NEITHER
THIS NOTE, THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE, OR
THE SECURITIES WHICH MAY BE ISSUED TO THE HOLDER OF THIS NOTE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON THE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF FEDERAL AND STATE SECURITIES
LAWS PROVIDED BY REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF WITHOUT COMPLIANCE WITH SUCH
REQUIREMENTS OR A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE
OBLIGOR THAT SUCH TRANSFER WILL NOT RESULT IN ANY VIOLATION OF SUCH
LAWS OR AFFECT THE LEGALITY OF THEIR ISSUANCE.
CONVERTIBLE PROMISSORY
NOTE
|
US$500,000
|
|
March 30th, 2007
|
FOR
VALUE RECEIVED, the
undersigned, True North Energy Corporation, a Nevada corporation
(the "Obligor"), hereby promises to pay to the order of EH&P
Investments AG (the "Holder"), the principal sum of Five Hundred
Thousand Dollars ($500,000) payable as set forth below. The Obligor
also promises to pay to the order of the Holder interest on the
principal amount hereof at a rate of 8% per annum, which interest
shall be payable as set forth below. Interest shall be calculated
on the basis of the year of 365 days and for the number of days
actually elapsed. The payments of principal and interest hereunder
shall be made in coin or currency of the United States of America
which at the time of payment shall be legal tender therein for the
payment of public and private debts.
This Note shall
be subject to the following additional terms and
conditions:
1.
Payments . Subject to prior conversion or acceleration,
all principal due hereunder shall be payable in one (1) installment
on March 30 th , 2010 (the “Maturity Date”).
Subject to prior conversion or acceleration, interest shall be
payable semi-annually. The first such interest payment shall be due
the first day of the first month following 180 days from the date
of this Note. Subsequent interest payments will be due and payable
on the first day of the month every six months thereafter.
Notwithstanding the foregoing, the final interest payment shall be
due and payable on the Maturity Date. In the event that any payment
to be made hereunder shall be or become due on Saturday, Sunday or
any other day which is a legal bank holiday under the laws of the
State of Texas, such payment shall be or become due on the next
succeeding business day.
2.
Prepayment
. The Obligor and the Holder
understand and agree that the principal amount of this Note
together with all accrued interest due thereon can be prepaid by
Obligor at any time without penalty, commencing April 30
th , 2007.
(a)
In the event the Obligor completes
an offering (the “Offering”) of US$10,000,000 or more
of equity or debt securities within 90 days of the date of this
Note (the “Offering Completion Date”), this Note,
including any accrued and unpaid interest, shall be automatically
exchanged for and converted into like share or securities issued by
the Obligor in the Offering on the same terms that such like shares
or securities are purchased by subscribers in the Offering. The
amount of like shares or securities so issued shall be based on the
amount of principal and interest converted. The Holder shall effect
the conversion by promptly surrendering this Note to the Obligor.
Upon receipt of the Note, the Obligor will deliver or shall cause
to be delivered the like shares or other securities of the Obligor
issuable upon conversion.
(b)
Upon a conversion involving common
stock of the Obligor, the Obligor shall not be required to issue
stock certificates representing fractions of shares, but may either
make a cash payment in respect of any final fraction of a share or
round up to the next whole share of common stock.
(c)
The issuance of securities of the
Obligor upon conversion of this Note shall be made without charge
to the Holder for any documentary stamp or similar taxes that may
be payable in respect of the issue or delivery of a certificate for
such securities, provided that the Obligor shall not be required to
pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon
conversion in a name other than that of the original
Holder.
(d)
Any and all notices or other
communications or deliveries to be provided by the Holder
hereunder, shall be in writing and delivered personally, by
facsimile, sent by a nationally recognized overnight courier
service or sent by certified or registered mail, postage prepaid,
addressed to the attention of the Chief Executive Officer of the
Obligor at the facsimile number or address of the pri
