Exhibit 10.1
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE
SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE
UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.
SUBSCRIPTION AGREEMENT
(Offshore Subscribers)
TO: NORSTRA ENERGY INC. (THE "COMPANY")
Purchase of Convertible Note
1. SUBSCRIPTION AND USE OF PROCEEDS
1.1 On the basis of the representations and warranties and subject to the terms
and conditions set forth herein, XXXXXXX XXXXXXX, LLC, (the "SUBSCRIBER") hereby
irrevocably subscribes for and agrees to purchase one convertible note (the
"NOTE") from the Company for an aggregate purchase price of $150,000 (the
"SUBSCRIPTION PROCEEDS"), substantially in the form attached to this
Subscription Agreement as Exhibit "A" (the subscription and agreement to
purchase being the "SUBSCRIPTION").
1.2 On the basis of the representations and warranties and subject to the terms
and conditions set forth herein, the Company hereby irrevocably agrees to sell
the Note to the Subscriber.
1.3 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company.
1.4 Unless otherwise provided, all dollar amounts referred to in this
Subscription Agreement are in lawful money of the United States of America.
2. PAYMENT
2.1 the Subscription Proceeds pertaining to the purchase of the Note shall be
paid on or before the Closing Date (as defined in Section 4.1, below) by cheque
or wire transfer to the Company.
3. DOCUMENTS REQUIRED FROM SUBSCRIBER
3.1 The Subscriber must:
(a) complete, sign and return to the Company an executed copy of this
Subscription Agreement prior to the Closing Date; and,
(b) complete, sign and return to the Company an executed copy of the
Investor Questionnaire attached as Annex B; and
(c) complete, sign and return to the Company as soon as possible, on
request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities and
applicable law
(collectively the "TRANSACTION DOCUMENTS.")
4. CLOSING
4.1 There shall be no formal closing ceremony with respect to the transactions
contemplated by this Agreement. Instead, the parties shall execute and exchange
the Transaction Documents by facsimile and email and the closing of the
transactions contemplated by this Agreement shall be deemed to have occurred
(the "CLOSING") on the date (the "CLOSING DATE") that the Company receives the
Subscription Proceeds in full. There may be multiple Closings
5. ACKNOWLEDGEMENTS OF SUBSCRIBER
5.1 The Subscriber acknowledges and agrees that:
(a) Neither the Note nor the shares of common stock ("SHARES") that may be
issued upon a conversion of the Note (the Note and the Shares may be
hereinafter referred to collectively as the "SECURITIES") have been or
will be registered under the 1933 Act, or under any state securities
or "blue sky" laws of any state of the United States, and, unless so
registered, none of them may be offered or sold in the United States
or, directly or indirectly, to a U.S. Person, as that term is defined
in Regulation S under the 1933 Act ("REGULATION S"), except in
accordance with the provisions of Regulation S, pursuant to an
effective registration statement under the 1933 Act, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act and in each case in accordance with
applicable state securities laws;
(b) the Company has not undertaken to, and will have no obligation to,
register the Securities, or any of them, under the 1933 Act;
(c) it has received and carefully read this Subscription Agreement;
(d) the decision to execute this Subscription Agreement and acquire the
Note hereunder has not been based upon any oral or written
representation as to fact or otherwise made by or on behalf of the
Company, and such decision is based entirely upon a review of
information (the adequacy of which is hereby acknowledged) about the
Company that is available to any member of the public on the XXXXX
database maintained by the U.S. Securities and Exchange Commission
(the "SEC") at xxx.xxx.xxx;
(e) there are risks associated with an investment in the Company
including, by way of example and not in limitation, the specific risks
identified in the Company's most recent periodic reports filed with
the SEC and available for viewing at the SEC's website at xxx.XXX.xxx;
(f) it and its advisor(s) have had a reasonable opportunity to ask
questions of and receive answers from the Company in connection with
the sale of the Note hereunder, and to obtain additional information,
to the extent possessed or obtainable by the Company without
unreasonable effort or expense;
(g) all information which the Subscriber has provided to the Company is
correct and complete as of the date the Subscription Agreement is
signed, and if there should be any change in such information prior to
this Subscription Agreement being executed by the Company, the
Subscriber will immediately provide the Company with such information;
(h) the Company is entitled to rely on the representations and warranties
of the Subscriber contained in this Subscription Agreement and the
Subscriber will hold the Company harmless from any loss or damage it
may suffer as a result of the Subscriber's failure to correctly
complete this Subscription Agreement;
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(i) the Subscriber has been advised to consult the Subscriber's own legal,
tax and other advisors with respect to the merits and risks of an
investment in the Securities and with respect to applicable resale
restrictions, and it is solely responsible (and the Company is not in
any way responsible) for compliance with:
(i) any applicable laws of the jurisdiction in which the Subscriber
is resident in connection with the distribution of the Securities
