energy Holdings, Inc. ("Employer" or "NuState") and S. Kevin Yates ("Employee"), to be effective on May 6, 2010 (the "Effective Date").

                              W I T N E S S E T H:

         WHEREAS,  Employer is desirous of  employing  Employee  pursuant to the terms and conditions and for the consideration set forth in this Agreement,  and;

WHEREAS, Employee is desirous of entering the employ of Employer pursuant to such terms and conditions and for such consideration as are listed below;

         NOW,  THEREFORE,  for  and in  consideration  of the  mutual  promises, covenants,  and  obligations  contained  herein,  Employer and Employee agree as follows:

ARTICLE 1:  EMPLOYMENT AND DUTIES:

         1.1.  Employer  agrees to employ  Employee,  and Employee  agrees to be employed by Employer,  beginning as of the Effective Date and  continuing  until the date of termination of Employee's  employment  pursuant to the provisions of Article 3 (the "Term"), subject to the terms and conditions of this Agreement.

         1.2.  Beginning as of the Effective Date, Employee shall be employed as President  of  Employer.  Employee  agrees  to serve in the assigned position or in such other executive capacities as may be requested from time to time by Employer and to perform diligently and to the best of Employee's abilities  the duties and services  appertaining  to such position as reasonably determined  by Employer,  as well as such  additional  or  different  duties and services  appropriate to such positions  which Employee from time to time may be reasonably directed to perform by Employer.

         1.3.  Employee  shall at all times  comply  with and be subject to such policies  and  procedures  as  NuState  may  establish  from  time to  time, including,  without limitation, the NuState Company Code of Business Conduct (the "Code of Business Conduct").

         1.4.  Employee  shall,  during the period of  Employee's  employment by Employer,  devote Employee's necessary and sufficient business time, energy, and best efforts to the business  and  affairs  of  Employer.  Employee  may  not  engage,  directly  or indirectly, in any other business,  investment, or activity that interferes with Employee's  performance  of  Employee's  duties  hereunder,  is  contrary to the interest of  Employer  or any of its  affiliated  companies  (collectively,  the "NuState  Entities" or, individually,  a "NuState  Entity"), or requires any   significant   portion  of   Employee's   business   time.   The  foregoing notwithstanding,  the parties  recognize  and agree that  Employee may engage in active and passive personal investments and other business activities which do not conflict with the business  and affairs of the  NuState  Entities or  interfere  with Employee's  performance of his duties  hereunder.  Employee may serve on the board of directors of any entity other than a NuState Entity during the Term without  the  approval  thereof  in  accordance  with  Employer's  policies  and procedures  regarding  such service.  Employee shall be permitted to retain any compensation received for approved service on any unaffiliated corporation's board of directors.

 
1

 
 
Exhibit 10.20
 
         1.5.  Employee  acknowledges  and agrees that Employee owes a fiduciary duty of  loyalty,  fidelity  and  allegiance  to act at all  times  in the  best interests of the Employer  and the other  NuState  Entities and to do no act which  would,  directly  or  indirectly,  injure  any  such  entity's  business, interests, or reputation.  It is agreed that any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect Employer, or any NuState Entity, involves a possible conflict of interest.  In keeping with Employee's fiduciary duties to Employer, Employee agrees that Employee shall not knowingly  become  involved  in a conflict  of  interest  with  Employer  or the NuState  Entities,  or upon  discovery  thereof,  allow such a  conflict  to continue. Moreover, Employee shall not engage in any activity that might involve a possible conflict of interest.

         1.6   Nothing contained  herein  shall be  construed  to  preclude  the transfer of Employee's  employment to another  NuState  Entity  ("Subsequent Employer") as of, or at any time after,  the Effective Date and no such transfer shall be deemed to be a  termination  of  employment  for  purposes of Article 3 hereof; provided, however, that, effective with such transfer, all of Employer's obligations  hereunder  shall be  assumed  by and be  binding  upon,  and all of Employer's  rights hereunder shall be assigned to, such Subsequent  Employer and the defined term "Employer" as used herein shall thereafter be deemed amended to mean such Subsequent  Employer.  Except as otherwise provided above, all of the terms and conditions of this Agreement, including without limitation, Employee's rights and obligations, shall remain in full force and effect following such transfer of employment.

ARTICLE 2:  COMPENSATION AND BENEFITS:

         2.1.  Employee's  base salary shall not be less than $240,000 per annum which shall be paid in accordance with the Employer's  standard payroll practice for its executives.  The parties further agree that Employee's election as Chairman of the Company shall be effective on May 6, 2010. Employee's base salary may thereafter be increased from time to time with the approval of the Compensation Committee of NuState's Board of Directors (the "Compensation Committee") or its delegate, as applicable.  Such increased base salary shall become the minimum base salary under this Agreement and may not be decreased thereafter without the written consent of Employee.

         2.2.  On June 6, 2010,  Employer  shall  grant to  Employee a  non-qualified  stock option to purchase up to 60,000,000 shares of  Employer's  common  stock at an  exercise  price of $0.0025.
 
 
2

 
 
Exhibit 10.20
 
         2.3.  During the Term, Employer shall pay or reimburse Employee for all actual,  reasonable and customary expenses incurred by Employee in the course of his  employment;   including,   but  not  limited  to,  travel,   entertainment, subscriptions  and dues associated with Employee's  membership in  professional, business and civic  organizations;  provided that such expenses are incurred and accounted for in accordance with Employer's applicable policies and procedures.

         2.4. Employer may withhold from any compensation, benefits, or amounts payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

ARTICLE 3:  TERMINATION OF EMPLOYMENT AND EFFECTS OF SUCH TERMINATION:

         3.1.  Employee's  employment  with  Employer  shall  be  terminated (i) upon the death of Employee,  (ii) upon Employee's Retirement (as defined below), (iii) upon Employee's  Permanent  Disability (as defined below),  or (iv) at any time by Employer  upon written  notice to Employee,  or by Employee  upon thirty (30) days' written notice to Employer, for any or no reason.

         3.2.  If Employee's  employment is  terminated by reason  of any of the following circumstances,  Employee shall not be entitled to receive the benefits set forth in Section 3.3 hereof:

         (i)   Death.

         (ii)  Retirement.  "Retirement"  shall mean  either  (a)  Employee's retirement   at  or  after  normal   retirement   age  (either voluntarily or pursuant to NuState's retirement policy) or (b) the  voluntary  termination  of  Employee's  employment by Employee in accordance with Employer's early retirement policy for other than Good Reason (as defined below).

         (iii) Permanent   Disability.    "Permanent    Disability" shall mean Employee's  physical  or mental incapacity  to perform  his usual duties with such  condition  likely  to remain  continuously  and permanently   as  reasonably  determined   by   the  Compensation Committee in good faith.

