EMPIRE PETROLEUM CORP (Form: 8-K, Received: 10/05/2021 08:02:08)

Name of Assignee

Number of Applicable
Warrant Shares

Exercise Price of

Warrant Shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

Current Report

Pursuant To Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):

September 29, 2021

_______________________________

EMPIRE PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

_______________________________

Delaware	001-16653	73-1238709
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

2200 S. Utica Place, Suite 150, Tulsa, Oklahoma   74114

(Address of Principal Executive Offices)       (Zip Code)

Registrant’s telephone number, including area code:   (539) 444-8002

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	EMPR	None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01

Entry into a Material Definitive Agreement.

On September 29, 2021, Empire Petroleum Company (the “Company”) and Empire New Mexico LLC, a wholly owned subsidiary of the Company d/b/a Green Tree New Mexico (“Green Tree New Mexico”), entered into a Loan Modification Agreement with Energy Evolution Master Fund, Ltd. (“Investor”).

The Loan Modification Agreement made certain modifications to the Senior Secured Convertible Note Due December 31, 2021 issued by Green Tree New Mexico (the “Senior Convertible Note”). Prior to entering into the Loan Modification Agreement, Investor required that all remaining indebtedness under the unsecured convertible notes issued by Green Tree New Mexico be converted or prepaid in full (“Unsecured Convertible Debt”). Effective as of September 29, 2021, an aggregate of $331,410 of Unsecured Convertible Debt was prepaid and the remaining $1,445,966 of Unsecured Convertible Debt was converted into 1,156,778 shares of common stock, par value $0.001 per share, of the Company. Approximately $1,500,000 of indebtedness under the unsecured convertible notes issued by Green Tree New Mexico was previously converted into shares of common stock. For more information regarding the Senior Convertible Note and the Unsecured Convertible Debt, please see the Company’s Current Report on Form 8-K dated as of May 14, 2021, which was filed with the Securities and Exchange Commission on May 20, 2021.

Pursuant to the Loan Modification Agreement, among other things, (i) Investor converted $6,500,000 of principal under the Senior Convertible Note along with accrued interest into 5,305,208 shares of the Company’s common stock on September 30, 2021, (ii) the maturity date of the Senior Convertible Note was extended from December 31, 2021 to June 30, 2023, (iii) the Company’s obligations with respect to a registration statement under the Senior Convertible Note were extended, (iv) the Company executed and delivered a Pledge and Security Agreement granting Investor a first priority perfected security interest in the Company’s membership interest in Green Tree New Mexico, (v) the Company and Green Tree New Mexico agreed to use commercially reasonable best efforts to separate Green Tree New Mexico from the Company as a separate, independent business on or before December 31, 2022 in a spin off to the stockholders of the Company or similar transaction with the stockholders, (vi) the Company issued a Common Share Warrant Certificate dated as of September 30, 2021 pursuant to which Investor has the right to acquire 500,000 shares of the Company’s common stock at an exercise price of $5.00 per share (assuming the effectiveness of the Company’s currently contemplated 1 for 4 reverse stock split) on or before December 31, 2023, and (vii) upon maturity of the Senior Convertible Note, Investor has the option to convert the remaining principal balance along with accrued interest into common stock of the Company in lieu of cash payment.

On August 31, 2021, the Company filed an Information Statement on Schedule 14C informing of the approval, upon recommendation by the Board of Directors, of resolutions adopted by certain stockholders of the Company that, among other things, adopted an equity compensation plan entitled Empire Petroleum Corporation 2021 Stock and Incentive Compensation Plan (the “2021 Incentive Plan”). Such approval did not become effective until 20 calendar days after the mailing of the Information Statement. The 2021 Incentive Plan became effective as of September 30, 2021. For more information regarding the 2021 Incentive Plan, please see the Company’s Information Statement on Schedule 14C filed with the Securities and Exchange Commission on August 31, 2021.

Copies of the Loan Modification Agreement, Pledge and Security Agreement, Common Share Warrant Certificate, and the 2021 Incentive Plan are filed herewith and incorporated by reference into this Item 1.01 as though fully set forth herein. The foregoing description of each such document is qualified in its entirety by reference to the full text of such document.

Item 5.02

Departure of Directors or Certain Oﬃcers; Election of Directors; Appointment of Certain Oﬃcers; Compensatory Arrangements of Certain Oﬃcers.

(e) The 2021 Incentive Plan became effective as of September 30, 2021. For a description of the 2021 Incentive Plan, please see Item 1.01 above and the Company’s Information Statement on Schedule 14C filed with the Securities and Exchange Commission on August 31, 2021.

Item 9.01

Financial Statements and Exhibits.

(d)		Exhibits.

		The following exhibits are filed herewith.


Exhibit Number		Description

10.1		Loan Modification Agreement dated as of September 29, 2021, by and among Empire New Mexico LLC d/b/a Green Tree New Mexico, Empire Petroleum Corporation and Energy Evolution Master Fund, Ltd.

10.2		Pledge and Security Agreement dated as of September 29, 2021, made by Empire Petroleum Corporation in favor of Energy Evolution Master Fund, Ltd.

10.3		Common Share Warrant Certificate dated as of September 30, 2021 issued by Empire Petroleum Corporation in favor of Energy Evolution Master Fund, Ltd.

10.4		Empire Petroleum Corporation 2021 Stock and Incentive Compensation Plan (Appendix A to the Company’s Information Statement on Schedule 14C filed August 31, 2021, is hereby incorporated by reference).

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

EMPIRE PETROLEUM CORPORATION

Date:   October 5, 2021

By:

/s/ Michael R. Morrisett

Michael R. Morrisett

President

EXHIBIT 10.1

LOAN MODIFICATION AGREEMENT

This LOAN MODIFICATION AGREEMENT (hereinafter, this “Agreement”) is made this 29^th day of September, 2021, by and among EMPIRE NEW MEXICO LLC, a Delaware limited liability company d/b/a Green Tree New Mexico (“Company”), Empire Petroleum Corporation, a Delaware corporation (“Parent”), and ENERGY EVOLUTION MASTER FUND, LTD., a Cayman Islands exempted company (“Investor”). Each of Company, Parent and Investor is referred to herein as a “Party” or, collectively, as the “Parties.” Capitalized terms utilized but not defined herein shall have the meaning ascribed to them in the Empire New Mexico LLC Senior Secured Convertible Note Due December 31, 2021, between Company, Parent and Investor dated May 14, 2021 (the “Note”).

