DAYBREAK OIL AND GAS, INC. (OTCMKTS:DBRM) Files An 8-K Entry into a Material Definitive Agreement

DAYBREAK OIL AND GAS, INC. (OTCMKTS:DBRM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

On January 14, 2020, the Company entered into a Convertible Note Purchase Agreement (the “Agreement”) with James F. Westmoreland, the Company’s Chairman, President and Chief Executive Officer. As Consideration for the aggregate principal amount of $50,000.00 (the “Note”), Mr. Westmoreland, as of the Closing will have paid funds of $27,835.03 to the Company, including $10,000 loaned to the Company in December 2019 and added to the principal balance of the Note, and $17,835.03 paid as of the closing. Further, Mr. Westmoreland agreed to pay up to $22,164.97 in additional funding, in one or more tranches, as and when agreed upon. The Note will have a principal balance equal to the total amount of the Consideration paid by Mr. Westmoreland at any given time, and may be adjusted as necessary to reflect changes to such principal balance.

The Note has a maturity date of 180 days, or July 12, 2020 and carries no interest, fees or penalties. The Company may prepay the Notes at any time. If the Note is not repaid in full on or before the Maturity Date then, on the day following the Maturity Date, the Note will automatically convert into that number of Conversion Shares equal to the quotient obtained by dividing (x) the outstanding principal balance of the Note on the date of such conversion by (y) a Conversion Price of $0.004. The terms of the Agreement and the Note are more favorable to the Company than the financing available to the Company from a third party.

The Agreement and the Note were each reviewed and approved by the Company’s board of directors, including all disinterested directors, all the members of the Compensation Committee and all the members of the Nominating and Corporate Governance Committee, and were approved to the Company’s Related Party Transactions policy.

The information in Item 1.01 is incorporated by reference herein.

The information in Item 1.01 is incorporated by reference herein.

The Note was issued in reliance upon exemptions from registration requirements to Section 4(a)(2) under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, and to applicable state securities laws and regulations, in that the sale and purchase of such securities did not involve any public offering, Mr. Westmoreland is an “accredited investor” as that term is defined under Rule 501 of Regulation D, Mr. Westmoreland had access to information about the Company and its investment, Mr. Westmoreland took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

References to Agreements

The descriptions of the Convertible Note Purchase Agreement and the Note do not purport to be complete and are qualified in their entirety by reference to the forms of the Convertible Note Purchase Agreement and Note which are attached as an Exhibit to this Current Report on Form 8-K, and each of which is incorporated herein by reference.

(d) Exhibits.

10.1 Form of Convertible Note Purchase Agreement and Note, issued by the Company dated as of January 14, 2020. Filed herewith


EX-10.1 2 exhibit101.htm EXHIBIT 10.1 Exhibit 10.1 Exhibit 10.1     CONVERTIBLE NOTE PURCHASE AGREEMENT This Convertible Note Purchase Agreement (this "Agreement"),…
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Daybreak Oil and Gas, Inc. (Daybreak) is an independent oil and natural gas exploration, development and production company. The Company’s operations are focused on identifying and evaluating prospective oil and natural gas properties, and funding projects that have the potential to produce oil or natural gas in commercial quantities. The Company conducts all of its drilling, exploration and production activities onshore in the United States. Daybreak is in the process of developing approximately two multi-well oilfield projects, one in Lawrence County, Kentucky and the other in Kern County, California. Its projects include Twin Bottoms Field and East Slopes project. It has approximately 20 vertical oil wells in the East Slopes Project that produce from over five reservoirs at its Sunday, Bear, Black, Ball and Dyer Creek locations. The Twin Bottoms Field, comprising approximately 7,220 acres in over two contiguous blocks, is located in the Appalachian Basin of eastern Kentucky.

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