hereunder, and
(ii) applicable resale restrictions;
(j) none of the Securities are listed on any stock exchange or automated
dealer quotation system and no representation has been made to the
Subscriber that any of the Securities will become listed on any stock
exchange or automated dealer quotation system, except that currently
certain market makers make market in the Shares of the Company on the
OTC Bulletin Board operated by the Financial Industry Regulatory
Authority ("FINRA");
(k) none of the Securities may be offered or sold by the Subscriber to a
U.S. Person (as defined in Section 0, below, or for the account or
benefit of a U.S. Person (other than a distributor) prior to the end
of the Distribution Compliance Period (as defined herein);
(l) the Subscriber is not acquiring the Note as a result of, and will not
itself engage in, any "directed selling efforts" (as that term is
defined in Regulation S under the 0000 Xxx) in the United States in
respect of the Securities which would include any activities
undertaken for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market in the United States for
the resale of any of the Securities; provided, however, that the
Subscriber may sell or otherwise dispose of the Securities pursuant to
registration thereof under the 1933 Act and any applicable state
securities laws or under an exemption from such registration
requirements;
(m) the Company will refuse to register any transfer of the Securities not
made in accordance with the provisions of Regulation S, pursuant to an
effective registration statement under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933 Act
and in each case in accordance with applicable state securities laws;
(n) neither the SEC nor any other securities commission or similar
regulatory authority has reviewed or passed on the merits of the
Securities;
(o) no documents in connection with the sale of the Note hereunder have
been reviewed by the SEC or any state securities administrators;
(p) there is no government or other insurance covering any of the
Securities;
(q) the issuance and sale of the Securities to the Subscriber will not be
completed if it would be unlawful or if, in the discretion of the
Company acting reasonably, it is not in the best interests of the
Company;
(r) the Subscriber is purchasing the Securities pursuant to an exemption
from the registration and the prospectus requirements of applicable
securities legislation on the basis that the Subscriber is not a
resident of either the United States or Canada and, as a consequence:
(i) is restricted from using most of the civil remedies available
under securities legislation,
(ii) may not receive information that would otherwise be required to
be provided under securities legislation, and
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(iii)the Company is relieved from certain obligations that would
otherwise apply under securities legislation; and
(s) the statutory and regulatory basis for the exemption from U.S.
registration requirements claimed for the offer of the Note, although
in technical compliance with Regulation S, would not be available if
the offering is part of a plan or scheme to evade the registration
provisions of the 1933 Act or any applicable state securities laws; .
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing), and acknowledges that the Company is relying thereon, that:
(a) the Subscriber is not a U.S. Person as that term is defined in
Regulation S;
(b) the Subscriber is not acquiring the Note for the account or benefit
of, directly or indirectly, any U.S. Person as that term is defined in
Regulation S;
(c) the Subscriber is resident in the jurisdiction set out under the
heading "Name and Address of Subscriber" on the signature page of this
Subscription Agreement and the sale of the Securities to the
Subscriber as contemplated in this Subscription Agreement complies
with or is exempt from the applicable securities legislation of the
jurisdiction of residence of the Subscriber;
(d) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription Agreement and to take all actions required
pursuant hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Subscription Agreement on behalf of the
Subscriber;
(e) if the Subscriber is a corporation or other entity, the entering into
of this Subscription Agreement and the transactions contemplated
hereby do not and will not result in the violation of any of the terms
and provisions of any law applicable to, or the constating documents
of, the Subscriber or of any agreement, written or oral, to which the
Subscriber may be a party or by which the Subscriber is or may be
bound;
(f) the Subscriber has duly executed and delivered this Subscription
Agreement and upon acceptance thereof by the Company it will
constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber in accordance with its terms;
(g) the Subscriber is acquiring the Securities as principal for its own
account for investment purposes only and not for the account of any
other person and not for distribution, assignment or resale to others,
and no other person has a direct or indirect beneficial interest in
such Securities, and it has not subdivided its interest in the
Securities with any other person;
(h) the Subscriber is outside the United States when receiving and
executing this Subscription Agreement and is acquiring the Note as
principal for the Subscriber's own account for investment purposes
only, and not with a view to, or for, resale, distribution or
fractionalisation thereof, in whole or in part, and no other person
has a direct or indirect beneficial interest in the Securities;