Recitals

Whereas, Company, Parent and Investor entered into certain loan arrangements evidenced by, among other things, the Note, the Security Agreement (defined below), and that certain Mortgage, Fixture Filing, Assignment of As-Extracted Collateral, Security Agreement and Financing Statement between Company and Investor with an effective date of May 14, 2021 (the “Mortgage,” and collectively, together with the Note the Security Agreement, and all other documents, instruments, and agreements executed in connection herewith related hereto, the “Loan Documents”);

Whereas, Parent and Company must reduce their consolidated Debt obligations in order for Parent to meet the requirements to be listed on a recognized securities exchange;

Whereas, Parent is making arrangements to convert the balance of all unsecured convertible notes issued by Company (the “Unsecured Convertible Debt”) into equity of Parent, or payoff the balance of any Unsecured Convertible Debt prior to the Loan Settlement Date;

Whereas, Company and Parent (hereinafter, collectively, “Obligors”) have requested that Investor, among other things, extend the Maturity Date under the Note until June 30, 2023, immediately convert the Maximum Convertible Amount under the Note, and waive Investor’s right to a downward adjustment of the Conversion Price;

Whereas, if Investor exercised its rights to adjust the Conversion Price down from $1.25/share to $1.00/share under Section 14 of the Note, Investor would receive approximately 1,300,000 additional shares of Parent’s Common Stock at no additional cost when it converted the Maximum Convertible Amount; and

Whereas, despite the delay in receiving a return of principal and the lost benefit of receiving an additional 1,300,000 million shares of Common Stock at no additional cost, Investor is willing to modify the Note on the terms and conditions expressly set forth herein.

Now therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by and between Obligors and Investor as follows:

Acknowledgment of Indebtedness

1.        Obligors and Investor each hereby acknowledge and agree that, in accordance with the terms and conditions of the Loan Documents, that:

a. The payment to be made on September 30, 2021 (the “Loan Settlement Date”) for all accrued and unpaid interest on the Note is $119,009.01.

b. The principal balance on the Note on the Loan Settlement Date, after the preceding interest payment is $12,215,353.10.

Hereinafter, all amounts set forth in this Paragraph 1 and all other amounts owed under this Agreement and/or the other Loan Documents shall be referred to, collectively, as the “Obligations”.

No Offsets, Credits or Reductions

2.        Each of Obligors hereby acknowledges and agrees that it has no offsets, credits or other basis to claim any existing or past basis to reduce the amount of the Obligations as stated in Paragraph 1.

Ratification of Loan Documents; Cross-Collateralization;

Cross-Guaranty; Cross-Default; Further Assurances

Obligors:

a. Hereby acknowledge and agree that this Agreement, once executed shall constitute one of the Loan Documents for all purposes;

b. Hereby ratify, confirm, and reaffirm all and singular the terms and conditions of the Loan Documents as amended pursuant to this Agreement. Obligors further acknowledge and agree that except as specifically modified in this Agreement, all terms and conditions of the Loan Documents shall remain in full force and effect;

c. Hereby ratify, confirm, and reaffirm that (i) the obligations secured by the Loan Documents (as now modified) include, without limitation, the Obligations, and any future modifications, amendments, substitutions, or renewals thereof, (ii) all collateral, whether now existing or hereafter acquired, granted to Investor pursuant to the Loan Documents, or otherwise, shall secure all of the Obligations until the full, final, and indefeasible payment and/or satisfaction of all Obligations, and (iii) the occurrence of an Event of Default under any Loan Document, shall constitute an Event of Default under all of the Loan Documents, it being the express intent of the Company that all of the Obligations be fully cross-collateralized and cross-defaulted; and

d. Shall, from and after the execution of this Agreement, execute and deliver to Investor whatever additional documents, instruments, and agreements that Investor may reasonably require in order to correct any document deficiencies, or to vest or perfect the Loan Documents and the collateral granted therein more securely in Investor and/or to otherwise give effect to the terms and conditions of this Agreement and the other Modification Documents.

Conditions Precedent

4.        Investor’s agreements, as contemplated herein, shall not be effective unless and until each of the following conditions precedent have been fulfilled by September 30, 2021, all as determined by Investor in its reasonable discretion:

a. Company shall have paid to Investor and Investor shall have received all accrued and unpaid interest under the Note on the Loan Settlement Date as set forth in Paragraph 1 above, which shall be paid as an interest conversion in accordance with the provisions Section 5(b) of the Note, as amended hereby.

b. Company shall have amended its Company Agreement to authorize its Member to pledge, transfer and/or assign all of Parent’s equity interest in Company, including the economic rights, the control rights, and status as a full member of the Company as security for the Obligations pursuant to the Security Agreement;

c. Parent shall have (1) executed a Pledge and Security Agreement in form and substance satisfactory to Investor (the “Security Agreement”) granting Investor a first priority perfected security interest in Parent’s membership interest in Company, including all economic and control rights and status as a full member of the Company, as security for the Obligations, (2) delivered physical possession of Parent’s certificate of membership interest or such other documents, if any, evidencing Parent’s membership interest in Company to Investor to prefect Investor’s interest therein, and/or (3) taken all such other actions as may be required by Investor to confirm Investor’s first priority lien on and security interest in Parent’s membership interest in Company;

d. Obligors shall have taken all steps necessary to convert $6,500,000.00 of the balance of the Note at a Conversion Price of $1.25/share (pursuant to the amendment below), the corresponding reduction of the balance on the Note to be effective as of the Loan Settlement Date;

e. All action on the part of Obligors necessary for the valid execution, delivery, and performance by Obligors of this Agreement and the Security Agreement shall have been duly and effectively taken and evidence thereof satisfactory to Investor shall have been provided to Investor (including, without limitation, (i) current certificates of good standing for Obligors from the state where each Obligor is formed; and (ii) copies of the resolutions authorizing Obligors to enter into this Agreement and the Security Agreement and certification of each Obligor’s Secretary that such Resolutions have been adopted and remain in effect);

f. Obligors shall have taken all other actions and complied with all other covenants required under this Loan Modification; and

g. This Agreement shall have been executed and delivered by each of the Parties and shall be in full force and effect.

Modifications to Loan Documents

5.        Investor will notify Obligors in writing on the date on which the conditions precedent set forth in Paragraph 4 have been satisfied (the “Effective Date”). From and after the Effective Date, the Note is hereby deemed modified as follows:

a. Maturity Date. The Maturity Date of the Note shall be extended from December 31, 2021 to June 30, 2023.

b. Conversion Price. The definition of “Conversion Price” shall be amended by deleting it in its entirety and replacing it with the following, “‘Conversion Price’ means $1.25 per share, subject to adjustment from time to time in accordance with Section 10 and Section 11.”

c. Maximum Convertible Amount. The definition of “Maximum Convertible Amount” shall be amended to add the words “and unpaid interest” so that the language after the last close parenthesis will read “…together with any accrued and unpaid interest hereunder at such time, subject to adjustment from time to time in accordance with Section 13.” For the avoidance of doubt, this definition only applies in connection with conversion of principal amount of the Note prior to Maturity and is not applicable to Quarterly Interest Payments under Section 5(b) of the Note or to Maturity Conversion under Section 5(c) of the Note.

d. Underlying Shares. The definition of “Underlying Shares” shall be amended to add the following language after the final word but before the period, “or in satisfaction of Quarterly Interest Payments.”

e. New Definitions. The following definitions shall be added to Section 1:

“Event of Default” has the meaning given to it in the Mortgage, provided that this Loan Modification Agreement shall also be understood to be a “Loan Document” as that term is utilized in the Mortgage.

ii.