         (iv) Voluntary Termination.  "Voluntary  Termination"  shall  mean  a  termination  of employment  in  the sole  discretion  and at  the election  of Employee for other than  Good Reason.  "Good Reason" shall mean (a) a  termination  of employment  by Employee because of a material  breach by Employer of any  material  provision  of this Agreement  which remains  uncorrected  for thirty  (30) days following  written notice of such breach by Employee to Employer, provided  such  termination  occurs  within sixty (60) days after the  expiration  of the notice  period;  or (b) a termination of employment  by Employee  within  six (6) months after  a material reduction in Employee's  rank or responsibility with Employer.

         (v)   Termination for Cause. Termination of Employee's employment by Employer for Cause.  "Cause" shall mean any of the following:
 
 
3

 
 
Exhibit 10.20
 
               (a) Employee's gross negligence or willful misconduct in the performance  of the  duties and  services  required  of  Employee pursuant to  this Agreement; (b) Employee's  final conviction  of a  felony;  (c) a  material  violation  of  the Code of  Business Conduct  or  (d)  Employee's  material  breach  of  any  material provision  of  this   Agreement  which  remains  uncorrected  for thirty (30) days  following  written  notice  of  such  breach to notice  of such breach  to Employee  by  Employer.  Determination Employee's   employment   will   be  reasonably   made   by   the Compensation Committee in good faith.

         In the event Employee's employment is terminated under any of the foregoing circumstances,  all future compensation to which Employee is otherwise entitled and all future  benefits for which Employee is eligible shall cease and terminate as of the date of termination, except as specifically provided in this Section 3.2.  Employee,  or his estate in the case of Employee's death, shall be entitled to pro rata base salary through the date of such  termination and shall be  entitled  to  any  individual   bonuses  or  individual   annual   incentive compensation  not yet paid but payable under Employer's plans for the year prior to the year of Employee's  termination of employment,  but shall not be entitled to any  annual  bonus  or  incentive  compensation  for  the  year in  which  he terminates  employment  or any other  payments  or  benefits  by or on behalf of Employer  except  for  those  which  may be  payable  pursuant  to the  terms of Employer's or NuState's  employee benefit plans (as defined in Section 3.4), stock, stock option or incentive plans, or the applicable  agreements underlying such plans.

         3.3   If Employee's employment is terminated by Employee for Good reason or by Employer for any reason other than as set forth in Section 3.2 above Employee shall be entitled to each of the following:

(i) To the extent not otherwise specifically provided in any underlying restricted stock agreements, NuState, at its option and in its sole discretion, shall either (a) cause all shares of NuState common stock previously granted to Employee to be forfeited, in which case, Employer will pay Employee a lump sum cash payment equal to the value of the Restricted Shares (based on the closing price of NuState common stock on the date of termination of employment); or (b) cause the forfeiture restrictions with respect to the Restricted Shares to lapse and such shares shall be retained by Employee.

         (ii)  Subject to the provisions of Section 3.4, Employer shall pay to  Employee a  severance  benefit  consisting  of a  single lump sum  cash payment equal  to two  years' of Employee's base salary as   in   effect  at  the  date  of  Employee's   termination  of employment.  Such severance   benefit shall be paid no later than sixty (60) days following Employee's termination of employment.

         (iii) Employee shall be entitled to any individual bonuses or individual  incentive  compensation  not  yet  paid  but  payable under Employer's  or NuState's plans  for years  prior to the year  of Employee's termination of employment.  Such amounts, if any, shall  be paid  according  to the terms and  conditions set forth in the applicable plan document.

 
4

 
 
Exhibit 10.20
 
         (iv)  Employee shall be entitled to any   individual bonuses or individual incentive   compensation   under    Employer's   or NuState's   plans, or   any   successor   annual   incentive compensation  plan, for  the year  of  Employee's  termination of employment  determined as  if Employee had  remained employed  by the Employer  for the entire year.  Such amounts shall be paid to Employee at the time that such amounts are   paid to similarly situated employees.

3.4. The severance benefit paid to Employee pursuant to Section 3.3 shall be in consideration of Employee's continuing obligations hereunder after such termination, including, without limitation, Employee's obligations under Article 4. Further, as a condition to the receipt of such severance benefit, Employer, in its sole discretion, may require Employee to first execute a release, in the form established by Employer, releasing Employer and all other NuState Entities, and their officers, directors, employees, and agents, from any and all claims and from any and all causes of action of any kind or character, including, but not limited to, all claims and causes of action arising out of Employee's employment with Employer and any other NuState Entities or the termination of such employment. The performance of Employer's obligations under Section 3.3 and the receipt of the severance benefit provided thereunder by Employee shall constitute full settlement of all such claims and causes of action. Employee shall not be under any duty or obligation to seek or accept other employment following a termination of employment pursuant to which a severance benefit payment under Section 3.3 is owing and the amounts due Employee pursuant to Section 3.3 shall not be reduced or suspended if Employee accepts subsequent employment or earns any amounts as a self-employed individual. Employee's rights under Section 3.3 are Employee's sole and exclusive rights against the Employer or its affiliates and the Employer's sole and exclusive liability to Employee under this Agreement, in contract, tort or otherwise, for the termination of his employment relationship with Employer. Employee agrees that all disputes relating to Employee's termination of employment, including, without limitation, any dispute as to "Cause" or "Voluntary Termination" and any claims or demands against Employer based upon Employee's employment for any monies other than those specified in Section 3.3, shall be resolved through the Arbitration as provided in Section 5.6 hereof; provided, however, that decisions as to whether "Cause" exists for termination of the employment relationship with Employee and whether and as of what date Employee has become permanently disabled are delegated to the Compensation Committee for determination and any dispute of Employee with any such decision shall be limited to whether the Compensation Committee reached such decision in good faith. Nothing contained in this Article 3 shall be construed to be a waiver by Employee of any benefits accrued for or due Employee under any employee benefit plan (as such term is defined in the Employees' Retirement Income Security Act of 1974, as amended) maintained by Employer except that Employee shall not be entitled to any severance benefits pursuant to any severance plan or program of the Employer.

         3.5.  Termination of  the employment  relationship does  not  terminate those  obligations  imposed by this Agreement which are continuing  obligations, including, without limitation, Employee's obligations under Article 4.

 
5

 

Exhibit 10.20
 
ARTICLE 4:  OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION:

         4.1.  All information, ideas, concepts, improvements,  discoveries, and inventions,  whether patentable or not, which are conceived,  made, developed or acquired  by  Employee,  individually  or in  conjunction  with  others,  during Employee's  employment  by Employer  or any of its  affiliates  (whether  during business  hours or otherwise  and whether on  Employer's  premises or otherwise) which relate to the business, products or services of Employer or its affiliates (including,  without  limitation,  all such  information  relating to  corporate opportunities,  research,  financial and sales data,  pricing and trading terms, evaluations, opinions,  interpretations,  acquisition prospects, the identity of customers  or their  requirements,  the  identity  of key  contacts  within  the customer's organizations or within the organization of acquisition prospects, or marketing and merchandising  techniques,  prospective names, and marks), and all writings or materials of any type embodying any of such items, shall be the sole and exclusive property of Employer or its affiliates, as the case may be.