(i) the Subscriber is aware that an investment in the Company is
speculative and involves certain risks, including the possible loss of
the entire investment and it has carefully read and considered the
matters set forth under the heading "Risk Factors" appearing in the
Company's Forms 00-X, 00-X, 0-X and any other filings filed with the
SEC;
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(j) the Subscriber has made an independent examination and investigation
of an investment in the Securities and the Company and has depended on
the advice of its legal and financial advisors and agrees that the
Company will not be responsible in any way whatsoever for the
Subscriber's decision to invest in the Securities and the Company;
(k) the Subscriber (i) has adequate net worth and means of providing for
its current financial needs and possible personal contingencies, (ii)
has no need for liquidity in this investment, and (iii) is able to
bear the economic risks of an investment in the Securities for an
indefinite period of time;
(l) the Subscriber understands and agrees that the Company and others will
rely upon the truth and accuracy of the acknowledgements,
representations and agreements contained in this Subscription
Agreement and agrees that if any of such acknowledgements,
representations and agreements are no longer accurate or have been
breached, the Subscriber shall promptly notify the Company;
(m) the Subscriber has the legal capacity and competence to enter into and
execute this Subscription Agreement and to take all actions required
pursuant hereto;
(n) the Subscriber has duly executed and delivered this Subscription
Agreement and it constitutes a valid and binding agreement of the
Subscriber enforceable against the Subscriber in accordance with its
terms;
(o) the Subscriber is not an underwriter of, or dealer in, the Company's
Shares, nor is the Subscriber participating, pursuant to a contractual
agreement or otherwise, in the distribution of any of the Shares;
(p) the Subscriber is not an underwriter of, or dealer in, the Company's
Shares, nor is the Subscriber participating, pursuant to a contractual
agreement or otherwise, in the distribution of any of the Securities;
(q) the Subscriber understands and agrees that offers and sales of any of
the Securities prior to the expiration of restricted period after the
date of original issuance of the Securities (the six month period
hereinafter referred to as the "DISTRIBUTION COMPLIANCE PERIOD") shall
only be made in compliance with the safe harbor provisions set forth
in Regulation S, pursuant to the registration provisions of the 1933
Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with
the registration provisions of the 1933 Act or an exemption therefrom
and in each case only in accordance with applicable state securities
laws;
(r) the Subscriber agrees not to engage in any hedging transactions
involving any of the Securities unless such transactions are in
compliance with the provisions of the 1933 Act and in each case only
in accordance with applicable state securities laws;
(s) the Subscriber (i) is able to fend for itself in the Subscription;
(ii) has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its
investment in the Securities and the Company; and (iii) has the
ability to bear the economic risks of its prospective investment and
can afford the complete loss of such investment;
(t) the Subscriber will indemnify the Company against, and will hold the
Company and, where applicable, its respective directors, officers,
employees, agents, advisors and shareholders harmless from, any and
all loss, liability, claim, damage and expense whatsoever (including,
but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against
any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any
representation or warranty of the Subscriber contained herein or in
any document furnished by the Subscriber to the Company in connection
herewith being untrue in any material respect or any breach or failure
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by the Subscriber to comply with any covenant or agreement made by the
Subscriber to the Company in connection therewith;
(u) the Subscriber is not aware of any advertisement of any of the
Securities and is not acquiring the Securities as a result of any form
of general solicitation or general advertising including
advertisements, articles, notices or other communications published in
any newspaper, magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising; and
(v) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Securities,
(ii) that any person will refund the purchase price of any of the
Securities,
(iii) as to the future price or value of any of the Securities, or
(iv) that any of the Securities will be listed and posted for trading
on any stock exchange or automated dealer quotation system or
that application has been made to list and post any of the
Securities of the Company on any stock exchange or automated
dealer quotation system, except that currently the Company's
common shares are quoted on the over-the-counter market operated
by the Over-The-Counter Bulletin Board operated by FINRA.
6.2 In this Subscription Agreement, the term "U.S. Person" shall have the
meaning ascribed thereto in Regulation S.
7. ACKNOWLEDGEMENT AND WAIVER
7.1 The Subscriber has acknowledged that the decision to purchase the Securities
was solely made on the basis of information available to the Subscriber on the
XXXXX database maintained by the SEC at xxx.xxx.xxx. The Subscriber hereby
waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of the Securities.