“Interest Conversion Price” means (a) $1.25 per share prior to the 4 to 1 reverse stock split to be authorized upon filing of the Amended and Restated Certificate of Incorporation approved by the Board and shareholders of Parent on or about August 27, 2021 and August 31, 2021, respectively, (the “Stock Split”) and (b) $5.00 per share after the Stock Split, subject to adjustment from time to time in each case in accordance with Section 10 and Section 11 in the same manner as the Conversion Price; provided however, that the Stock Split shall not result in any adjustment under Section 10(a).

iii.

“Loan Modification” means that Loan Modification Agreement between Investor, on the one hand, and Company and Parent, on the other hand, dated September 29, 2021.

iv.

“Maturity Conversion Price” means $8.00 per share after the Stock Split (provided that if for any reason the Stock Split does not occur or until it occurs, Maturity Conversion Price shall mean $2.00 per share), subject to adjustment from time to time in each case in accordance with Section 10 and Section 11; provided however, that the Stock Split shall not result in any adjustment under Section 10(a).

“Mortgage” means that certain Mortgage, Fixture Filing, Assignment of As-Extracted Collateral, Security Agreement and Financing Statement between Company and Investor with an effective date of May 14, 2021.

vi.

“Security Agreement” the Pledge and Security Agreement between Investor and Parent, dated September 30, 2021.

f. Interest. Section 2 of the Note shall be amended to delete the final sentence and replace it with the following, “Company shall pay all accrued and unpaid interest in arrears (each, a “Quarterly Interest Payment”) on the first day of each calendar quarter (beginning on October 1, 2021) (each, an “Interest Due Date”) and calculated on the basis of a 360-day year for the actual number of days elapsed and shall accrue daily commencing on the Original Issue Date and be compounded monthly on the first day of each calendar month. For the sake of clarity, the Quarterly Interest Payment shall be the payment necessary to return the principal balance as of the preceding Interest Due Date less the aggregate principal amount of all prepayment of principal of this Note approved by Investor, if any, since the preceding Interest Due Date, and a final Quarterly Interest Payment shall be made on the Maturity Date. Each Quarterly Interest Payment shall be payable to Investor in shares of Common Stock or, at Investor’s option in cash, in accordance with Section 5(b).

g. Conversion. Section 5 of the Note shall be amended to so that the current text shall become a new subsection 5(a) subtitled “Pre-Maturity Date Conversion,” and new subsections 5(b) and (c) shall be added as follows:

(b)

Interest Payment in Shares or Cash. Each Quarterly Interest Payment shall be payable in shares of Common Stock converted at the Interest Conversion Price on the applicable Interest Due Date, unless Investor provides Company with a written election at least 3 days before the Interest Due Date to have such Quarterly Interest Payment made in cash or cash equivalent, in which case, such Quarterly Interest Payment shall be paid in cash or cash equivalent on the applicable Interest Due Date.

(c)

Maturity Conversion. Investor may elect to collect the full and final balance due and outstanding on the Note, including all accrued and unpaid interest thereon, on the Maturity Date (i) in cash, or (ii) by converting all or any portion of such outstanding balance into shares of Common Stock at the Maturity Conversion Price (as “Maturity Conversion”). Investor may elect a Maturity Conversion by delivering to Company a Conversion Notice and Conversion Schedule at least 14 days prior to the Maturity Date. Upon the timely delivery of the Conversion Notice and Conversion Schedule, the Maturity Conversion shall be completed in the same manner and under the same terms as a conversion prior to the Maturity Date under Section 5(a).

h. Debt. The first sentence of Section 7(b) shall be deleted in its entirety and replaced with the following, “Until all amounts due under the Note have been paid in full Company and Parent will not, directly or indirectly, enter into, create, incur, assume, or suffer to exist any Debt, mortgage, lien, security interest or other encumbrance of any kind, on or with respect to any of Company’s property or assets (including Parent’s equity interest in Company) now owned or hereafter acquired or any interest therein or income or profits therefrom, without first obtaining Investor’s express written consent, which shall be at Investor’s sole discretion.”

i. Certain Adjustments. Section 10 of the Note shall be amended to delete the first sentence.

j. Prepayment. Section 12 of the Note shall be deleted in its entirety and replaced with the following, “The Note may not be prepaid except with the consent of Investor, to be granted in Investor’s sole and absolute discretion.”

k. Registration Statement. Section 13 of the Note shall be deleted and replaced in its entirety by the following:

The Parent shall use commercially reasonable best efforts to cause a registration statement on Form S-3 to be filed with the Securities Exchange Commission by the sooner of 10 days after FINRA approval of the actions set forth in Section 6(e) of the Loan Modification or October 30, 2021 for the Common Stock and the Common Stock underlying warrants issued by the Parent prior to April 1, 2021 and the unsecured convertible notes issued by Company, with sale rights being allocated between the holders thereof by the Parent’s board of directors, it being understood that additional Form S-3 filings will be necessary to sell the unallocated Common Stock and the Common Stock underlying warrants.

l. Events of Default. Section 14 of the Note shall be deleted and replaced in its entirety by a new section titled “Events of Default” to read as follows: “Upon the occurrence of an Event of Default, the outstanding principal amount of the Note and all accrued and unpaid interest thereon shall be immediately due and payable to Investor. Company waives presentment, demand, notice of dishonor, protest and notice of nonpayment and protest of this Note.”