4.2. Employee acknowledges that the businesses of Employer and its affiliates are highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets which are valuable, special, and unique assets which Employer or its affiliates use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such confidential business information and trade secrets against unauthorized disclosure and use is of critical importance to Employer and its affiliates in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after his employment by Employer, make any unauthorized disclosure of any confidential business information or trade secrets of Employer or its affiliates, or make any use thereof, except in the carrying out of his employment responsibilities hereunder. Confidential business information shall not include information in the public domain (but only if the same becomes part of the public domain through a means other than a disclosure prohibited hereunder). The above notwithstanding, a disclosure shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which Employee's legal rights and obligations as an employee or under this Agreement are at issue; provided, however, that Employee shall, to the extent practicable and lawful in any such events, give prior notice to Employer of his intent to disclose any such confidential business information in such context so as to allow Employer or its affiliates an opportunity (which Employee will not oppose) to obtain such protective orders or similar relief with respect thereto as may be deemed appropriate.

         4.3.  All written  materials, records,  and other documents made by, or coming  into the  possession  of,  Employee  during  the  period  of  Employee's employment  by  Employer  which  contain  or  disclose   confidential   business information or trade secrets of Employer or its  affiliates  shall be and remain the  property  of  Employer,  or  its  affiliates,  as the  case  may  be.  Upon termination of Employee's employment by Employer, for any reason, Employee promptly shall deliver the same, and all copies thereof, to Employer.

 
6

 
 
Exhibit 10.20
 
         4.4   For purposes of this Article 4, "affiliates" shall mean entities in which Employer has a 20% or more direct or indirect equity interest.

ARTICLE 5:  MISCELLANEOUS:

         5.1.  Except as otherwise  provided in Section 4.4 hereof, for purposes of this Agreement,  the terms  "affiliate" or  "affiliated"  means an entity who directly,  or  indirectly  through  one or  more  intermediaries,  controls,  is controlled  by,  or is  under  common  control  with  NuState  or  in  which NuState has a 50% or more equity interest.

         5.2.  For   purposes  of  this   Agreement,   notices  and   all  other communications  provided  for herein  shall be in writing and shall be deemed to have been duly given when  received by or tendered to Employee or  Employer,  as applicable,  by pre-paid  courier or by United  States  registered  or certified mail, return receipt requested, postage prepaid, addressed as follows:

         If to Employer, to NuState Company at 1201 Main St, Columbia, South Carolina, to the attention of the General Counsel, or to such other address as Employee shall receive notice thereof.

         If to Employee, to his last known personal residence.

         5.3.  This Agreement shall be  governed by and  construed and enforced, in all respects in accordance with the law of the State of South Carolina, without regard to  principles  of conflicts of law,  unless  preempted by federal law, in which case federal law shall govern;  provided,  however, that the NuState Dispute Resolution  Plan and the Federal  Arbitration  Act shall  govern in all respects with regard to the resolution of disputes hereunder.

         5.4. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

         5.5.  It is a  desire  and  intent  of  the  parties  that  the  terms, provisions,  covenants,  and  remedies  contained  in this  Agreement  shall  be enforceable to the fullest extent permitted by law. If any such term, provision, covenant,  or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid  or  unenforceable  in whole  or in part,  then  such  term,  provision, covenant,  or  remedy  shall  be  construed  in a  manner  so as to  permit  its enforceability  under the applicable law to the fullest extent permitted by law. In any case,  the  remaining  provisions  of this  Agreement or the  application thereof to any person,  association, or entity or circumstances other than those to which they have been held  invalid  or  unenforceable,  shall  remain in full force and effect.
 
 
7

 
 
Exhibit 10.20
 
         5.6.  It is the mutual  intention  of the  parties to have any  dispute concerning this Agreement resolved out of court. Accordingly, the parties agree that any such dispute shall, as the sole and exclusive  remedy, be submitted for resolution through the  Arbitration through the American Arbitration Association;  provided, however that the  Employer,  on its own behalf  and on behalf of any of the  NuState Entities,  shall be entitled to seek a  restraining  order or  injunction in any court of competent jurisdiction to prevent any breach or the continuation of any breach of the  provisions  of Article 4 and Employee  hereby  consents that such restraining  order or  injunction  may be granted  without the  necessity of the Employer  posting any bond.  The parties agree that the resolution of any such dispute through such Arbitration shall be final and binding.

         5.7. This  Agreement shall be binding upon and inure to the benefit of Employer, to the extent herein provided, NuState and any other person, association,  or  entity  which  may  hereafter  acquire  or  succeed  to all or substantially all of the  business or assets of  Employer by any means  whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's rights and  obligations  under this  Agreement  are  personal  and such  rights, benefits,  and obligations of Employee shall not be voluntarily or involuntarily assigned,  alienated, or transferred,  whether by operation of law or otherwise, without the prior written  consent of Employer,  other than in the case of death or incompetence of Employee.

         5.8.  This  Agreement replaces and merges any previous  agreements  and discussions pertaining to the subject  matter  covered  herein.  This Agreement constitutes the entire  agreement  of the  parties  with regard to the terms of Employee's  employment,  termination of employment and severance  benefits,  and contains all of  the  covenants,  promises,  representations,  warranties,  and agreements between the parties with respect to such matters.  Each party to this Agreement   acknowledges  that  no  representation,   inducement,   promise,  or agreement,  oral or written,  has been made by either  party with respect to the foregoing  matters  which  is  not  embodied  herein,  and  that  no  agreement, statement, or promise relating to the employment of Employee by Employer that is not contained in this Agreement shall be valid or binding.  Any  modification of this  Agreement  will be  effective  only if it is in writing and signed by each party whose  rights  hereunder  are  affected  thereby,  provided  that any such modification must be authorized or approved by the Compensation Committee or its delegate, as appropriate.





[THIS BOTTOM PORTION OF PAGE 8 IS INTENTIONALLY LEFT BLANK]

 
8

 

Exhibit 10.20


         IN WITNESS  WHEREOF,  Employer and  Employee  have duly  executed  this Agreement in multiple originals to be effective on the Effective Date.
 
   
NUSTATE ENERGY HOLDINGS, INC.
   
           
       By:   /s/ Kevin Yates  
Dated: 5/28/2010    
Name: S. Kevin Yates
 
       
Title: Chairman of the Board,
 
           
           
   
WITNESS
   
           
       By: /s/ Tom Murphy  
Dated: 5/28/2010        
       
Tom Murphy
 
 
9
 
Exhibit 10.21
 
CONSULTING AGREEMENT



THIS AGREEMENT is effective as of the _1__ day of July, 2011 (the "Effective Date").

