Document:

PROMISSORY
NOTE

 

Effective
Date: November 1, 2018

 

For
Value received the undersigned Crossroads Petroleum LLC (“Maker”) of 28535 Nelson Rd, San Benito, TX 78586,
promises to pay Petrolia Energy Corporation (“Holder”), 710 N Post Oak Rd, Suite 512, Houston, TX 77024, or
order, the sum of Two Hundred Forty Thousand and Zero Cents ($240,000.00) for the purchase of Noack Farms, Minerva lease
in Milam County, Texas.

 

This
note shall be due on the following schedule:

 

	 	●	One
    Hundred Twenty Five Thousand ($125,000.00) on or before December 1, 2018
	 	●	One
    Hundred Fifteen Thousand ($115,000.00) on or before December 31, 2018 

 

This
note may be prepaid at any time or from time to time in whole or in part without penalty, premium, or permission.

 

Should
the Maker default in payment of any principal, and/or profit, when due, Maker shall be obligated to pay such costs, fees, expenses,
including attorney’s fees, which may be incurred by Holder, or any such Holder hereof, in connection with any and all enforcement
proceeding. In the event of default hereunder, Holder shall have the right to offset against any obligation payable to Maker under
Maker’s any other contracts with Holder, such amounts as are necessary to extinguish this Note as soon as possible after
Maker’s default.

 

	By:		 
	 	CROSSROADS
    PETROLEUM LLC (“Maker”)	 

 

	By:		 
	 	PETROLIA
    ENERGY CORPORATION (“Holder”)LOAN
AGREEMENT

 

Sept
17th, 2018

 

WHEREAS
Emmett Lescroart (the “Lender”) and
Petrolia Energy Corporation (the “Borrower”)
wish to enter into this loan
agreement (the “Loan
Agreement”) which provides a loan of US $200,000 at an interest
rate of 12%;

 

AND
WHEREAS by September
17th, 2018, Borrower has acquired
three percent (3%) undivided working interest
in the 3 former Cona Resources Ltd. leases
(“Cuthbert Assets”) and is prepared to issue
certain securities of Petrolia pursuant to the
terms herein;

 

NOW
THEREFORE, in consideration
of the increase of the loan upon
the terms hereof, the Lender and
the Borrower covenant and agree as follows:

 

	Borrower:	Petrolia
    Energy Corporation
	 	 
	Guarantor(s):	Petrolia
    Energy Corporation (the “Guarantor” or
    “Loan Party”).
	 	 
	Lender:	Emmett
    Lescroart.
	 	 
	Loan:	US
    $200,000 (“Loan”).
	 	 
	Loan
    Purpose:	To
    acquire 3% working interest
    in the Cuthbert Assets formerly owned by Cona Resources Ltd. in Alberta
    and Saskatchewan, Canada; and are
    free and clear of any liens
    and encumbrances on the Closing
    Date.
	 	 
	Effective
    Date:	September
    17th, 2018.
	 	 
	Maturity
    Date:	October
    17th, 2019.
	 	 
	Interest
    Rate:	The
    Borrower shall pay interest on the total
    Loan at a rate of 12% per annum.
	 	 
	Warrants:	In
                                         addition
                                         to the
                                         repayment of principal
                                         and interest on
                                         the Loan, the Borrower shall grant to
                                         the Lender an aggregate
                                         250,000 warrants in Petrolia
                                         Energy Corporation at an
                                         exercise price of USD$0.10 per share
                                         expiring on Maturity Date (the “Warrants”).

         

        The
        terms of the Warrants shall include:
        (i) typical adjustment provisions to adjust the number
        of Warrants and the Exercise
        Price in the event of any
        share consolidation, recapitalization, reclassification, or
        similar transaction or reorganization
        of share capital; and (ii) provisions
        allowing exercise in the event of any change
        in control, business combination or other transaction involving the
        Borrower.

	 	 
	Repayment:	A
    repayment schedule is attached as
    Schedule A. Principal and interest shall
    be remitted on the 17th of
    each Month commencing October 17th, 2018.
	 	 