Additional Covenants

Obligors hereby agree to the following additional covenants:

a. Green Tree Separation. Parent and Company shall cooperate and use commercially reasonable best efforts to separate Company from Parent as a separate, independent business from Company and analyze the most beneficial structure to spin-off, split-off or otherwise separate Company from Parent with the intended result that the shareholders of Parent shall, to extent practicable hold an equal proportionate interest in Company with the same rights, privileges and restrictions as the shareholders hold in Parent, consistent with Section 15(b)(ii) of Parent’s Amended and Restated Bylaws, to the reasonable satisfaction of Investor. The failure to complete the separation of Company from Parent on or before December 31, 2022 shall constitute an Event of Default, except to the extent such failure is (i) related to the action/inaction of Series A Directors (as defined in the Amended and Restated Bylaws), Investor and/or Phil Mulacek or (ii) due to an injunction, order, rule, or law restraining, enjoining, or otherwise prohibiting the consummation of such separation. In addition, upon completion of the covenants set forth in Section 6(e) and the issuance of Series A Voting Preferred Stock, this covenant shall be terminated and be of no further effect.

b. No Amending Governing Documents. Company shall not amend its Certificate of Formation or its Limited Liability Company Agreement (“Company Agreement”) without Investor’s express consent (not to be unreasonably withheld), provided, that Investor shall not withhold consent of such changes as are reasonably necessary for Company to perform its obligations under Section 6(a).

c. Investor Enforcement Expenses. Company shall reimburse Investor on demand for any and all costs, expenses and/or fees incurred by Investor (including attorneys’ fees and expenses) heretofore or hereafter incurred by Investor in connection with the protection, preservation, and enforcement by Investor of its rights and remedies under the Loan Documents. If Company fails to pay such reimbursement within 30 days of receiving Company’s demand then Investor may add them to the principal of the Note without further notice to or action against Company.

d. Issue Warrant. As additional consideration for the agreements of Investor in this Agreement, on or before the Loan Settlement Date, Parent shall issue a warrant to Investor in the form attached hereto as Exhibit A for 500,000 shares of Common Stock at an exercise price of $5.00/share (assuming the effectiveness of the Stock Split) that may be exercised any time on or before December 31, 2023.

e. Company Action. The full and final completion, approval, adoption and implementation of the following documents by the board of directors (the “Board”) and, where applicable the majority of all shareholders and/or the majority of the minority-shareholders of Parent, each as submitted to the Board on August 27, 2021, on or before the later of seven days after FINRA approval of such actions or November 1, 2021:

Certificate of Designation of Series A Voting Preferred Stock of Empire Petroleum Corporation shall be filed with the Delaware Secretary of State and the Series A Voting Preferred Stock shall be issued in accordance therewith;

ii.

Amended and Restated Certificate of Incorporation of Empire Petroleum Corporation shall be filed with the Delaware Secretary of State; and

iii.

Amended and Restated Bylaws of Empire Petroleum Corporation (a Delaware Corporation) shall have passed all required approvals and received all necessary consents to be effective an operating as the bylaws of Parent.

Representations, Warranties, and Covenants

Obligors hereby represent, warrant, and covenant to Investor as follows:

a. Company’s exact legal name is as shown in the preamble of this Agreement.

b. Company is duly organized, validly existing, and in good standing under the laws of Delaware.

c. Company is qualified to do business in every state in which the nature of its business conducted or the character of its property owned in such state would require such qualification, except where such failure to qualify would not result in a material adverse effect.

d. The execution and delivery of this Agreement and the other Loan Documents by Obligors and the performance by Obligors of their respective obligations and agreements under this Agreement and the other Loan Documents are within the authority of Obligors, have been duly authorized by all necessary corporate or limited liability company proceedings on behalf of Obligors, and do not and will not contravene any provision of law, statute, rule or regulation to which Obligors (or any of them) are subject or, if applicable, Obligors’ charter, other organization papers, by-laws, or any stock provision or any amendment thereof or of any agreement or other instrument binding upon any of Obligors.

e. This Agreement, the Security Agreement and the other Loan Documents constitute legal, valid, and binding obligations of Obligors, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

f. No approval or consent of, or filing with, any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by Obligors of this Agreement, the Security Agreement or the other Loan Documents.

g. Obligors have performed and complied in all material respects with all terms and conditions of the Loan Documents required to be performed or complied with by Obligors prior to or at the time hereof, and as of the date hereof, no Event of Default (as defined in the Mortgage) has occurred and is continuing.

h. The representations and warranties contained in the Mortgage are true and correct as of the date hereof, except to the extent of changes resulting from transactions specifically contemplated or specifically permitted by this Agreement, the Security Agreement, or the other Loan Documents, changes which have been disclosed in writing to Investor on or prior to the date hereof, changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and excepting such representations and warranties that expressly relate only to an earlier date.

i. Obligors have read and understand each of the terms and conditions of this Agreement and the other Loan Documents and that they are entering into this Agreement and the other Loan Documents freely and voluntarily, without duress, after having had an opportunity for consultation with independent counsel of their own selection, and not in reliance upon any representations, warranties, or agreements made by Investor and not set forth in this Agreement or the other Loan Documents.

Waivers

8. Jury Trial. Obligors and Investor hereby make the following waiver knowingly, voluntarily, and intentionally, and understand that the other, in entering into this Agreement, is relying on such a waiver: OBLIGORS AND INVESTOR EACH HEREBY IRREVOCABLY WAIVE ANY PRESENT OR FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE OTHER BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST SUCH PARTY OR IN WHICH SUCH PARTY IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN OBLIGORS, OR ANY OTHER PERSON, AND INVESTOR.

Entire Agreement

9. This Agreement shall be binding upon Obligors and Obligors’ respective employees, representatives, successors, and assigns, and shall inure to the benefit of Investor and Investor’s successors and assigns. This Agreement, the Security Agreement and the other Loan Documents incorporate all of the discussions and negotiations between Obligors and Investor, either express or implied, concerning the matters included herein and in such other documents, instruments, and agreements, any statute, custom, or usage to the contrary notwithstanding. No such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof. No modification, amendment, or waiver of any provision of this Agreement, or any provision of any other document, instrument, or agreement between Obligors and Investor shall be effective unless executed in writing by the party to be charged with such modification, amendment, or waiver, and if such party be Investor, then by a duly authorized officer thereof.

Construction of Agreement

10. In connection with the interpretation of this Agreement and the Security Agreement:

a. All rights and obligations hereunder and thereunder, including matters of construction, validity, and performance, shall be governed by and construed in accordance with the law of the Delaware.

b. The captions of this Agreement are for convenience purposes only, and shall not be used in construing the intent of Investor and Obligors under this Agreement.

c. Except as explicitly set forth herein and therein, this Agreement and the Security Agreement are not intended to, nor shall they be construed to, replace or supersede any prior amendments and/or modifications to the Loan Documents but are intended to be supplemental thereto. However, in the event of any express inconsistency between the provisions of this Agreement and the Security Agreement on the one hand and any other document, instrument, or agreement entered into by and between Investor and Obligors on the other, the provisions of this Agreement and the Security Agreement shall govern and control.

d. Investor and Obligors have prepared this Agreement and the Security Agreement with the aid and assistance of their respective counsel. Accordingly, all such documents shall be deemed to have been drafted jointly by Investor and Obligors and shall not be construed against either Investor or Obligors.

Miscellaneous

11. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the Agreement that can be given effect without the invalid provision shall continue in full force and effect and shall in no way be impaired or invalidated.