8. LEGENDING OF SUBJECT SECURITIES
8.1 The Subscriber hereby acknowledges that that upon the issuance thereof, and
until such time as the same is no longer required under the applicable
securities laws and regulations, the certificates representing any of the
Securities will bear a legend in substantially the following form:
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION
AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE
OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN)
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The Subscriber hereby acknowledges and agrees to the Company making a
notation on its records or giving instructions to the registrar and
transfer agent of the Company in order to implement the restrictions on
transfer set forth and described in this Subscription Agreement.
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9. COSTS
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred
by the Subscriber (including any fees and disbursements of any special counsel
retained by the Subscriber) relating to the purchase of the Note or to the
conversion of the Note or the Conversion Shares shall be borne by the
Subscriber.
10. GOVERNING LAW
10.1 This Subscription Agreement is governed by the laws of the State of Nevada
and the federal laws applicable thereto. The Subscriber, in its personal or
corporate capacity and, if applicable, on behalf of each beneficial purchaser
for whom it is acting, irrevocably attorns to the jurisdiction of the courts of
the State of Nevada.
11. SURVIVAL
11.1 This Subscription Agreement, including without limitation the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties hereto
notwithstanding the completion of the purchase of the Note by the Subscriber
pursuant hereto.
12. ASSIGNMENT
12.1 This Subscription Agreement is assignable.
13. SEVERABILITY
13.1 The invalidity or unenforceability of any particular provision of this
Subscription Agreement shall not affect or limit the validity or enforceability
of the remaining provisions of this Subscription Agreement.
14. ENTIRE AGREEMENT
14.1 Except as expressly provided in this Subscription Agreement and in the
agreements, instruments and other documents contemplated or provided for herein,
this Subscription Agreement contains the entire agreement between the parties
with respect to the sale of the Securities and there are no other terms,
conditions, representations or warranties, whether expressed, implied, oral or
written, by statute or common law, by the Company or by anyone else. This
subscription may only be amended by instrument in writing signed by the parties
hereto.
15. NOTICES
15.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on the signature page of this Subscription Agreement and notices to the
Company shall be directed to it at Norstra Energy Inc., 0000 Xxxx 00xx Xxx,
Xxxxxxx, Xxxxxxxxxx, 00000 and with a copy to Norstra Energy Inc. c/o 4th Floor
- 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxx Xxxxxxxx X0X 0X0.
16. COUNTERPARTS AND ELECTRONIC MEANS
16.1 This Subscription Agreement may be executed in any number of counterparts,
each of which, when so executed and delivered, shall constitute an original and
all of which together shall constitute one instrument. Delivery of an executed
copy of this Subscription Agreement by electronic facsimile transmission or
other means of electronic communication capable of producing a printed copy will
be deemed to be execution and delivery of this Subscription Agreement as of the
date hereinafter set forth.
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17. REGISTRATION INSTRUCTIONS
17.1 The Subscriber hereby directs the Company to cause any Note issued pursuant
to this Subscription Agreement to be registered on the books of the Company as
directed on the signature page of this Agreement.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement
as of the date of acceptance by the Company.
XXXXXXX XXXXXXX LLC
/s/ Authorized Signatory
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(Signature and, if applicable, Office)
Registration Information (if different from above)
----------------------------------------------------
----------------------------------------------------
(Name of Subscriber - Please type or print)
----------------------------------------------------
(Signature and, if applicable, Office)
----------------------------------------------------
(Address of Subscriber)
----------------------------------------------------
(City, State or Province, Postal Code of Subscriber)
----------------------------------------------------
(Country of Subscriber)
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(Fax and/or E-mail Address of Subscriber)
A C C E P T A N C E
The above-mentioned Subscription Agreement in respect of the Note is hereby
accepted by Norstra Energy Inc.
DATED at Southlake, Texas, the 6h day of December, 2013.
NORSTRA ENERGY INC.
Per: /s/ Xxxx Xxxxxx
----------------------------------
Xxxx Xxxxxx
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EXHIBIT "A"
FORM OF CONVERTIBLE NOTE
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS
CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT
A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S.
STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS SECURITY
AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS
DEFINED BY REGULATION S UNDER THE 1933 ACT.