	Prepayment:	Prepayment
    is permitted
    any time on, or after, 60 days from the date hereof,
    with no penalty, subject to
    a written notification period of 10 calendar
    days. In the event of
    early payout, the Borrower shall
    ensure total interest paid to the lender is 12%
    on US $200,000.
	 	 
	Security:	The
    Lender holds security (the “Security”) against the Borrower’s
    3% Working Interest in the
    Cuthbert Assets. All Security,
    as the same may be amended,
    replaced, restated or supplemented, shall be held
    by the Lender as continuing security
    for the present and future indebtedness, liabilities and obligations
    (whether direct or indirect, absolute
    or contingent) of the
    Borrower to the Lender under this
    Loan Agreement and the Security
    as the same may be amended,
    replaced, restated or supplemented.

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	2	 

    

 

	Representations and
    Warranties:	Borrower
    represents and warrants
    to the Lender that:

 

		1.	it
                                         has been duly
                                         incorporated and is in good standing under
                                         the legislation governing it, and it
                                         has the powers, permits, and licenses required
                                         to operate its business or enterprise
                                         and to own, manage, and administer
                                         its property;
	 	 	 
		2.	this
                                         Loan
                                         Agreement constitutes, the Security, and
                                         the Warrants and other agreements shall constitute,
                                         legal, valid, and binding obligations
                                         of itself, enforceable in accordance
                                         with their terms, subject to applicable bankruptcy, insolvency, or similar
                                         laws affecting creditors’ rights generally
                                         and to the availability of equitable
                                         remedies;
	 	 	 
		3.	it
                                         has the right
                                         to pledge, charge, mortgage, or lien its
                                         assets in accordance with the Security
                                         contemplated by this Loan Agreement;
	 	 	 
		4.	it
                                         is presently in good
                                         standing under, and shall duly perform
                                         and observe, all material
                                         terms of all
                                         material documents, agreements, and instruments affecting or relating
                                         to its petroleum and natural
                                         gas assets (collectively, the “PNG
                                         Agreements”);
	 	 	 
		5.	the
                                         Borrower is Petrolia Energy Corporation.
	 	 	 
		6.	it
                                         is not involved in any dispute
                                         or legal proceedings likely to materially
                                         affect its financial position or its capacity
                                         to operate its business;
	 	 	 
		7.	without
                                         limiting the generality of
                                         clause 4 above
                                         with respect to the PNG Agreements,
                                         it is not in default
                                         under any other contracts to which
                                         it is a party or under
                                         the applicable legislation and regulations
                                         governing the operation of its
                                         business or its property, including all
                                         material environmental requirements except where such default
                                         or non-compliance could not
                                         reasonably be expected to have
                                         a material adverse effect on the
                                         Borrower or its property;
	 	 	 
		8.	it
                                         is not in default
                                         under the contracts to which
                                         it is a party or under the applicable legislation
                                         and regulations governing the operation
                                         of its business or
                                         its property,
                                         including all material
                                         environmental requirements, other than arrears
                                         in payment of amounts outstanding
                                         to suppliers and service providers, which have
                                         been disclosed to the
                                         Lender;
	 	 	 
		9.	it
                                         has provided to the Lender
                                         all material
                                         information in the possession of
                                         or available to it and relevant
                                         to the Lender’s review and
                                         assessment of
                                         the Loan, Security and the
                                         structure of the Loan Parties and, all such
                                         information is true, complete and
                                         accurate;
	 	 	 
		10.	it
                                         has all the requisite power, authority and
                                         capacity to execute
                                         and deliver this Loan Agreement and
                                         the Security (to which
                                         it is a party)
                                         and to perform its obligations
                                         hereunder and thereunder;
	 	 	 
		11.	the
                                         execution and delivery of this
                                         Loan Agreement, the Warrants and
                                         the Security (to which it is a party)
                                         and the performance of the terms
                                         of this Loan Agreement, the Warrants and
                                         Security do not violate the provisions of its contacting documents or its by-laws or
                                         any law, order, rule or regulation applicable to it and have been validly authorized
                                         by it; and 
	 	 	 
	 	12.	the
                                         execution, delivery and performance of
                                         the terms of this
                                         Loan Agreement, the Warrants and
                                         the Security (to which
                                         it is a party) shall not
                                         constitute a breach of
                                         any agreement to which
                                         it or its property,
                                         assets or undertaking are bound or
                                         affected.