12. This Agreement may be executed in multiple identical counterparts (including by facsimile or e-mail transmission of an adobe file format document (also known as a PDF file)), each of which when duly executed shall be deemed an original, and all of which shall be construed together as one agreement. This Agreement will not be binding on or constitute evidence of a contract between the Parties hereto until such time as a counterpart has been executed by such Party and a copy thereof is delivered to each other party to this Agreement.

13. No failure on the part of Investor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. Investor’s rights and remedies provided herein and in any other instrument or document now or hereafter securing all or any part of the Obligations are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.

[signature page follows]

IN WITNESS WHEREOF, the duly authorized representatives of Investor, Company and Parent have executed this Agreement on this the day and year first above written.

COMPANY:

EMPIRE NEW MEXICO LLC, d/b/a GREEN TREE NEW MEXICO

By: /s/ Michael R. Morrisett                                   

Michael R. Morrisett, President

Parent:

EMPIRE PETROLEUM CORPORATION

By: /s/ Michael R. Morrisett                                    

Michael R. Morrisett, President

INVESTOR:

ENERGY EVOLUTION MASTER FUND, LTD.

By /s/ Sterling Mulacek                                             

       Sterling Mulacek, Director

Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (“Security Agreement”) dated the 29^th day of September, 2021, made by Empire Petroleum Corporation, a Delaware corporation (“Pledgor”), in favor of ENERGY EVOLUTION MASTER FUND, LTD., a Cayman Islands exempted company (“Lender”). Capitalized terms utilized but not defined herein shall have the meaning as set forth under the terms of the Loan Modification Agreement (“Modification Agreement”) between EMPIRE NEW MEXICO LLC, a Delaware limited liability company d/b/a Green Tree New Mexico (“Company”), Pledgor and Lender, dated on or near the date hereof.

W I T N E S S E T H:

That for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Lender as follows:

1. Pledge and Grant of Security Interest. As collateral security for all of the Obligations, Pledgor hereby pledges and assigns to Lender, and grants to Lender a continuing security interest in, the following (collectively, the “Pledged Collateral”):

(a) One hundred percent (100%) of Pledgor’s membership interests (collectively the “Pledged Interest”) in Company, Parent’s wholly owned subsidiary, including, but not limited to, the present right to make claim for, collect, receive and give receipt for any of the sums, amounts, income, revenues, issues and profits and any other sums of money payable to or receivable under that certain Limited Liability Company Agreement of Company dated as of March 10, 2021, as the same may amended (the “Company Agreement”), to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which Pledgor is or may become entitled to under Company Agreement and all of Pledgor’s claims, demands and causes of actions with respect to the Pledged Interest, and all of Pledgor’s right, title and interest in any fund or account balance set aside for the payment thereof; moneys and proceeds of every kind and nature, due or to become due to Pledgor at any time, now or hereafter, together with the certificates representing the Pledged Interests (if any), all options and other rights, contractual or otherwise, with respect thereto and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Interests; any and all of Pledgor’s rights to vote, control or otherwise direct the actions of Company or its managers, directors, employees, agents or representatives; and any and all of Pledgor’s right to be and act as a member of Company, without restriction or reservation;

(b) All additional interests in Company from time to time issued to or acquired by Pledgor by virtue of its ownership of the Pledged Interests as a result of any dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of membership interests, membership interest split, spin-off, split-off, or other form or recapitalization, the certificates representing such additional financial interests and all dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such additional financial interests; and

(c) All proceeds of any and all of the foregoing; in each case, whether now owned or hereafter acquired by Pledgor and howsoever its interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

2. Security for Obligations. The security interest created hereby in the Pledged Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (the “Obligations”):

(a) The prompt payment, as and when due and payable, of the “Obligations” (in this instance as used and defined in the Loan Modification) under the Note (as modified by the Modification Agreement and as maybe further modified, extended or amended the “Loan”); and

(b) The due performance and observance by Pledgor of all of its respective obligations and undertakings under or pursuant to this Security Agreement, the Modification Agreement and any other Loan Document.

3. Delivery of the Pledged Collateral.

(a) All certificates representing the Pledged Interests, if any, shall be delivered to Lender on or prior to the execution and delivery of this Security Agreement. All other certificates and instruments constituting Pledged Collateral from time to time shall be delivered to Lender promptly upon the receipt thereof by or on behalf of Pledgor, and until such delivery shall be held in trust for the benefit of Lender. All such certificates and instruments shall be held by or on behalf of Lender pursuant hereto and shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Lender.

(b) If Pledgor shall receive, by virtue of its being or having been an owner of any Pledged Collateral, any (i) membership interest certificate (including, without limitation, any certificate representing a dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of membership interests, split membership interest, spinoff or split-off), promissory note or other instrument; (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Collateral, or otherwise; (iii) dividends or distributions payable in cash (except as otherwise set forth in Section 6 hereof) or in securities or other property; or (iv) dividends or other distributions in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, Pledgor shall receive such membership interest certificate, promissory note, instrument, option, right, payment or distribution in trust for the benefit of Lender, shall segregate it from Pledgor’s other property and shall deliver it forthwith to Lender in the exact form received, with any necessary endorsement and/or appropriate membership interest powers duly executed in blank, to be held by Lender as Pledged Collateral and as further collateral security for the Obligations.

(c) If any of the Pledged Interests are not certificated, Pledgor shall, at Lender’s request, and at Pledgor’s expense, cause each such Pledged Interest to be certificated in accordance with all applicable laws and shall deliver the certificate(s) evidencing such Pledged Interests to Lender together with any necessary endorsement and/or membership interest powers duly executed in blank, to be held by Lender as Pledged Collateral and as further collateral security for the Obligations.

4. Representations and Warranties.  Pledgor represents and warrants as follows:

(a) The Pledged Interest has been duly authorized and validly issued, are fully paid and non-assessable, and constitute validly issued, outstanding membership interest of Company.

(b) Pledgor is the legal and beneficial owner of the Pledged Collateral free and clear of any lien, security interest or other charge or encumbrance except for the security interest created by this Security Agreement.

(c) The execution, delivery and performance by Pledgor of this Security Agreement and any transactions contemplated hereunder are within the powers of Pledgor and have been duly authorized by all necessary action. This Security Agreement has been duly executed and delivered by Pledgor and constitutes a legal, valid and binding agreement of Pledgor, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(d) The exercise by Lender of its rights and remedies hereunder will not contravene any law or governmental regulation or any contractual restriction binding on or affecting Pledgor or any of its properties and will not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties.

(e) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge hereunder by Pledgor of, or the grant by Pledgor of the security interest created hereby in, the Pledged Collateral or (ii) except as may be required by laws affecting the offering and sale of securities generally, for the exercise by Lender of its rights and remedies hereunder.