BETWEEN:

NuState Energy Holdings Inc., a   company duly incorporated pursuant to the laws of the state of Nevada.

 
(Hereinafter referred to as the "Company")

 OF THE FIRST PART

AND:

Williams Global Holdings, LLC , a company duly incorporated pursuant to the laws of the State of Nevada.

 
Interim Chief Operating Officer (Hereinafter referred to as the "Consultant")

 OF THE SECOND PART

RECITALS

WHEREAS the Company is a publicly held corporation traded on the Pink Sheets in the U.S. under the symbol: NSEH.

WHEREAS the Consultant provides certain operational advisory services to private and public companies to assist in the successful execution of both the operational business plan and the public company plan; and,

WHEREAS the Company understands that in order to achieve its objectives as set forth in its operational and public company plans, it would be beneficial to secure the services of a qualified consulting firm. As a result, the Company has agreed to engage the services of the Consultant in accordance with the terms and conditions herein set forth.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants set forth below, the parties hereto agree as follows:

 
 

 

- 2 -

1                         SERVICES PROVIDED AND DEVOTION OF TIME

1.1                       Services Provided.   During the term of this Agreement, the Consultant shall report to the Company’s Chief Executive Officer (CEO) and provide the operational advisory services as requested by the CEO (the "Services Provided").

1.2                       Devotion of Time .  The parties hereto acknowledge and agree that the work of the Consultant is and shall be of such a nature that regular business hours will not apply nor will the Services Provided take place only at the Company’s office. The Consultant and the Company agree that best efforts will apply to all Services Provided and as the Consultant has other clients, the Company agrees that this contractual relationship represents a part-time obligation for the Consultant.

1.3                       Business Opportunities the Property of the Company .  The Consultant agrees to communicate immediately to the Company all business opportunities and improvements in the nature of the business of the Company which, during the term of this Agreement, the Consultant may conceive, make or discover, become aware of, directly or indirectly, or have presented to him in any manner which relates in any way to the Company, either as it is now or as it may develop, and such business opportunities or improvements shall become the exclusive property of the Company without any obligation on the part of the Company to make any payments in addition to the fee paid to the Consultant.



2                         CONSULTING FEES

2.1                       Consulting Fees      In consideration of the Consultant providing the services referred to herein, the Company agrees to pay the Consultant a monthly fee of Ten Thousand Dollars (the “Consulting Fee”).

2.2                       Warrants     As additional consideration for services rendered, the Consultant shall be entitled to three year share purchase Five Million warrants of the Company at an exercise price of $.005

 
 

 

- 3 -
3                         REIMBURSEMENT OF EXPENSES

3.1                        Reimbursement of Expenses .  The Consultant shall be reimbursed for all reasonable and pre-approved expenses incurred by the Consultant in connection with the services provided, including without limiting the generality of the foregoing, all travel and promotional expenses incurred by the Consultant.  All reimbursements shall be made within two (2) weeks of submission by the Consultant of vouchers, bills or receipts for such expenses.


4                         CONFIDENTIAL INFORMATION

4.1                       Confidential Information .  The Consultant shall not, either during the term of this Agreement or under the provisions of Section 4.3, without specific consent in writing, disclose or reveal in any manner whatsoever to any other person, firm or corporation, nor will he use, directly or indirectly, for any purpose other than the purposes of the Company, the private affairs of the Company or any confidential information which he may acquire during the term of this Agreement with relation to the business and affairs of the directors and shareholders of the Company, unless the Consultant is ordered to do so by a court of competent jurisdiction or unless required by any statutory authority.

4.2                       Non-Disclosure Provisions .  The foregoing provision shall be subject to the further non-disclosure provisions contained in Schedule "A" attached hereto and incorporated hereinafter by this reference.

4.3                       Provisions Survive Termination .  The provisions of this section shall survive the termination of this Agreement for a period of three years.


5                         TERM

5.1                       Term .  This Agreement shall remain in effect for two years until July 1 , 2013 or until terminated in accordance with any of the provisions contained in this Agreement.


6                          TERMINATION

6.1                       Termination by Consultant .  Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.

6.2                       Termination by Company . Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.

 
 

 
 
- 4 -
7                          RIGHTS AND OBLIGATIONS UPON TERMINATION

7.1                       Rights and Obligations .  Upon termination of this Agreement, the Consultant shall deliver up to the Company all documents, papers, plans, materials and other property of or relating to the affairs of the Company, other than the Consultant’s own papers in regard to his role in the Company.


8                          CLOSING

8.1                       Closing Date .  This Agreement shall be effective as of July 1, 2011.

8.2                       Conditions of Closing .  The parties hereto agree that it shall be a condition of the execution of this Agreement that prior to or contemporaneously with the execution of this Agreement:

 
(a)
This Agreement shall be approved by the Board of Directors of the Company.


9                         NOTICES AND REQUESTS

9.1                       Notices and Requests .  All notices and requests in connection with this Agreement shall be deemed given as of the day they are received either by messenger, delivery service, or mailed by registered or certified mail with postage prepaid and return receipt requested and addressed as follows:

 
(a)
If to the Company, the registered office in the State of South Carolina.

 
(b)
If to the Consultant, the registered office in the state of Maryland.


or to such other address as the party to receive notice or request so designates by written notice to the others.


10                         INDEPENDENT PARTIES

10.1                     Independent Parties .  This Agreement is intended solely as a consulting agreement and no partnership, agency, joint venture, distributorship or other form of agreement is intended.

 
 

 
 
- 5 -
11                        AGREEMENT VOLUNTARY AND EQUITABLE

11.1                     Agreement Voluntary .  The parties acknowledge and declare that in executing this Agreement they are each relying wholly on their own judgment and knowledge and have not been influenced to any extent whatsoever by any representations or statements made by or on behalf of any other party regarding any matters dealt with herein or incidental thereto.

11.2                     Agreement Equitable .  The parties further acknowledge and declare that they each have carefully considered and understand the provisions contained herein, including, but without limiting the generality of the foregoing, the said provisions are mutually fair and equitable, and that they executed this Agreement voluntarily and of their own free will.


12                        CONTRACT NON-ASSIGNABLE

12.1                     Contract Non-Assignable .  This Agreement and all other rights, benefits and privileges contained herein may not be assigned by the Consultant.



13                        ENTIRE AGREEMENT

13.1                     Entire Agreement .  This Agreement represents the entire Agreement between the parties and supersedes any and all prior agreements and understandings, whether written or oral, among the parties.



14                       AMENDMENT

14.1                     Amendment .  This Agreement shall not be amended or otherwise modified except by a written notice of even date herewith or subsequent hereto signed by both parties.



15                       EXECUTION

15.1                     Execution in Several Counterparts .  This Agreement may be executed by facsimile and in several counterparts, each of which shall be deemed to be an original and all of which shall together constitute one and the same instrument.
 
 
 

 
 
- 6 -
 
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the _1st­­_ day of ____ July ____________, 2011.
 