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	3	 

    

 

	 	Unless
    expressly stated to be made
    as of a specific date, the representations
    and warranties made in this Loan
    Agreement shall survive the execution
    of this Loan Agreement,
    the Warrants and all Security,
    and shall be deemed to be repeated
    as of the date of each drawdown
    under the Loan subject to modifications made by the Borrower
    to the Lender in writing
    and accepted by the Lender. The Lender
    shall be deemed to have relied
    upon such representations and warranties at each such time
    as a condition of making
    each drawdown under the Loan or continuing
    to extend the Loan.

 

	Affirmative
    Covenants:	Each
    of the Loan Parties covenants and agrees that it shall:

 

	 	1.	pay
    all sums of money when due and payable by it to the Lender under this Loan Agreement and the Security;
	 	 	 
	 	2.	in
    the case of the Borrower, carry on business and operate its petroleum and natural gas reserves in accordance with good practices
    consistent with accepted industry standards and pursuant to applicable agreements, regulations, and laws;
	 	 	 
	 	3.	maintain
    its corporate existence and comply with all applicable laws;
	 	 	 
	 	4.	pay,
    when due, all taxes, assessments, deductions at source, crown royalties, income tax or levies for which the payment is guaranteed
    by legal privilege, prior claim, or legal hypothec, without subrogation or consolidations;
	 	 	 
	 	5.	comply
    with all regulatory bodies and provisions regarding environmental procedures and controls; 
	 	 	 
	 	6.	upon
    reasonable notice, allow the Lender access to its books and records and to visit and inspect its assets and place of business;
    and

 

	 	inform
    the Lender of any event or action which would have a material adverse impact on its operational or financial affairs, including
    the sale of assets, guarantees, or alterations of type and business.

 

	Events
    of Default:	The
    Lender may accelerate the payment of any such outstanding amounts and cancel availability of any undrawn portion of any of
    the Loan at any time after the occurrence of anyone or more of the following events (each an “Event of Default”): 

 

	 	1.	failure
    by the Borrower to pay principal. interest and fees when due;
	 	 	 
	 	2.	any
    material representations and warranties made by a Loan Party are incorrect in any material respect;
	 	 	 
	 	3.	any
    breach of applicable law by a Loan Party;

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	4	 

    

 

	 	4.	any
    breach by a Loan Party of, or failure of a Loan Party to perform, any covenant set forth in this Loan Agreement or any of
    the Security to which it is a party (other than covenants referred to elsewhere in this Events of Default section) if such
    breach or failure continues unremedied for more than 30 business days after the Borrower first receives notice from the Lender
    requiring the applicable Loan Party to remedy such breach or failure;
	 	 	 
	 	5.	the
    bankruptcy or insolvency of a Loan Party, or any action is taken for the winding up, liquidation or any appointment of any
    person with respect to such bankruptcy or insolvency;
	 	 	 
	 	6.	any
    cross default as a result of a failure in the performance or observance of any material term or condition in respect of any
    other indebtedness or obligation of a Loan Party under this Loan Agreement or any of the Security to which it is a party or
    under any other material agreement to which it is a party; or 

 

	 	any
    event which has happened or is expected to happen which would have a material adverse effect on a Loan Party.

 