(f) This Security Agreement creates a valid security interest in favor of Lender in the Pledged Collateral. The taking possession by Lender of the certificates representing the Pledged Interests, if any, and all other certificates, instruments and cash constituting Pledged Collateral from time to time, and the filing of a UCC-1 financing statement with the Secretary of State of the State of Delaware describing the Pledged Collateral will perfect, and establish the first priority of, Lender’s security interest hereunder in the Pledged Collateral, securing the Obligations. Except as set forth in this Section 4(f), no action is necessary or desirable to perfect or otherwise protect such security interest.

(g) The office where Pledgor keeps its records concerning the Pledged Collateral is located at the address specified for Pledgor in Section 11 hereof.

5. Covenants as to the Pledged Collateral. So long as any of the Obligations shall remain outstanding, Pledgor will, unless Lender shall otherwise consent in writing:

(a) give Lender at least thirty (30) days’ prior written notice of any change in the location of the office where it keeps its records concerning the Pledged Collateral;

(b) keep adequate records concerning the Pledged Collateral and permit Lender, its agents or representatives, at any reasonable time and from time to time to examine and make copies of and abstracts from such records;

(c) at Pledgor’s expense, promptly deliver to Lender a copy of each notice or other communication received by it in respect of the Pledged Collateral, and of each financial statement from time to time furnished or made available to it by Company; and, at Lender’s request, permit Lender to inspect all records of Company which Pledgor is entitled to inspect (provided that such inspection by Lender is not in conflict with applicable law);

(d) at Pledgor’s expense, defend Lender’s right, title and security interest in and to the Pledged Collateral against the claims of any person or entity;

(e) at Pledgor’s expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that Lender may request in order to (i) perfect and protect the security interest created or purported to be created hereby; (ii) enable Lender to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral; or (iii) otherwise effect the purposes of this Security Agreement, including, without limitation, delivering to Lender irrevocable proxies in respect of the Pledged Collateral in accordance with Section 6 hereof.

(f) not sell, assign, exchange or otherwise dispose of any of the Pledged Collateral, or any interest therein, except in furtherance of Section 6(a) of the Modification Agreement;

(g) not create or suffer to exist any lien, security interest or other charge or encumbrance upon or with respect to any Pledged Collateral except for the pledge hereunder and the security interest created hereby;

(h) not make or consent to any amendment or other modification or waiver with respect to any Pledged Collateral or enter into any agreement or permit to exist any restriction with respect to any pledged collateral other than pursuant hereto;

(i) not permit the issuance of (i) any additional shares of any class of membership interests of Company, (ii) any securities convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or conditions into, or exchangeable for any such membership interests, or (iii) any warrants, options, contracts, or other commitments entitling any party to purchase or otherwise acquire any such membership interests;

(j) not take or fail to take any action which would in any manner impair the value or enforceability of Lender’s security interest in any Pledged Collateral;

(k)  not amend Company’s Certificate of Formation or the Company Agreement without Lender’s express consent (not to be unreasonably withheld) and, provided further, Lender shall not withhold consent of such changes as are reasonably necessary for Company to perform its obligations under Section 6(a) of the Modification Agreement; and

(l) not permit the Pledged Interests to become certificated.

6. Voting Rights, Distributions, Dividends, Etc. in Respect of the Pledged Collateral.

(a) Prior to the occurrence of an Event of Default (as defined in Section 8 hereof):

(i) Pledgor may exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Security Agreement or the other Loan Documents; provided, however, that Pledgor will not exercise or refrain from exercising any such right, as the case may be, if Lender gives Pledgor notice that, in Lender’s judgment, such action would have a material adverse effect on the value of any Pledged Collateral;

(ii) Pledgor may receive and retain any and all dividends or interest paid in respect of the Pledged Collateral; provided, however, that any and all

(1) dividends, distributions and interest (paid or payable other than in cash) and instruments and other property received, receivable or otherwise distributed in respect of or in exchange for, any Pledged Collateral, and

(2) cash paid, payable or otherwise distributed in redemption of, or in exchange for, any Pledged Collateral shall be, and shall forthwith be delivered to Lender to hold as Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Lender, shall be segregated from the other property or funds of Pledgor, and shall be forthwith delivered to Lender in the exact form received with any necessary endorsement and/or appropriate stock powers duly executed in blank, to be held by Lender as Pledged Collateral and as further collateral security for the Obligations; and

(iii) Lender will execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) of this Section 6(a).

(b) Upon the occurrence of an Event of Default (as defined in Section 8 hereof), all rights of Pledgor to receive such dividend payments and distributions as related to the Pledged Collateral shall cease, and all such rights shall thereupon become vested in Lender which shall thereupon have the sole right to receive the distributions and dividends related to the Pledged Collateral.

7. Additional Provisions Concerning the Pledged Collateral.

(a) Pledgor hereby agrees to take any action and to execute any instruments which may be necessary or advisable to accomplish the purposes of this Security Agreement.

(b) Pledgor hereby irrevocably appoints Lender Pledgor’s attorney-in-fact and proxy, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Lender’s discretion, to give any notice, take any action and execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Security Agreement (subject to the rights of Pledgor under Section 6(a) hereof), including, without limitation, (i) to receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same, and (ii) to give any notice, request any information, take any action and execute any instrument which Lender deems necessary to perfect, preserve and protect its position as lienholder with respect to the Pledged Collateral.

(c) If Pledgor fails to perform any agreement or obligation contained herein, Lender itself may perform, or cause performance of, such agreement or obligation, and the expenses of Lender incurred in connection therewith shall be payable by Pledgor pursuant to Section 10 hereof.

(d) Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which Lender accords its own property, it being understood that Lender shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not Lender has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral.

8. Events of Default. An Event of Default shall be deemed to have occurred hereunder upon the occurrence of a failure or default in the full, faithful and prompt payment or performance of any one or more of the Obligations, and shall include, but shall not be limited to:

(a) Any default in the full and prompt payment when due of all or any part of any indebtedness or obligation constituting part of the Obligations within 7 days after being provided written notice by Lender of such default; or

(b) Any failure by Pledgor to cure any material default of any covenant, agreement, obligation, condition or undertaking under any Loan Documents or any other instrument or document now or hereafter securing all or any part of the Obligations within 30 days after being provided written notice by Lender of such default, except in the case of the payment of money or installment thereof when due and payable for which a 7-day cure period shall apply; or

(c) Any failure by Pledgor to cure any material default of any representation or warranty of Pledgor under any Loan Documents or any other instrument or document now or hereafter securing all or any part of the Obligations within 30 days after being provided written notice by Lender of such default; or

(d) Any representation or warranty by Pledgor set out herein or in any other instrument or document executed by Pledgor in connection herewith shall prove to be false or misleading in any material respect as of the time made; or

(e) An Event of Default under the Loan Modification Agreement or any other Loan Document.

