EXHIBIT 10.1

 

Note Conversion Agreement

 

This Note Conversion Agreement (this “Agreement”) is made and entered into as of
December 11, 2012 (the “Effective Date”) by and between Empire Petroleum
Corporation, a Delaware corporation (the “Company”) and The Albert E. Whitehead
Living Trust (the “Holder”). The Company and the Holder are collectively
referred to herein as the “Parties”.

 

WHEREAS, the Holder has previously advanced loans to the Company evidenced by
(1) a Convertible Note, dated February 1, 2011, made by the Company in favor of
the Holder in the principal amount of $100,000 (the “2011 Convertible Note”),
(2) a Convertible Note, dated April 17, 2012, made by the Company in favor of
the Holder in the principal amount of $133,603.00 (the “2012 Convertible Note”)
and (3) a Promissory Note, dated August 28, 2012, made by the Company in favor
of the Holder in the principal amount of $25,000 (together with the 2011
Convertible Note and the 2012 Convertible Note, the “Notes”);

 

WHEREAS, the Holder has subsequently advanced an additional loan to the Company
in the amount of $32,397.50 (the “New Loan”);

 

WHEREAS, the Company owes the Holder an aggregate of $300,012.50 in principal
and accrued but unpaid interest under the Notes and the New Loan (collectively,
the “Outstanding Debt”);

 

WHEREAS, the Parties desire to convert all of the Outstanding Debt into shares
of Common Stock, $0.001 par value per share, of the Company (“Common Stock”) at
a conversion rate of $0.05 per share of Common Stock (the “Conversion Rate”);
and

 

WHEREAS, with respect to the amounts of the Outstanding Debt attributable to the
2011 Convertible Note and the 2012 Convertible Note, the Parties desire to
effect the conversion of such amounts pursuant to the terms set forth herein
rather than, and in place of, the terms set forth in the 2011 Convertible Note
and the 2012 Convertible Note;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
is hereby acknowledged, the Parties agree as follows:

 

1.                  Conversion. Subject to the terms and conditions set forth
herein, all of the Outstanding Debt shall convert into shares of Common Stock at
the Conversion Rate, effective as of the Effective Date, resulting in the
issuance of 6,000,250 shares of Common Stock (the “Conversion Shares”).

 

2.                  Issuance of Conversion Shares; Cancellation of the
Outstanding Debt. On the Effective Date, the Holder shall surrender and deliver
the Notes to the Company for cancellation. Upon such surrender and delivery,
(a) the Company shall issue the Conversion Shares to the Holder and the Company
shall issue and deliver, or instruct its transfer agent to issue and deliver, to
the Holder a certificate or other document evidencing the Conversion Shares and
(b) all of the Outstanding Debt shall be deemed paid in full and all rights and
privileges of the Holder under the Notes and with respect to the New Loan shall
cease and be terminated in their entirety and the Company shall have no further
obligations under the Notes or with respect to the New Loan.

 

3.                  Compliance with Securities Laws. The Holder represents and
warrants to the Company as follows:

 

a.The Holder acknowledges that it understands that the Conversion Shares are
“restricted securities” and have not been registered under the Securities Act of
1933, as amended (the “Securities Act”), or any applicable state securities law,
that the Conversion Shares will include a restrictive legend to that effect,
and, that accordingly, the Conversion Shares 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.

 

b.The Holder is able to bear the economic risk of the investment in the
Conversion Shares and could afford a complete loss of such investment.

 

c.The Holder has sufficient knowledge and experience in financial and business
matters that the Holder is capable of evaluating the merits and risks of an
investment in the Conversion Shares and of making an informed investment
decision with respect thereto and has the capacity to protect its own interests
in connection with the issuance of the Conversion Shares.

 

d.The Holder has no intention of distributing any of the Conversion Shares in
violation of the Securities Act or any applicable state securities law, has no
direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Conversion Shares in violation
of the Securities Act or any applicable state securities law and is acquiring
the Conversion Shares solely for the Holder’s own account as principal, for
investment purposes only and not with a view to the resale or distribution
thereof, in whole or in part.

 

e.The Holder shall not offer, sell or otherwise transfer the Conversion Shares
without registration under the Securities Act or an exemption therefrom and
fully understands and agrees that the Holder must bear the economic risk for an
indefinite period of time because, among other reasons, the Conversion Shares
have not been registered under the Securities Act or under the securities laws
of any state and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Securities Act and
under the applicable securities laws of such states or unless an exemption from
such registration is available.

 

f.The terms and conditions under which the Conversion Shares were issued were
directly communicated to the Holder by the Company in such a manner that the
Holder was able to ask questions of and receive answers from concerning the
terms and conditions of this transaction. At no time was the Holder presented
with or solicited by or through any article, notice or other communication
published in any newspaper or other leaflet, public promotional meeting,
television, radio or other broadcast or transmittal advertisement or any other
form of general advertising.

 

4.                  Entire Agreement; Modifications; Waiver. This Agreement
constitutes the entire agreement between the Parties pertaining to the subject
matter contained herein. This Agreement supersedes all prior and contemporaneous
agreements, representations, and understandings of the Parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all the Parties. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the Party making the waiver. The
failure of a Party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that Party
of the right thereafter to insist upon adherence to that term of any other term
of this Agreement.

 

5.                  Further Assurances. Each Party to this Agreement agrees to
perform any further acts and execute and deliver any further documents that may
be reasonably necessary to carry out the provisions of this Agreement.

 

6.                  Severability. If any provision of this Agreement is rendered
or declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation, by decree of a court of last resort or any other law, the
balance of this Agreement shall remain in effect. If any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

 

7.                  Governing Law. The subject matter of this Agreement shall be
governed by and construed in accordance with the laws of the State of Oklahoma
(without reference to its choice of law principles), and to the exclusion of the
law of any other forum, without regard to the jurisdiction in which any action
or special proceeding may be instituted.

 

8.                  Execution of the Agreement. The Company, the party executing
this Agreement on behalf of the Company, and the Holder, have the all requisite
power and authority to enter into and carry out the terms and conditions of this
Agreement, as well as all transactions contemplated hereunder. All proceedings
have been taken and all authorizations and approvals have been secured which are
necessary to authorize the execution, delivery and performance by the Company
and the Holder of this Agreement. This Agreement has been duly and validly
executed and delivered by the Company and the Holder and constitutes a valid and
binding obligation on the Company and the Holder, enforceable in accordance with
the respective terms herein.

 

9.                  Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 
 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.

 

EMPIRE PETROLEUM CORPORATION

 

 

  By: /s/Albert E. Whitehead     Name:  Albert E. Whitehead     Title:     Chief
Executive Officer

 

 

THE ALBERT E. WHITEHEAD LIVING TRUST

.

 

  By: /s/Albert E. Whitehead     Name:  Albert E. Whitehead, as Trustee