	Indemnity:	The
                                         Loan Parties jointly and severally
                                         indemnify the Lender against any
                                         loss, costs, claims,
                                         actions, suits, damages, expenses
                                         or liabilities
                                         of any and every kind which the Lender
                                         may sustain or incur, directly or
                                         indirectly, as a consequence
                                         of the entry into and performance
                                         of this
                                         Loan Agreement and any of the
                                         Security, the use of funds advanced under
                                         this Loan Agreement, the consummation
                                         of any transaction contemplated by
                                         this Loan Agreement, any litigation or claim
                                         commenced arising out of the execution,
                                         delivery or performance of, or
                                         the enforcement of any right
                                         under this Loan Agreement or any
                                         of the Security, a default
                                         by any Loan Party in the payment
                                         or performance of any obligations
                                         (including any representation or
                                         warranty made herein by a Loan Party
                                         being incorrect at the time
                                         it was made or deemed
                                         to have been made),
                                         the failure by a Loan Party to comply
                                         with any of its covenants in this
                                         Loan Agreement or in any
                                         of the Security, or the occurrence
                                         of any other default or Event
                                         of Default, except where such loss, costs,
                                         claims, actions,
                                         suits, damages, expenses
                                         or liabilities
                                         arise by reason of the gross
                                         negligence or willful misconduct
                                         of the Lender.
                                         The indemnities in this Loan Agreement
                                         shall extend to the agents and assignees
                                         of the Lender
                                         and. for certainty, those for whom
                                         the Lender acts as agent
                                         hereunder, and the Loan Parties shall hold
                                         the benefit of such indemnities
                                         in trust for such indemnified parties to the extent
                                         necessary to give effect
                                         hereto.

         

        The
        provisions, undertakings, and indemnifications
        set out in this Loan
        Agreement, shall survive the satisfaction
        and release of the Security and payment and satisfaction of
        the indebtedness and liability
        of the Loan Parties to the Lender.

	 	 
	Costs:	Each
    party shall be responsible for its
    own legal costs.
	 	 
	General:	Time
                                         is of
                                         the essence.

         

        The
        insertion of headings in this
        Loan Agreement is for convenience of
        reference only and shall not
        affect the construction or interpretation
        of this Loan Agreement.
        The terms “this Loan Agreement”,
        “hereof’, “hereunder”, “herein” and similar expressions refer to this
        Loan Agreement and not to any particular
        Section or other portion hereof
        and include any agreement supplemental hereto.

        

        

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	5	 

    

 

	 	Words
                                         importing the
                                         singular number only shall
                                         include the plural and vice
                                         versa, words importing the masculine gender
                                         shall include the feminine and neuter genders
                                         and vice versa, words importing persons shall include individuals, partnerships, associations,
                                         trusts, unincorporated organizations and corporations and vice
                                         versa and words
                                         and terms denoting inclusiveness
                                         (such as “include” or
                                         “includes” or “including”),
                                         whether or not so stated, are not
                                         limited by their context or by the
                                         words or phrases
                                         which precede or succeed
                                         them.

         

        Reference
        herein to any agreement,
        instrument, license or other document shall be deemed
        to include reference to such
        agreement, instrument, license or other document as the
        same may from time to time
        be amended, modified, supplemented or restated
        in accordance with the provisions of this
        Loan Agreement if and to the extent such provisions
        are applicable; and reference herein to any enactment
        shall be deemed to include reference
        to such enactment as re-enacted,
        amended or extended from time to time
        and to any successor enactment.

         

        The
        Borrower agrees that all information provided by it to the
        Lender may be disclosed to the
        Lender’s consultants, advisors and legal counsel.

         

        The
        Borrower shall do all
        things and execute all documents reasonably deemed necessary or appropriate
        by the Lender, for the purposes
        of giving full force
        and effect to the terms, conditions,
        undertakings, and security granted or
        to be granted hereunder.

         

        It
        is understood
        and agreed that the execution,
        delivery and registration of
        the Security shall in no way merge
        or extinguish this Loan Agreement or the terms
        and conditions hereof, which shall survive and continue
        in full force and effect. When a contradiction
        or conflict exists between an express
        term of any of the Security and an express
        term of this Loan Agreement, the term of this
        Loan Agreement shall govern and prevail.
        For greater certainty a term contained
        in the Security and not contained
        in the Loan Agreement and vice
        versa is not a contradiction or conflict
        with the other. Notwithstanding
        the foregoing, if there
        is any right or remedy
        of the Lender set out in any of the
        Security or any part of
        which is not set out
        or provided for in this
        Loan Agreement, such additional right shall not constitute a conflict
        or inconsistency.

         

        If
        any amount
        due to the Lender is not paid when due, then
        Borrower shall pay interest on such unpaid amount if and to the
        fullest extent permitted by applicable law but not exceeding 19% per
        annum, provided such default is cured in 30 days from the date of
        the default. After the occurrence of
        an Event of Default, the
        Lender shall be entitled
        to charge $250 per hour for recorded
        time to administer its Loan and in exercising
        its rights and remedies under
        this Loan Agreement and the Security.