THE COMPANY
 
     
Per:
/s/ Kevin Yates  
 
Authorized Signatory
 
     
     
Kevin Yates  
Name  
CEO  
Title
 
 

 
 
 
THE CONSULTANT
 
     
Per:
/s/ Wilbert Williams  
 
Authorized Signatory
 
     
     
Wilbert O. Williams  
Name
 
Managing Partner  
Title
 
 
 
 

 
 
- 7 -
SCHEDULE "A"
 
NON-DISCLOSURE PROVISIONS

 

1.
CONFIDENTIAL INFORMATION AND MATERIALS

 
(a)
"Confidential Information" shall mean, for the purposes of this Agreement, non-public information which the Company designates as being confidential or which, under the circumstances surrounding disclosure ought reasonably to be treated as confidential.  Confidential Information includes, without limitation, information, whether written, oral or communicated by any other means, relating to released or unreleased Company software or hardware products, the marketing or promotion of any product of the Company, the Company's business policies or practices, and information received from others which the Company is obliged to treat as confidential.  Confidential Information disclosed to the Consultant by any subsidiary and/or agents of the Company is covered by this Agreement.

 
(b)
Confidential Information shall not include that information defined as Confidential Information hereinabove which the Consultant can exclusively establish:

 
(i)
is or subsequently becomes publicly available without breach of any obligation of confidentiality owed to the Company;

 
(ii)
became known to the Consultant prior to disclosure by the Company to the Consultant;

 
(iii)
became known to the Consultant from a source other than the Company other than by the breach of any obligations of confidentiality owed to the Company; or

 
(iv)
is independently developed by the Consultant.

 
(c)
Confidential Materials shall include all tangible materials containing Confidential Information, including, without limitation, written or printed documents and computer disks or tapes, whether machine or user readable.

 
 

 
 
- 8 -
2.
RESTRICTIONS

 
(a)
The Consultant shall not disclose any Confidential Information to third parties for a period of three (3) years following the termination of this Agreement, except as provided herein.  However, the Consultant may disclose Confidential Information during bona fide execution of the Services Provided or in accordance with judicial or other governmental order, provided that the Consultant shall give reasonable notice to the Company prior to such disclosure and shall comply with any applicable protective order or equivalent.

 
(b)
The Consultant shall take reasonable security precautions, at least as great as the precautions he takes to protect his own confidential information, to keep confidential the Confidential Information, as defined hereinabove.

 
(c)
Confidential Information and Materials may be disclosed, reproduced, summarized or distributed only in pursuance of the business relationship of the Consultant with the Company, and only as provided hereunder.


3.
RIGHTS AND REMEDIES

 
(a)
The Consultant shall notify the Company immediately upon discovery of any unauthorized use or disclosure of Confidential Information or Materials, or any other breach of this Agreement by the Consultant, and shall co-operate with the Company in every reasonable manner to aid the Company to regain possession of said Confidential Information or Materials and prevent all such further unauthorized use.

 
(b)
The Consultant shall return all originals, copies, reproductions and summaries of or relating to the Confidential Information at the request of the Company or, at the option of the Company, certify destruction of the same.

 
(c)
The parties hereto recognize that a breach by the Consultant of any of the provisions contained herein would result in damages to the Company and that the Company could not be compensated adequately for such damages by monetary award.  Accordingly, the Consultant agrees that in the event of any such breach, in addition to all other remedies available to the Company at law or in equity, the Company shall be entitled as a matter of right to apply to a court of competent jurisdiction for such relief by way of restraining order, injunction, decree or otherwise, as may be appropriate to ensure compliance with the provisions of this Agreement.

 
 

 
 
- 9 -
4.
MISCELLANEOUS

 
(a)
All Confidential Information and Materials are and shall remain the property of the Company. By disclosing information to the Consultant, the Company does not grant any express or implied right to the Consultant to or under any and all patents, copyrights, trademarks, or trade secret information belonging to the Company.

 
(b)
All obligations created herein shall survive change or termination of any and all business relationships between the parties for a period of three years after such termination.

 
(c)
The Company may from time to time request suggestions, feedback or other information from the Consultant on Confidential Information or on released or unreleased software belonging to the Company.  Any suggestions, feedback or other disclosures made by the Consultant are and shall be entirely voluntary on the part of the Consultant and shall not create any obligations on the part of the Company or a confidential agreement between the Consultant and the Company.  Instead, the Company shall be free to disclose and use any suggestions, feedback or other information from the Consultant as the Company sees fit, entirely without obligation of any kind whatsoever to the Consultant.
 
Exhibit 10.22
 
CONSULTING AGREEMENT



THIS AGREEMENT is effective as of the 30th day of April , 2010 (the "Effective Date").

BETWEEN:

NuState Energy Holdings Inc., a   company duly incorporated pursuant to the laws of the state of Nevada.

 
(Hereinafter referred to as the "Company")

 OF THE FIRST PART

AND:

Mobile Software Team, LLC , a company duly incorporated pursuant to the laws of state of South Carolina.

 
Interim Executive and administrative services  (Hereinafter referred to as the "Consultant")

 OF THE SECOND PART

RECITALS

WHEREAS the Company is a publicly held corporation traded on the Pink Sheets in the U.S. under the symbol: NSEH.

WHEREAS the Consultant provides certain operational advisory services to private and public companies to assist in the successful execution of both the operational business plan and the public company plan; and,

WHEREAS the Company understands that in order to achieve its objectives as set forth in its operational and public company plans, it would be beneficial to secure the services of a qualified consulting firm. As a result, the Company has agreed to engage the services of the Consultant in accordance with the terms and conditions herein set forth.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants set forth below, the parties hereto agree as follows:




1                         SERVICES PROVIDED AND DEVOTION OF TIME

1.1                       Services Provided.   During the term of this Agreement, the Consultant shall report to the Company’s Chief Executive Officer (CEO) and provide the operational advisory services as requested by the CEO (the "Services Provided").

1.2                       Devotion of Time .  The parties hereto acknowledge and agree that the work of the Consultant is and shall be of such a nature that regular business hours will not apply nor will the Services Provided take place only at the Company’s office. The Consultant and the Company agree that best efforts will apply to all Services Provided and as the Consultant has other clients, the Company agrees that this contractual relationship represents a part-time obligation for the Consultant.
 
 
 

 

- 2 -
 
1.3                       Business Opportunities the Property of the Company .  The Consultant agrees to communicate immediately to the Company all business opportunities and improvements in the nature of the business of the Company which, during the term of this Agreement, the Consultant may conceive, make or discover, become aware of, directly or indirectly, or have presented to him in any manner which relates in any way to the Company, either as it is now or as it may develop, and such business opportunities or improvements shall become the exclusive property of the Company without any obligation on the part of the Company to make any payments in addition to the fee paid to the Consultant.