9. Remedies Upon Default. Upon the occurrence of an Event of Default:

(a) Lender may (i) exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of Delaware (the “Code”); and (ii) without limiting the generality of the foregoing and without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker’s board or elsewhere, at such price or prices and on such other terms as Lender may deem commercially reasonable, for cash or on credit or for future delivery. Pledgor agrees that at least five (5) days’ notice to Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Lender shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Notwithstanding anything herein to the contrary, Pledgor recognizes that Lender may deem it impracticable to effect a public sale of all or any part of the Pledged Interest or any other securities constituting Pledged Collateral and that Lender may, therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that Lender shall have no obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933, as amended (the “Securities Act”). A sale so conducted shall not be deemed to be commercially unreasonable, within the meaning of the Code, by virtue of the failure to register such securities or to offer them publicly in the manner permitted only with respect to registered securities. Pledgor further acknowledges and agrees that any offer to sell such securities which has been (i) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation (to the extent that such an offer may be so advertised without prior registration under the Securities Act), or (ii) made privately in the manner described above to not less than six (6) bona fide offerees shall be deemed to involve a “public sale” for the purposes of the Code (or any successor or similar applicable statutory provision) as then in effect, notwithstanding that such sale may not constitute a “public offering” under the Securities Act, and that Lender may, in such event, bid for the purchase of such securities.

(b) Any cash held by Lender as Pledged Collateral and all cash proceeds received by Lender in respect of any sale of, collection from, or other realization upon, all or any part of the Pledged Collateral may, in the discretion of Lender, be held by Lender as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Lender pursuant to Section 10 hereof) in whole or in part by Lender against, all or any part of the Obligations in such order as Lender shall elect. Any surplus of such cash, cash proceeds or assets, if any, held by Lender and remaining after payment in full of all of the Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus.

10. Indemnity and Expenses.

(a) Pledgor agrees to indemnify Lender from and against any and all claims, losses and liabilities growing out of or resulting from this Security Agreement (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from Lender’s gross negligence or willful misconduct.

(b) Pledgor will upon demand pay to Lender the amount of any and all expenses, including the reasonable fees and disbursements of Lender’s counsel and of any experts and agents, which Lender may incur in connection with (i) the administration of this Security Agreement; (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Pledged Collateral; (iii) exercise or enforcement of any of the rights of Lender hereunder; or (iv) the failure by Pledgor to perform or observe any of the provisions hereof, except expenses resulting from Lender’s gross negligence or willful misconduct.

11. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, certified mail, return receipt requested, or telegraphed or delivered, if to Pledgor, to it at: 2200 S. Utica Place, Suite 150 Tulsa, OK 74114; to Lender, 25025 I-45 North, Suite 420, The Woodlands, Texas 77380; or as to either such person at such other address as shall be designated by such person in a written notice to such other person complying as to delivery with the terms of this Section 11. All such notices and other communications shall be effective (i) if mailed, when received or three business days after mailing, whichever is earlier; or (ii) if delivered, upon delivery.

12. Security Interest Absolute. All rights of Lender, all security interests and all obligations of Pledgor hereunder shall be absolute and unconditional irrespective of:

(a) any lack of validity or enforceability of the Loan Documents, or any other agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the Obligations, or any other amendment or waiver of or consent to any departure from the Note, or any other agreement or instrument relating thereto or to any of the Obligations;

(c) any increase in, addition to, or exchange, release or non-perfection of, any other collateral, or any release or amendment or waiver of or consent to departure from agreement, for all or any of the Obligations;

(d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, Pledgor or any other party liable, directly or indirectly, absolutely or contingently, with respect to all or any part of the Obligations; or

(e) the absence of any action on the part of Lender to obtain payment or performance of the Obligations from any person or entity.

13. Miscellaneous.

(a) No amendment or waiver of any provision of this Security Agreement, and no consent to any departure by Pledgor therefrom, shall in any event be effective unless the same shall be in writing and signed by Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b) No failure on the part of Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. Lender’s rights and remedies provided herein and in any other instrument or document now or hereafter securing all or any part of the Obligations are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.

(c) Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(d) This Security Agreement shall be binding on Pledgor and its successors and permitted assigns and shall inure, together with all rights and remedies of Lender hereunder, to the benefit of Lender and its successors, transferees and assigns. Without limiting the generality of the foregoing, Lender may assign or otherwise transfer all or part of its rights to all or any part of the Obligations to any other person or entity, and such other person or entity shall thereupon become vested with all of the benefits in respect thereof granted to Lender herein or otherwise. None of the rights or obligations of Pledgor hereunder may be assigned or otherwise transferred without the prior written consent of Lender.

(e) Upon payment and satisfaction in full of the Obligations, this Security Agreement and the security interest created hereby shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Lender will thereupon, at Pledgor’s request and expense, (i) return to Pledgor such of the Pledged Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof; and (ii) execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination.

(f) This Security Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, except to the extent that the validity or perfection of the security interest created hereby, or remedies hereunder, in respect of any particular Pledged Collateral are, under mandatory provisions of law, governed by the laws of a jurisdiction other than the State of Delaware.

(g) The captions or headings of the Sections of this Security Agreement are inserted merely for convenience of reference and shall not be deemed to limit or modify the terms and provisions hereof. As used herein, the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders, as the context shall require.

(h) Any payment of principal and/or interest on any of the Obligations shall toll any statute of limitations which would otherwise be applicable.

(i) This Security Agreement may be executed and delivered (including by facsimile or Portable Document Format (pdf) transmission) in one or more counterparts, all of which will be considered

one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Facsimile or pdf transmission of any signed original document or retransmission of any signed facsimile or pdf transmission will be deemed the same as delivery of an original. At the request of any party, the other parties will confirm facsimile or pdf transmission by signing a duplicate original document.

[signature page follows]

IN WITNESS WHEREOF, the duly authorized representatives of Pledgor and Lender have executed this Security Agreement on this the day and year first above written.

Pledgor:

EMPIRE PETROLEUM CORPORATION

By: /s/ Michael R. Morrisett

Michael R. Morrisett, President

LENDER:

ENERGY EVOLUTION MASTER FUND, LTD.

By: /s/ Sterling Mulacek

Sterling Mulacek, Director

Exhibit 10.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I) THEY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES ACT, OR (II) THE COMPANY SHALL HAVE BEEN FURNISHED AN OPINION OF COUNSEL, SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER ANY OF SUCH ACTS.