         

        All
        interest rates specified are nominal
        annual rates. The effective annual rate in any case
        shall vary with payment frequency. All interest payable hereunder bears interest as well
        after as before maturity, default
        and judgment with interest on
        overdue interest at the applicable
        rate payable herein.

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	6	 

    

 

	 	Notwithstanding
                                         any provision herein to the contrary, in no event shall
                                         the aggregate “interest” (as defined in section 347
                                         of
                                         the
                                         Criminal Code (Canada))
                                         payable under this Loan Agreement exceed the maximum effective annual rate
                                         of
                                         interest
                                         on
                                         the “credit advanced” (as
                                         defined in that section)
                                         permitted under that section and, if
                                         any payment, collection or demand
                                         pursuant to this Loan Agreement
                                         in respect of
                                         “interest” (as defined
                                         in that section) is determined to be
                                         contrary to the
                                         provisions of that section,
                                         such payment, collection or demand shall
                                         be deemed to have
                                         been made by mutual
                                         mistake and the amount of such payment
                                         or collection shall be
                                         refunded to the Borrower.
                                         For purposes of
                                         this Loan Agreement, the effective annual
                                         rate of interest
                                         shall be determined in accordance
                                         with generally accepted actuarial practices
                                         and principles over
                                         the term of
                                         the Loan on the
                                         basis of annual
                                         compounding of the lawfully
                                         permitted rate of interest
                                         and, in the event of
                                         dispute, a certificate
                                         of a Fellow
                                         of the
                                         Canadian Institute of Actuaries
                                         appointed by the Lender shall be
                                         prima facie evidence, for the
                                         purposes of such determination.

         

        In
        accordance with
        prudent lending practices of knowing your client, the Borrower acknowledges
        that the policies and procedures of
        the Lender require investigation,
        verification and recording of
        information regarding the Borrower, the Guarantors, their directors, officers
        and shareholders and other persons in control
        of any Loan Party. Subject to
        any applicable privacy laws, the Loan
        Parties agree to promptly provide all information as may be reasonably
        requested by Emmett Lescroart Capital Partners Corp. and the Lender,
        including supporting documentation and other evidence,
        in order to comply with the Lender’s
        internal policies and anti-money
        laundering and anti- terrorist legislation. Subject
        to compliance with any applicable privacy laws, the Loan
        Parties hereby authorize any personal information agent, financial institution,
        creditor, tax authority, employer, or any other person including any
        public entity, having information concerning the Loan Parties
        or their respective property, more particularly any financial
        information or information with respect to any
        undertaking, guarantee, or suretyship given
        by the Loan Parties, to supply
        such information to the Lender
        in order to verify the accuracy
        of all information furnished or to be furnished
        from time to time to the
        Lender and to ensure the
        solvency of any Loan Party
        at all times.

	 	 
	Requirements:	The
    Borrower hereby agrees to provide
    to the  Lender
    written notice of a change
    in name or address immediately.
	 	 
	Assignment:	The
    rights or obligations of
    the Borrower herein and the amount
    of the Loan may be transferred
    or assigned by the Borrower subject
    to written approval of the Lender,
    acting reasonably. The Lender may
    assign all or any part of
    the Loan, the Security and this Loan
    Agreement without the consent
    of the Borrower but shall
    notify the Borrow within a reasonable
    time frame of such assignment
    occurring.
	 	 
	Binding
    Agreement:	The
    terms and conditions of this
    Loan Agreement are binding and legal
    obligations and shall constitute a commitment
    on the part of the Borrower and the Lender.
	 	 
	Confidentiality:	This
    Loan Agreement is delivered
    to you on the understanding that
    neither it nor its contents shall be disclosed
    to any other party except
    to counsel, accountants, employees and agents of the
    Borrower who are specifically involved in the transaction.
	 	 
	Lender’s
    Role:	Nothing
    contained in this
    Loan Agreement, the Security
    or any related documentation shall in any way
    be deemed to be or be construed as
    creating the  relationship
     of  joint
     venturer  or
     partner  or
     co-venturer  with
     the  Loan
    Parties. The parties each acknowledge and agree that the relationship between them is solely and exclusively one of
    borrower and lender.