2                         CONSULTING FEES

2.1                       Consulting Fees      In consideration of the Consultant providing the services referred to herein, the Company agrees to pay the Consultant a monthly fee of Ten Thousand Dollars (the “Consulting Fee”).

2.2                       Warrants                       As additional consideration for services rendered, the Consultant shall be entitled to three year share purchase Five Million warrants of the Company at an exercise price of $.005



3                         REIMBURSEMENT OF EXPENSES

3.1                        Reimbursement of Expenses .  The Consultant shall be reimbursed for all reasonable and pre-approved expenses incurred by the Consultant in connection with the services provided, including without limiting the generality of the foregoing, all travel and promotional expenses incurred by the Consultant.  All reimbursements shall be made within two (2) weeks of submission by the Consultant of vouchers, bills or receipts for such expenses.


4                         CONFIDENTIAL INFORMATION

4.1                       Confidential Information .  The Consultant shall not, either during the term of this Agreement or under the provisions of Section 4.3, without specific consent in writing, disclose or reveal in any manner whatsoever to any other person, firm or corporation, nor will he use, directly or indirectly, for any purpose other than the purposes of the Company, the private affairs of the Company or any confidential information which he may acquire during the term of this Agreement with relation to the business and affairs of the directors and shareholders of the Company, unless the Consultant is ordered to do so by a court of competent jurisdiction or unless required by any statutory authority.

4.2                       Non-Disclosure Provisions .  The foregoing provision shall be subject to the further non-disclosure provisions contained in Schedule "A" attached hereto and incorporated hereinafter by this reference.

4.3                       Provisions Survive Termination .  The provisions of this section shall survive the termination of this Agreement for a period of three years.


5                         TERM

5.1                       Term .  This Agreement shall remain in effect for three years until April 30 , 2012 or until company becomes a reporting company or terminated in accordance with any of the provisions contained in this Agreement.


6                          TERMINATION

6.1                       Termination by Consultant .  Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.
 
 
 

 
 
- 3 -
6.2                       Termination by Company . Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.


7                          RIGHTS AND OBLIGATIONS UPON TERMINATION

7.1                       Rights and Obligations .  Upon termination of this Agreement, the Consultant shall deliver up to the Company all documents, papers, plans, materials and other property of or relating to the affairs of the Company, other than the Consultant’s own papers in regard to his role in the Company.


8                         CLOSING

8.1                       Closing Date .  This Agreement shall be effective as of April 30, 2010.

8.2                       Conditions of Closing .  The parties hereto agree that it shall be a condition of the execution of this Agreement that prior to or contemporaneously with the execution of this Agreement:

 
(a)
This Agreement shall be approved by the Board of Directors of the Company.


9                         NOTICES AND REQUESTS

9.1                       Notices and Requests .  All notices and requests in connection with this Agreement shall be deemed given as of the day they are received either by messenger, delivery service, or mailed by registered or certified mail with postage prepaid and return receipt requested and addressed as follows:

 
(a)
If to the Company, the registered office in the State of South Carolina.

 
(b)
If to the Consultant, the registered office in the state of South Carolina.


or to such other address as the party to receive notice or request so designates by written notice to the others.


10                        INDEPENDENT PARTIES

10.1                       Independent Parties .  This Agreement is intended solely as a consulting agreement and no partnership, agency, joint venture, distributorship or other form of agreement is intended.


11                        AGREEMENT VOLUNTARY AND EQUITABLE

11.1                     Agreement Voluntary .  The parties acknowledge and declare that in executing this Agreement they are each relying wholly on their own judgment and knowledge and have not been influenced to any extent whatsoever by any representations or statements made by or on behalf of any other party regarding any matters dealt with herein or incidental thereto.

11.2                     Agreement Equitable .  The parties further acknowledge and declare that they each have carefully considered and understand the provisions contained herein, including, but without limiting the generality of the foregoing, the said provisions are mutually fair and equitable, and that they executed this Agreement voluntarily and of their own free will.

 
 

 
 
- 4 -
12                        CONTRACT NON-ASSIGNABLE

12.1                     Contract Non-Assignable .  This Agreement and all other rights, benefits and privileges contained herein may not be assigned by the Consultant.



13                       ENTIRE AGREEMENT

13.1                     Entire Agreement .  This Agreement represents the entire Agreement between the parties and supersedes any and all prior agreements and understandings, whether written or oral, among the parties.



14                       AMENDMENT

14.1                     Amendment .  This Agreement shall not be amended or otherwise modified except by a written notice of even date herewith or subsequent hereto signed by both parties.



15                       EXECUTION

15.1                     Execution in Several Counterparts .  This Agreement may be executed by facsimile and in several counterparts, each of which shall be deemed to be an original and all of which shall together constitute one and the same instrument.
 
 
 

 
 
- 5 -
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the 30th day of April, 2010.
 
 
THE COMPANY
 
     
Per:
/s/ S. Kevin Yates  
 
Authorized Signatory
 
     
     
Sterling K. Yates  
Name
 
CEO  
Title
 
 


 
THE CONSULTANT
 
     
Per:
s/ Kevin Yates  
 
Authorized Signatory
 
     
     
Kevin Yates  
Name  
Director, MST LLC  
Title
 
 
 
 

 
 
- 6 -
SCHEDULE "A"


NON-DISCLOSURE PROVISIONS



1.
CONFIDENTIAL INFORMATION AND MATERIALS

 
(a)
"Confidential Information" shall mean, for the purposes of this Agreement, non-public information which the Company designates as being confidential or which, under the circumstances surrounding disclosure ought reasonably to be treated as confidential.  Confidential Information includes, without limitation, information, whether written, oral or communicated by any other means, relating to released or unreleased Company software or hardware products, the marketing or promotion of any product of the Company, the Company's business policies or practices, and information received from others which the Company is obliged to treat as confidential.  Confidential Information disclosed to the Consultant by any subsidiary and/or agents of the Company is covered by this Agreement.

 
(b)
Confidential Information shall not include that information defined as Confidential Information hereinabove which the Consultant can exclusively establish:

 
(i)
is or subsequently becomes publicly available without breach of any obligation of confidentiality owed to the Company;

 
(ii)
became known to the Consultant prior to disclosure by the Company to the Consultant;

 
(iii)
became known to the Consultant from a source other than the Company other than by the breach of any obligations of confidentiality owed to the Company; or

 
(iv)
is independently developed by the Consultant.

 
(c)
Confidential Materials shall include all tangible materials containing Confidential Information, including, without limitation, written or printed documents and computer disks or tapes, whether machine or user readable.


2.
RESTRICTIONS

 
(a)
The Consultant shall not disclose any Confidential Information to third parties for a period of three (3) years following the termination of this Agreement, except as provided herein.  However, the Consultant may disclose Confidential Information during bona fide execution of the Services Provided or in accordance with judicial or other governmental order, provided that the Consultant shall give reasonable notice to the Company prior to such disclosure and shall comply with any applicable protective order or equivalent.

