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Promissory Note Conversion Agreement For Us Noteholders

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QUEST SOLUTION, INC. | Quest Solution, Inc

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Title: PROMISSORY NOTE CONVERSION AGREEMENT FOR US NOTEHOLDERS
Governing Law: Delaware     Date: 8/22/2016
Industry: Oil and Gas Operations     Sector: Energy

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Exhibit 10.1

 

PROMISSORY NOTE CONVERSION AGREEMENT FOR US NOTEHOLDERS

 

THIS PROMISSORY NOTE CONVERSION AGREEMENT (this “ Agreement ”) is entered into as of June 17, 2016 by and between Quest Solution, Inc. , a Delaware corporation (the “ Company ”), and _______________ (“ Noteholder ”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has executed a Promissory Note in favor of Noteholder in the original aggregate principal amount of $_________, dated ____________, a copy of which is attached hereto as Exhibit A (the “ Note ”); and

 

WHEREAS, the current outstanding principal and interest amount due under the Note (including principal and accrued but unpaid interest) is $_____________, which the Company and Noteholder desire to convert $_______________ of this amount into shares of Series C Preferred Stock, $0.001 par value, of the Company (“ Preferred Stock ”).

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

 

 

1.

Conversion to Preferred Stock . Notwithstanding any term or provision of the Note to the contrary, this Agreement shall be effective when it is accepted and countersigned by the Company (the “ Effective Date ”) and the entire amount outstanding under the Note (including principal and accrued but unpaid interest) shall be converted into shares of Preferred Stock (each, a “Share” and collectively, the “Shares”), at a conversion rate of one Share for each $1.00 of principal and accrued but unpaid interest due under the Note through the Effective Date, which, for purposes of this Agreement, Noteholder and the Company agree shall be equal to an aggregate of ___________ Shares of Preferred Stock. Upon the Effective Date and return of the original Note as described below, the Company shall instruct its transfer agent to issue such shares of Preferred Stock to Noteholder at the address on the signature page hereto.

 

 

 

 

2.

Reserved.

 

 

 

 

3.

Restricted Stock . The Preferred Stock to be issued hereunder has not been registered with the Securities and Exchange Commission or with the securities regulatory authority of any state. Preferred Stock is subject to restrictions imposed by federal and state securities laws and regulations on transferability and resale, and may not be transferred assigned or resold except as permitted under the Securities Act of 1933, as amended (the “ 1933 Act ”), and the applicable state securities laws, pursuant to registration thereunder or exemption therefrom.

 

 

 

 

4.

Company Representations and Warranties . As of the date hereof, the Company hereby represents and warrants to Noteholder that:

 

 

(a) 

Organization . The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

 

 

 

(b) 

Authority and Validity . The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of the Company, and no other proceedings on the part of the Company are necessary to authorize this Agreement or for the Company to perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation of the Company, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

 

 

 

 

 

(c)

Valid Issuance of Preferred Stock . The Shares, when issued and delivered in accordance with the terms hereof, will be duly and validly authorized and issued, fully paid and nonassessable.

 

 

 

 

(d)

No Violation or Conflict . The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (i) violate, conflict with or result in the breach of any provision of the Company’s Certificate of Incorporation or the Company’s Amended and Restated Bylaws, adopted September 29, 2003 (the “ Bylaws ”), (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable the Company or any of its assets, properties or businesses, or (iii) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any encumbrance on any of the assets or properties of the Company, pursuant to any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Company is a party except, in the case of clauses (ii) and (iii), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company.

 

 

 

 

(e)

Governmental/Regulatory Consents and Approvals . Except for filings under federal securities laws and, if required, FINRA rules and regulations, the execution, delivery and performance of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby do not and will not, require any permits, consents, approvals, orders, authorizations of, or declarations to or filings with any federal, state, local or foreign government or regulatory authority, which has not already been obtained, effected or provided.

 

 

5.

Noteholder Representations and Warranties . As of the date hereof, Noteholder hereby represents and warrants to the Company that:

 

 

(a)

Noteholder is the beneficial owner of the Note free and clear of any liens, security interests, encumbrances or other like items and is conveying good title to the Note back to the Company. The Note is the only Promissory Note that Noteholder holds in relation to Company and that there is no further indebtedness owed by the Company to Noteholder.

 

 

 

 

(b)

Noteholder, either alone or with the assistance of the appropriate professional advisors, is a sophisticated investor, is able to fend for himself/herself/itself in the transactions contemplated by this Agreement and has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of this investment. Noteholder has the ability to accept the high risk and lack of liquidity inherent in this type of investment. Noteholder’s financial condition is such that Noteholder can afford to bear the economic risk of holding Preferred Stock, and to suffer a complete loss of Noteholder’s investment in the Company represented by Preferred Stock.

 

-2-

 

 

 

(c)

Noteholder:

 

 

(i)

has had, and continues to have, access to detailed information with respect to the business, financial condition, results of operations and prospects of the Company;

 

 

 

 

(ii)

has received or has been provided access to all material information concerning an investment in the Company; and

 

 

 

 

(iii)

has been given the opportunity to obtain any additional information or documents from, and to ask questions and receive answers of, the officers, directors and representatives of the Company to the extent necessary to evaluate the merits and risks related to an investment in the Company represented by Preferred Stock.

 

 

(d)

As a result of Noteholder’s study of the aforementioned information and Noteholder’s prior overall experience in financial matters, and Noteholder’s familiarity with the nature of businesses such as the Company, Noteholder is properly able to evaluate the capital structure of the Company, the business of the Company and the risks inherent therein.

 

 

 

 

(e)

Noteholder is an “accredited investor” (as said term is defined in Rule 501(a) (17 C.F.R. § 230.501) promulgated under the 1933 Act. Noteholder has accurately completed the Investor Questionnaire attached hereto as Exhibit B . The undersigned agrees to provide any additional documents and information that the Board of Directors of the Company shall reasonably request for purposes of determining whether the undersigned is an accredited investor.

 

 

 

 

(f)

Noteholder understands that nothing in this Agreement or any materials presented to Noteholder in connection with the issuance of the Shares constitutes legal, tax or investment advice. Noteholder has consulted such legal, tax and investment advisors and made such investigations as it, it its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

 

 

 

 

(g)

No person or entity acting on behalf of, or under the authority of, Noteholder is or will be entitled to any broker’s, finder’s or similar fees or commission payable by the Company.

 

 

 

 

(h)

Noteholder has all necessary power and authority to execute and deliver this Agreement and become an owner of the Shares. All action on Noteholder’s part required for the lawful execution and delivery of this Agreement has been taken. Upon its execution and delivery, this Agreement will be a valid and binding obligation of Noteholder, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

 

 

 

 

(i)

The Shares are being acquired for Noteholder’s own account without the participation of any other person, with the intent of holding the Shares for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares and not with a view to, or for resale in connection with, any distribution of the Shares or any portion thereof, nor is Noteholder aware of the existence of any distribution of the Company’s securities, and Noteholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person with respect to any of the Shares.

 

-3-

 

 

 

(j)

The Shares were not offered to Noteholder by means of any form of general solicitation, general advertising or publicly disseminated advertisements or sales literature, nor is Noteholder aware of any offers made to other persons by such means.

 

 

 

 

(k)

For purposes of the application of state securities laws, if Noteholder is an individual, then Noteholder resides in the state or province identified in the address of Noteholder set forth on the signature page hereto; if Noteholder is a partnership, corporation, limited liability company or other entity, then the office or offices of Noteholder in which its investment decision was made


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