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	7	 

    

 

	Counterparts:	This
    Loan Agreement may be executed
    by the parties hereto in any number
    of counterparts and by different
    parties in separate counterparts, each of which
    when so executed shall be deemed
    to be an original and all
    of which taken together shall constitute one
    and the same document. Executed copies
    may be delivered by facsimile
    transmission or electronic mail transmission and it
    shall not be necessary to confirm
    execution by delivery of originally
    executed documents.
	 	 
	Currency:	All
    references to amounts
    in this agreement, unless otherwise described, are in United States Dollars.
	 	 
	Rights
    and Remedies
    Cumulative:	The
    rights, remedies and powers of
    the Lender under this Loan Agreement
    and the Security, at law and
    in equity are cumulative and not
    alternative and are not in substitution for any other
    remedies, rights or powers of the
    Lender, and no delay or omission in exercise
    of any such right, remedy
    or power shall exhaust such rights, remedies
    and powers to be construed as
    a waiver of any of them.
	 	 
	Waivers
    and Amendments:	No
    term, provision or
    condition of
    this Loan Agreement or any of the
    Security, may be waived, varied or
    amended unless in writing
    and signed by a duly authorized officer
    of the Lender.
	 	 
	Governing
    Law:	This
    Loan Agreement
    shall be construed, governed and enforced in accordance
    with, and the rights of the parties
    shall be governed by, the law
    of the State of New
    Jersey and the laws of the United
    States of America applicable therein.

 

	Notice:	All
                                         notices which mayor
                                         are
                                         required to be given
                                         pursuant to this
                                         Loan Agreement shall be in writing and
                                         shall be
                                         addressed as follows:

         

        If
        to Borrower:

         

        Petrolia
        Energy Corporation

        710
        N Post Oak Road, Suite 522

        Houston,
        Texas USA 77024

        Attention:
        Tariq Chaudhary, CFO

        With
        a copy
        by email to: tariq.c@petroliaenergy.com

        If
to the Lender:

        Emmett
        Lescroart

        280
        Cherry Valley Road

        Princeton,
        New Jersey 08540

        USA

        With
        a copy
        by email to: ejlesc@gmail.com

         

        or
        such other addresses or emails
        as the parties may advise
        by notice in writing. All communications
        provided for or permitted hereunder
        shall be in writing, personally
        delivered to an officer or
        other responsible employee of the addressee
        or sent by email set
        forth above or to such other address
        or email as the recipient
        may from time to time designate
        to the other in such manner.
        Any communication so personally delivered or
        sent by email shall be
        deemed to have been validly
        and effectively given on
        the date of such
        delivery or facsimile, as the case may
        be.

 

    	 

    	Petrolia Energy Corporation
New Loan Agreement – Sept 2018
	8	 

    

 

	Joint
    and Several Liability:	If
    more than
    one person is designated as Guarantor,
    then each such person shall
    be jointly and severally
    liable for all of the
    indebtedness, liabilities, covenants, representations, warranties and other obligations of the
    Guarantors set out in this Loan Agreement. If
    more than one person is designated
    as a Loan Party, then each such person
    shall be jointly and severally liable
    for all of the indebtedness, liabilities,
    covenants, representations, warranties and other obligations of the Loan
    Parties set out in this Loan Agreement.
	 	 
	Waiver
    of Jury Trial:	The
    Borrower hereby irrevocably waives, to the fullest
    extent permitted by applicable law, any right
    it may have to a trial
    by jury in any legal proceeding directly or indirectly
    arising out of or relating to this
    Loan Agreement, the Security or any other
    document or the transactions contemplated hereby or thereby
    (whether based on contract, tort or any of other
    theory).

 

AGREED
AND ACCEPTED
as of
the 17th day of September 2018.

 

		 	 
	Witness	 	EMMETT LESCROART

        Lender

 

	 	PETROLIA
    ENERGY CORPORATION
	 	Borrower
	 	 	
	 	Per:	
	 	Name:	Zel
    C. Khan
	 	Title:	CEO
    & President

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