 
(b)
The Consultant shall take reasonable security precautions, at least as great as the precautions he takes to protect his own confidential information, to keep confidential the Confidential Information, as defined hereinabove.

 
(c)
Confidential Information and Materials may be disclosed, reproduced, summarized or distributed only in pursuance of the business relationship of the Consultant with the Company, and only as provided hereunder.

 
 

 
 
- 7 -
3.
RIGHTS AND REMEDIES

 
(a)
The Consultant shall notify the Company immediately upon discovery of any unauthorized use or disclosure of Confidential Information or Materials, or any other breach of this Agreement by the Consultant, and shall co-operate with the Company in every reasonable manner to aid the Company to regain possession of said Confidential Information or Materials and prevent all such further unauthorized use.

 
(b)
The Consultant shall return all originals, copies, reproductions and summaries of or relating to the Confidential Information at the request of the Company or, at the option of the Company, certify destruction of the same.

 
(c)
The parties hereto recognize that a breach by the Consultant of any of the provisions contained herein would result in damages to the Company and that the Company could not be compensated adequately for such damages by monetary award.  Accordingly, the Consultant agrees that in the event of any such breach, in addition to all other remedies available to the Company at law or in equity, the Company shall be entitled as a matter of right to apply to a court of competent jurisdiction for such relief by way of restraining order, injunction, decree or otherwise, as may be appropriate to ensure compliance with the provisions of this Agreement.


4.
MISCELLANEOUS

 
(a)
All Confidential Information and Materials are and shall remain the property of the Company. By disclosing information to the Consultant, the Company does not grant any express or implied right to the Consultant to or under any and all patents, copyrights, trademarks, or trade secret information belonging to the Company.

 
(b)
All obligations created herein shall survive change or termination of any and all business relationships between the parties for a period of three years after such termination.

 
(c)
The Company may from time to time request suggestions, feedback or other information from the Consultant on Confidential Information or on released or unreleased software belonging to the Company.  Any suggestions, feedback or other disclosures made by the Consultant are and shall be entirely voluntary on the part of the Consultant and shall not create any obligations on the part of the Company or a confidential agreement between the Consultant and the Company.  Instead, the Company shall be free to disclose and use any suggestions, feedback or other information from the Consultant as the Company sees fit, entirely without obligation of any kind whatsoever to the Consultant.
 
Exhibit 10.23
 
CONSULTING AGREEMENT



THIS AGREEMENT is effective as of the _1__ day of April , 2012 (the "Effective Date").

BETWEEN:

NuState Energy Holdings Inc., a   company duly incorporated pursuant to the laws of the state of Nevada.

 
(Hereinafter referred to as the "Company")

 OF THE FIRST PART

AND:

C3I Services, LLC , a company duly incorporated pursuant to the laws of state of South Carolina.

 
Interim Executive and administrative services (Hereinafter referred to as the "Consultant")

 OF THE SECOND PART

RECITALS

WHEREAS the Company is a publicly held corporation traded on the Pink Sheets in the U.S. under the symbol: NSEH.

WHEREAS the Consultant provides certain operational advisory services to private and public companies to assist in the successful execution of both the operational business plan and the public company plan; and,

WHEREAS the Company understands that in order to achieve its objectives as set forth in its operational and public company plans, it would be beneficial to secure the services of a qualified consulting firm. As a result, the Company has agreed to engage the services of the Consultant in accordance with the terms and conditions herein set forth.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants set forth below, the parties hereto agree as follows:

 
 

 

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1                         SERVICES PROVIDED AND DEVOTION OF TIME

1.1                       Services Provided.   During the term of this Agreement, the Consultant shall report to the Company’s Chief Executive Officer (CEO) and provide the operational advisory services as requested by the CEO (the "Services Provided").

1.2                       Devotion of Time .  The parties hereto acknowledge and agree that the work of the Consultant is and shall be of such a nature that regular business hours will not apply nor will the Services Provided take place only at the Company’s office. The Consultant and the Company agree that best efforts will apply to all Services Provided and as the Consultant has other clients, the Company agrees that this contractual relationship represents a part-time obligation for the Consultant.

1.3                       Business Opportunities the Property of the Company .  The Consultant agrees to communicate immediately to the Company all business opportunities and improvements in the nature of the business of the Company which, during the term of this Agreement, the Consultant may conceive, make or discover, become aware of, directly or indirectly, or have presented to him in any manner which relates in any way to the Company, either as it is now or as it may develop, and such business opportunities or improvements shall become the exclusive property of the Company without any obligation on the part of the Company to make any payments in addition to the fee paid to the Consultant.



2                         CONSULTING FEES

2.1                       Consulting Fees      In consideration of the Consultant providing the services referred to herein, the Company agrees to pay the Consultant a monthly fee of Ten Thousand Dollars (the “Consulting Fee”).
 


3                         REIMBURSEMENT OF EXPENSES

3.1                        Reimbursement of Expenses .  The Consultant shall be reimbursed for all reasonable and pre-approved expenses incurred by the Consultant in connection with the services provided, including without limiting the generality of the foregoing, all travel and promotional expenses incurred by the Consultant.  All reimbursements shall be made within two (2) weeks of submission by the Consultant of vouchers, bills or receipts for such expenses.

 
 

 

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4                         CONFIDENTIAL INFORMATION

4.1                       Confidential Information .  The Consultant shall not, either during the term of this Agreement or under the provisions of Section 4.3, without specific consent in writing, disclose or reveal in any manner whatsoever to any other person, firm or corporation, nor will he use, directly or indirectly, for any purpose other than the purposes of the Company, the private affairs of the Company or any confidential information which he may acquire during the term of this Agreement with relation to the business and affairs of the directors and shareholders of the Company, unless the Consultant is ordered to do so by a court of competent jurisdiction or unless required by any statutory authority.

4.2                       Non-Disclosure Provisions .  The foregoing provision shall be subject to the further non-disclosure provisions contained in Schedule "A" attached hereto and incorporated hereinafter by this reference.

4.3                       Provisions Survive Termination .  The provisions of this section shall survive the termination of this Agreement for a period of three years.


5                         TERM

5.1                       Term .  This Agreement  shall remain in effect for one year until July 1 , 2012 or until company becomes a reporting company or terminated in accordance with any of the provisions contained in this Agreement.


6                          TERMINATION

6.1                       Termination by Consultant .  Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.

6.2                       Termination by Company . Notwithstanding any other provision contained herein, the parties hereto agree that the Consultant may terminate this Agreement by giving thirty (30) days written notice of such intention to terminate.


7                          RIGHTS AND OBLIGATIONS UPON TERMINATION

7.1                       Rights and Obligations .  Upon termination of this Agreement, the Consultant shall deliver up to the Company all documents, papers, plans, materials and other property of or relating to the affairs of the Company, other than the Consultant’s own papers in regard to his role in the Company.

