PROMISSORY NOTE SETTLEMENT
AGREEMENT
THIS PROMISSORY NOTE SETTLEMENT
AGREEMENT (the “Agreement”) is made effective this 31
st day of October, 2008 (the “Effective
Date”), by and between Nitro Petroleum Incorporated, (the
“Company”), with a principal business address of 7250
N.W. Expressway, Oklahoma City, Oklahoma 73132 and 658111 B.C. Ltd.
(“658111 Ltd.”), with a principal business address of
16403-87 th Street, Osoyoos, British Columbia, Canada
V0H1V2.
WITNESSETH
WHEREAS, the Company has borrowed
$100,000 from 658111 Ltd. pursuant to the terms of that certain
demand promissory note issued by the Company in favor of 658111
Ltd., which bears interest at a rate of four percent (4%) per annum
(the “Note”).
WHEREAS, the table below sets forth
(i) the date the Note was entered into, (ii) the original principal
amount of the Note, (iii) the unpaid principal amount of the Note
as of the Effective Date, (iv) the accrued and unpaid interest owed
on the Note as of the Effective Date, and (v) the total amount of
principal and accrued and unpaid interest due on the Note as of the
Effective Date:
|
Date of Promissory
Note
|
Original Principal Amount of
Promissory Note
|
Unpaid Principal Amount of
Promissory Note
|
Accrued and Unpaid
Interest
|
Total Principal and Interest
due on Promissory Note
|
|
February 9, 2006
|
$100,000
|
$100,000
|
$11,072
|
$111,072
|
WHEREAS, the aggregate amount of the
total principal and accrued and unpaid interest due on the Note as
of the Effective Date is $111,072 (referred to hereafter as the
“Settlement Amount”).
WHEREAS, the Company desires to pay
the Settlement Amount through the issuance of shares of its common
stock, par value $0.001 per share (the “Common Stock”)
and 658111 Ltd. desires to accept shares of the Company’s
Common Stock in full satisfaction of the Settlement Amount pursuant
to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of
the foregoing, the covenants herein contained, and other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
|
|
1.
|
Payment of Settlement
Amount .
|
(a) Valuation
of Common Stock . The parties agree that, for purposes of
paying the Settlement Amount, each share of the Company’s
Common Stock shall be valued at $0.05 per share (the “Per
Share Value”). The parties determined the Per Share Value
through negotiation and, as such, the parties recognize,
acknowledge and agree that the Per Share Value may not be
indicative of the true value of a share of the Company’s
Common Stock.
(b) Issuance of
Shares . Based on the Per Share Value, simultaneously with the
execution and delivery of this Agreement, the Company shall issue
and deliver to 658111 Ltd. a stock certificate or stock
certificates representing a total of 2,221,440 shares (the
“Settlement Shares”) of the Company’s Common
Stock in full satisfaction of the Settlement Amount. The stock
certificate(s) for the Settlement Shares shall be freely tradable
and bear no legends restricting transfers of the Settlement
Shares.
2.
Cancellation of the Note . 658111 Ltd. hereby assigns,
transfers and surrenders for cancellation the Note to the Company.
Simultaneously with the execution of this Agreement, 658111 Ltd.
shall deliver to the Company the Note, duly endorsed as terminated
and cancelled. 658111 Ltd. acknowledges that upon its receipt
of
the Settlement Shares pursuant to
Section 1(b) above and delivery of the Note pursuant to this
Section, it shall have no further rights to any payments under the
Note.
3.
Release of the Company . 658111 Ltd., on behalf of its
officers, directors, shareholders, assigns, successors, agents,
representatives, attorneys and all other persons or entities
who/which have or could have made claims through or based on any of
its rights, hereby release and discharge the Company, and any of
its officers, directors, shareholders, attorneys, affiliates,
successors,
