Ann: Xstate Enters into Strategic Alliance with TSX Listed Entity, page-12

one form of funding

December 21, 2018
TSX-V: HRH
OTC: HLRTF​

VANCOUVER, B.C. / TheNewswire / Hillcrest Petroleum Ltd. (the “Company” announced that it has received loan commitments for gross proceeds of up to $900,000 (the "Loans"), the terms of which allow for the conversion of the Loans plus applicable interest, at the option of the holder, into common shares of the Company (the “Shares” at a price equals the market price of the Shares for the first 12 months and the greater of the market price and $0.10 per Share thereafter, pursuant to the policies of the TSX Venture Exchange.  
The Loans will mature on the date that is the earlier of the sale of certain assets of the Company, being specified wells owned by the Company (the “Asset”, the date of conversion or the date that is two years from the date of issuance and bear interest at the rate of 15% per annum, payable quarterly, until the Loans are converted or repaid.  As security of the repayment of the Loan an all interest accrued thereon, and all other indebtedness, liabilities and obligations of the Company to the lenders, both present and future, direct or indirect, absolute or contingent, matured or otherwise, or caused to be delivered to the Lenders on or before the advance of the Loan, a security agreement pertaining to the Asset in favour of the lenders.  The Notes are secured and transferable, subject to resale restrictions under applicable securities laws and TSX Venture Exchange requirements.
Proceeds from the Loan financing will be used for project costs related to the assets and wells in Saskatchewan Joint Venture that was previously announced.
All securities issued in connection with the Loan financing will be subject to a statutory hold period of four months plus a day commencing from the date of closing. Closing of the Loan financing is subject to customary conditions, including TSX Venture Exchange acceptance.
Insiders of the Company will participate in the Loan financing, which will constitute a “related party transaction” within the meaning of Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions (“MI 61-101” and Policy 5.9 – Protection of Minority Security Holders in Special Transactions of the TSX-V. The issuance to the insiders is exempt from the formal valuation and the minority shareholder approval requirements of MI 61-101 as the consideration paid by such insiders did not exceed 25% of the Company’s market capitalization.