DATED: DECEMBER 6, 2013
U.S. $150,000
CONVERTIBLE NOTE
FOR VALUE RECEIVED, NORSTRA ENERGY INC. (the "COMPANY") promises to pay to
XXXXXXX XXXXXXX LLC, or its registered assignS (the "HOLDER"), the principal sum
of One Hundred Fifty Thousand Dollars ($150,000) in lawful currency of the
United States (the "PRINCIPAL AMOUNT") on December 6, 2015 or such earlier date
as the Note may be permitted to be repaid as provided hereunder (the "MATURITY
DATE"), with 10% annual interest, to the Holder on the earlier of (i) the
Conversion Date (as hereafter defined) and (ii) the Maturity Date (except that,
if any such date is not a Business Day, then such payment shall be due on the
next succeeding Business Day) in cash. THE COMPANY MAY PREPAY ANY PORTION OF THE
PRINCIPAL AMOUNT WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDER.
This Note is subject to the following additional provisions:
1. OTHER AGREEMENTS.
1.1 This Note has been issued pursuant to a subscription agreement between the
Company and the Holder dated December 6, 2013 (the "SUBSCRIPTION AGREEMENT")
pursuant to which the Holder purchased this Note, and this Note is subject in
all respects to the terms of the Subscription Agreement and incorporates the
terms of the Subscription Agreement to the extent that they do not conflict with
the terms of this Note. This Note may be transferred or assigned.
2. EVENTS OF DEFAULT.
2.1 "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):
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(a) any default in the payment of the Principal Amount 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);
(b) the Company shall fail to observe or perform any other covenant or
agreement contained in this Note or the Subscription Agreement which
failure is not cured, if possible to cure, within 30 calendar days
after notice of such default is sent by the Holder to the Company; or
(c) the Company or any of its subsidiaries (each a "SUBSIDIARY") shall
commence, or there shall be commenced against the Company or any
Subsidiary a case under any applicable bankruptcy or insolvency laws
as now or hereafter in effect or any successor thereto, or the Company
or any Subsidiary commences 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
Company or any Subsidiary or there is commenced against the Company or
any Subsidiary any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 60 days; or the Company or
any Subsidiary is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is
entered; or the Company or any Subsidiary suffers any appointment of
any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60
days; or the Company or any Subsidiary makes a general assignment for
the benefit of creditors; or the Company 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 Company or any Subsidiary shall
call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the Company
or any Subsidiary 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 Company or
any Subsidiary for the purpose of effecting any of the foregoing.
2.2 If any Event of Default occurs, the full Principal Amount, together with
interest and other amounts owing in respect thereof to the date of acceleration
shall become, at the Holder's election, immediately due and payable in cash.
Upon payment of the full Principal Amount, together with interest and other
amounts owing in respect thereof, in accordance herewith, this Note shall
promptly be surrendered to or as directed by the Company. The Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by the Holder at any time prior to payment hereunder and
the Holder shall have all rights as a Note holder until such time, if any, as
the full payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.
3. CONVERSION.
3.1 At any time after the Financing Date until this Note is no longer
outstanding, this Note may be converted into Conversion Shares at any time and
from time-to-time, in whole or in part, at the option of the Holder. The Holder
shall effect conversions by delivering to the Company the form of Notice of
Conversion attached hereto as Annex A (a "NOTICE OF CONVERSION"), specifying
therein the amount of principal to be converted and the date on which such
conversion is to be effected (a "CONVERSION DATE"); provided that the date upon
which any such conversion may be effected may not be less than 5 calendar days
following the date of delivery of the Notice of Conversion. If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that is 5 calendar days after such Notice of Conversion is delivered to the
Company. To effect conversions hereunder, the Holder shall not be required to
physically surrender the Note to the Company unless the entire principal amount
of this Note has been so converted. Conversions hereunder shall have the effect
of lowering the outstanding principal amount of this Note in an amount equal to
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the applicable conversion. The Holder and the Company shall maintain records
showing the principal amount converted and the date of such conversions. The
Company shall deliver any objection to any Notice of Conversion within 10
business days of receipt of such notice. The Holder, by acceptance of this Note,
acknowledges and agrees that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on the face
hereof.
3.2 The number of Conversion Shares issuable upon a conversion of any
outstanding principal under the Note shall be determined by the quotient
obtained by dividing (x) by (y) where (x) is equal to the amount of outstanding
principal to be converted and (y) is the Conversion Price (as hereinafter
defined).
3.3 Not later than five Trading Days after any Conversion Date, the Company will
deliver to the Holder a certificate or certificates representing the Conversion
Shares (bearing such legends as may be required by applicable law and those
required by the Subscription Agreement) representing the number of Conversion
Shares being acquired upon the conversion of Note.