 
 

 
 
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8                         CLOSING

8.1                       Closing Date .  This Agreement shall be effective as of July ____, 2012.

8.2                       Conditions of Closing .  The parties hereto agree that it shall be a condition of the execution of this Agreement that prior to or contemporaneously with the execution of this Agreement:

 
(a)
This Agreement shall be approved by the Board of Directors of the Company.


9                         NOTICES AND REQUESTS

9.1                       Notices and Requests .  All notices and requests in connection with this Agreement shall be deemed given as of the day they are received either by messenger, delivery service, or mailed by registered or certified mail with postage prepaid and return receipt requested and addressed as follows:

                           (a)        If to the Company, the registered office in the State of South Carolina.

                           (b)        If to the Consultant, the registered office in the state of South Carolina.


or to such other address as the party to receive notice or request so designates by written notice to the others.


10                        INDEPENDENT PARTIES

10.1                     Independent Parties .  This Agreement is intended solely as a consulting agreement and no partnership, agency, joint venture, distributorship or other form of agreement is intended.


11                        AGREEMENT VOLUNTARY AND EQUITABLE

11.1                     Agreement Voluntary .  The parties acknowledge and declare that in executing this Agreement they are each relying wholly on their own judgment and knowledge and have not been influenced to any extent whatsoever by any representations or statements made by or on behalf of any other party regarding any matters dealt with herein or incidental thereto.

11.2                     Agreement Equitable .  The parties further acknowledge and declare that they each have carefully considered and understand the provisions contained herein, including, but without limiting the generality of the foregoing, the said provisions are mutually fair and equitable, and that they executed this Agreement voluntarily and of their own free will.

 
 

 
 
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12                       CONTRACT NON-ASSIGNABLE

12.1                     Contract Non-Assignable .  This Agreement and all other rights, benefits and privileges contained herein may not be assigned by the Consultant.



13                       ENTIRE AGREEMENT

13.1                     Entire Agreement .  This Agreement represents the entire Agreement between the parties and supersedes any and all prior agreements and understandings, whether written or oral, among the parties.



14                        AMENDMENT

14.1                     Amendment .  This Agreement shall not be amended or otherwise modified except by a written notice of even date herewith or subsequent hereto signed by both parties.



15                        EXECUTION

15.1                     Execution in Several Counterparts .  This Agreement may be executed by facsimile and in several counterparts, each of which shall be deemed to be an original and all of which shall together constitute one and the same instrument.
 
 
 

 
 
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IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the _ 1 _­­_ day of April, 2011.
 
THE COMPANY
 
     
Per:
/s/ Kevin Yates  
 
Authorized Signatory
 
     
     
Sterling K. Yates  
Name  
CEO  
Title
 
 
 
 
THE CONSULTANT
 
     
Per:
/s/ Kevin Yates
 
 
Authorized Signatory
 
     
     
Kevin Yates  
Name  
President  
Title
 
 
 
 

 

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SCHEDULE "A"


NON-DISCLOSURE PROVISIONS


1.
CONFIDENTIAL INFORMATION AND MATERIALS

 
(a)
"Confidential Information" shall mean, for the purposes of this Agreement, non-public information which the Company designates as being confidential or which, under the circumstances surrounding disclosure ought reasonably to be treated as confidential.  Confidential Information includes, without limitation, information, whether written, oral or communicated by any other means, relating to released or unreleased Company software or hardware products, the marketing or promotion of any product of the Company, the Company's business policies or practices, and information received from others which the Company is obliged to treat as confidential.  Confidential Information disclosed to the Consultant by any subsidiary and/or agents of the Company is covered by this Agreement.

 
(b)
Confidential Information shall not include that information defined as Confidential Information hereinabove which the Consultant can exclusively establish:

 
(i)
is or subsequently becomes publicly available without breach of any obligation of confidentiality owed to the Company;

 
(ii)
became known to the Consultant prior to disclosure by the Company to the Consultant;

 
(iii)
became known to the Consultant from a source other than the Company other than by the breach of any obligations of confidentiality owed to the Company; or

 
(iv)
is independently developed by the Consultant.

 
(c)
Confidential Materials shall include all tangible materials containing Confidential Information, including, without limitation, written or printed documents and computer disks or tapes, whether machine or user readable.

 
 

 
 
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2.
RESTRICTIONS

 
(a)
The Consultant shall not disclose any Confidential Information to third parties for a period of three (3) years following the termination of this Agreement, except as provided herein.  However, the Consultant may disclose Confidential Information during bona fide execution of the Services Provided or in accordance with judicial or other governmental order, provided that the Consultant shall give reasonable notice to the Company prior to such disclosure and shall comply with any applicable protective order or equivalent.

 
(b)
The Consultant shall take reasonable security precautions, at least as great as the precautions he takes to protect his own confidential information, to keep confidential the Confidential Information, as defined hereinabove.

 
(c)
Confidential Information and Materials may be disclosed, reproduced, summarized or distributed only in pursuance of the business relationship of the Consultant with the Company, and only as provided hereunder.


3.
RIGHTS AND REMEDIES

 
(a)
The Consultant shall notify the Company immediately upon discovery of any unauthorized use or disclosure of Confidential Information or Materials, or any other breach of this Agreement by the Consultant, and shall co-operate with the Company in every reasonable manner to aid the Company to regain possession of said Confidential Information or Materials and prevent all such further unauthorized use.

 
(b)
The Consultant shall return all originals, copies, reproductions and summaries of or relating to the Confidential Information at the request of the Company or, at the option of the Company, certify destruction of the same.

 
(c)
The parties hereto recognize that a breach by the Consultant of any of the provisions contained herein would result in damages to the Company and that the Company could not be compensated adequately for such damages by monetary award.  Accordingly, the Consultant agrees that in the event of any such breach, in addition to all other remedies available to the Company at law or in equity, the Company shall be entitled as a matter of right to apply to a court of competent jurisdiction for such relief by way of restraining order, injunction, decree or otherwise, as may be appropriate to ensure compliance with the provisions of this Agreement.

 
 

 
 
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4.
MISCELLANEOUS

 
(a)
All Confidential Information and Materials are and shall remain the property of the Company. By disclosing information to the Consultant, the Company does not grant any express or implied right to the Consultant to or under any and all patents, copyrights, trademarks, or trade secret information belonging to the Company.

 
(b)
All obligations created herein shall survive change or termination of any and all business relationships between the parties for a period of three years after such termination.

 
(c)
The Company may from time to time request suggestions, feedback or other information from the Consultant on Confidential Information or on released or unreleased software belonging to the Company.  Any suggestions, feedback or other disclosures made by the Consultant are and shall be entirely voluntary on the part of the Consultant and shall not create any obligations on the part of the Company or a confidential agreement between the Consultant and the Company.  Instead, the Company shall be free to disclose and use any suggestions, feedback or other information from the Consultant as the Company sees fit, entirely without obligation of any kind whatsoever to the Consultant.