3.4 The conversion price (the "CONVERSION PRICE") in effect on any Conversion
Date shall be shall mean $0.25 per share.
3.5 At any time after the Financing Date until this Note is no longer
outstanding, this Note may be converted into Conversion Shares at any time and
from time-to-time, in whole or in part, at the option of the Company. The
Company shall effect conversions by delivering to the Holder written notice of
conversion specifying therein the amount of principal to be converted and the
date on which such conversion is to be effected (a "CONVERSION DATE");
3.6 The Company covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock such number of shares
as is necessary in order to ensure that a sufficient number are available for
the purpose of issuance of Conversion Shares upon conversion of this Note, free
from pre-emptive rights or any other actual contingent purchase rights of
Persons other than the Holder. The Company covenants that all Conversion Shares
shall, upon issue, be duly and validly authorized, issued and fully paid and
non-assessable.
3.7 Upon a conversion hereunder the Company shall not be required to issue stock
certificates representing fractions of any Conversion Shares, and the number of
Conversion Shares shall be rounded up or down to the nearest whole number.
3.8 If the Company, at any time while this Note is outstanding: (A) pays a stock
dividend or otherwise makes a distribution or distributions in shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (B) subdivides outstanding shares of Common Stock into a
larger number of shares, (C) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (D)
issues 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.
4. REPAYMENT
4.1 Repayment of this Note, including all interest, shall be due on the Maturity
Date, unless earlier converted into common shares.
5. INTEREST
5.1 Interest on the Principal Amount shall be calculated at 10%, per annum, and
be payable on the Maturity Date.
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6. NOTICES
6.1 Any and all notices or other communications or deliveries to be provided by
the Holder hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other address or facsimile number as the Company may
specify for such purposes by notice to the Holder delivered in accordance with
this Section. Any and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered personally,
by facsimile, sent by a nationally recognized overnight courier service
addressed to the Holder at the facsimile telephone number or address of such
Holder appearing on the books of the Company, or if no such facsimile telephone
number or address appears, at the address of the Holder to which this Note was
delivered. Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 5:30 p.m. (Eastern Standard
Time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (Eastern Standard Time) on any
date and earlier than 11:59 p.m. (Eastern Standard Time) on such date, (iii) the
second business day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
7. DEFINITIONS.
7.1 For the purposes hereof, in addition to the terms defined elsewhere in this
Note: (i) capitalized terms not otherwise defined herein have the meanings given
to such terms in the Subscription Agreement, and (ii) the following terms shall
have the following meanings:
(a) "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 in the State of Texas are authorized or
required by law or other government action to close.
(b) "COMMON STOCK" means the common stock, par value $0.001 per share, of
the Company and stock of any other class into which such shares may
hereafter have been reclassified or changed.
(c) "CONVERSION DATE" has the meaning set forth in Section 3.5 hereof.
(d) "CONVERSION PRICE" has the meaning set forth in Section 3.4 hereof.
(e) "CONVERSION SHARE" means shares of the Company's Common Stock into
which principal and Interest due pursuant to this Note may be
converted.
(f) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(g) "FINANCING DATE" means the date on which the Principal Amount is
delivered to the Company by the Investor.
(h) "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(i) "TRADING DAY" means a day on which the shares of Common Stock are
traded on a trading market on which the shares of Common Stock are
then listed or quoted, provided, that in the event that the shares of
Common Stock are not listed or quoted, then Trading Day shall mean a
Business Day.
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8. REPLACEMENT OF NOTE IF LOST OR DESTROYED.
If this Note shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of a
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, and indemnity, if
requested, all reasonably satisfactory to the Company.
9. GOVERNING LAW.
All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in
accordance with the internal laws of the State of Nevada, without regard to the
principles of conflicts of law thereof.
10. WAIVERS
Any waiver by the Company or 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 Company or 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.
11. USURY
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 violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest. The Company 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 Company 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
indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.
12. NEXT BUSINESS DAY
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.
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed by a duly authorized officer as of the date first above indicated.
NORSTRA ENERGY INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
title: President
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Note of
Norstra Energy Inc., a Nevada corporation (the "COMPANY"), due on December 6,
2015, into shares of the Company's common stock (each a "Share") as of the date
written below. The undersigned will pay all transfer taxes, intangible or other
taxes payable with respect hereto 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.
The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
Shares.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Note to be Converted:
Accrued Interest to be Converted:
Number of Shares to be issued:
Signature:
Name:
Address:
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