No. Energy Evolution Master Fund-1

September 30, 2021

EMPIRE PETROLEUM CORPORATION

COMMON SHARE WARRANT CERTIFICATE

Warrant to Purchase up to 500,000 Common Shares

Expiring December 31, 2023

THIS CERTIFIES THAT Energy Evolution Master Fund, LTD, a Cayman Islands exempt company or, pursuant to Section 5.1(a), its Affiliates, nominees or assignees (the “Warrant Holder”), in consideration for entering into that certain Loan Modification Agreement dated as of September 29, 2021 (the “Loan Modification”), by and between the Warrant Holder, Green Tree and Empire Petroleum Corporation, a Delaware corporation (the “Company”), at any time on any Business Day on or prior to 5:00 p.m., Central Time, on December 31, 2023 (the “Expiration Date”), is entitled to subscribe for and purchase from Empire Petroleum Corporation, a Delaware corporation (the “Company”), up to 500,000 Common Shares (as defined in Section 1) at a price per Common Share equal to the Exercise Price (as defined in Section 1); provided, however, that the number of Common Shares issuable upon any exercise of this Warrant (as defined in Section 1) shall be adjusted and readjusted from time to time in accordance with Section 4 below.

1. Certain Definitions.

The following terms, as used herein, have the following meanings:

“Accredited Investor” means an accredited investor as that term is defined in Rule 501(a) of Regulation D promulgated by the Commission.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.

“Business Day” means any day except a Saturday, Sunday, or other day on which commercial banks in Houston, Texas, are authorized by law to close.

“Capital Reorganization” has the meaning set forth in Section 4.2.

“Commission” means the Securities and Exchange Commission.

“Common Share Reorganization” has the meaning set forth in Section 4.1.

“Common Shares” means the Company’s currently authorized class of Common Stock, par value $0.001.

“Company” has the meaning set forth in the preamble to this Warrant Certificate.

“Green Tree” means Empire New Mexico LLC, d/b/a Green Tree New Mexico, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a reference to the comparable section, if any, of any such successor Federal statute.

“Exercise Price” means $5.00 per share, applicable after the 4 to 1 reverse stock split to be authorized upon filing of the Amended and Restated Certificate of Incorporation approved by the board of directors and shareholders of Parent on or about August 27, 2021 and August 31, 2021, respectively, (the “Reverse Stock Split”), subject to adjustment from time to time pursuant to Section 4.

“Loan Modification” has the meaning set forth in the preamble to this Warrant Certificate

“Notice of Exercise” has the meaning set forth in Section 2(a).

“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Securities Act shall include a reference to the comparable section, if any, of any such successor Federal statute.

“Warrant” means the rights granted to the Warrant Holder pursuant to this Warrant Certificate.

“Warrant Certificate” means this Common Share Warrant Certificate.

“Warrant Holder” has the meaning set forth in the preamble to this Warrant Certificate.

“Warrant Shares” means 500,000 Common Shares issued or issuable upon exercise of this Warrant, subject to adjustment from time to time pursuant to Section 4.

2. Exercise.

(a) At any time, the Warrant Holder may exercise this Warrant by delivering to the Company a duly executed notice (a “Notice of Exercise”) in the form of Annex A specifying the number of Warrant Shares as to which this Warrant is being exercised along with payment, made 100% to Green Tree of the aggregate amount equal to the product of: (i) the Exercise Price times (ii) the number of Warrant Shares as to which the Warrant is being exercised.

The Company shall cause Green Tree to (1) retain for its own account and not dividend or distribute to the Company or any other person all monies paid to Green Tree by the Warrant Holder on any exercise of this Warrant, and (2) apply such monies solely to meet Green Tree’s financial obligations.

(b) Notwithstanding anything to the contrary set forth in this Warrant Certificate, at no time may all or a portion of the Warrant be exercised if the number of shares of Common Shares to be issued pursuant to such exercise would cause the Warrant Holder’s beneficial ownership to exceed, when aggregated with all other shares of Common Shares beneficially owned (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) by the Warrant Holder at such time, a number of shares of Common Shares that totals more than 49.99% of all of the Common Shares issued and outstanding at such time. For purposes of this Section 2(b), in determining the number of outstanding Common Shares, the Warrant Holder may rely on the number of outstanding Common Shares as reflected in (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company setting forth the number of outstanding Common Shares. For any reason at any time, upon the written request of the warrant Holder, the Company shall within one Business Day confirm in writing to the Warrant Holder the number of shares of outstanding Common Shares.

(c) As soon as practicable, but not later than five (5) Business Days after the Company shall have received such Notice of Exercise and payment of the aggregate Exercise Price made to Green Tree, the Company shall execute and deliver or cause to be executed and delivered, in accordance with such Notice of Exercise, a certificate or certificates representing the number of Common Shares specified in such Notice of Exercise issued in the name of the Warrant Holder. This Warrant shall be deemed to have been exercised and such share certificate or certificates shall be deemed to have been issued, and such Warrant Holder shall be deemed for all purposes to have become a holder of record of Common Shares, as of the date that such Notice of Exercise and payment of the aggregate Exercise Price shall have been received by Green Tree in the manner set forth in Sections 2(a) and 2(c) above.

(d) The Warrant Holder shall surrender this Warrant Certificate to the Company when it delivers the Notice of Exercise, and in the event of a partial exercise of the Warrant, the Company shall execute and deliver to the Warrant Holder, at the time the Company delivers the share certificate or certificates issued pursuant to such Notice of Exercise, a new Warrant Certificate for the unexercised portion of this Warrant Certificate, but in all other respects identical to this Warrant Certificate.

(e) The Company shall pay all expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of certificates for the Warrant Shares and a new Warrant Certificate, if any, except that if the certificates for the Warrant Shares or the new Warrant Certificate, if any, are to be registered in a name or names other than the name of the Warrant Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Warrant Holder at the time of its delivery of the Notice of Exercise or promptly upon receipt of a written request by the Company for payment.

(f) No fractional Common Shares will be issued in connection with any exercise of the Warrant, and any fractional Common Share (resulting from any adjustment pursuant to Section 4 or otherwise) in the aggregate number of Common Shares being purchased upon any exercise of the Warrant shall be eliminated.

3. Validity of Warrant and Issuance of Common Shares.

The Company represents and warrants that this Warrant has been duly authorized and is validly issued. The Company further represents and warrants that on the date hereof it has duly authorized and reserved, and the Company hereby agrees that it will at all times until the Expiration Date have duly authorized and reserved, such number of Common Shares as will be sufficient to permit the exercise in full of the Warrant, and that all such Common Shares are and will be duly authorized and, when issued upon exercise of the Warrant, will be validly issued, fully paid and nonassessable, and free and clear of all security interests, claims, liens, equities and other encumbrances.

4. Adjustment Provisions.

The number of Warrant Shares that may be purchased upon any exercise of the Warrant, shall be subject to change or adjustment as follows:

4.1. Common Share Reorganization. If the Company shall subdivide its outstanding Common Shares into a greater number of shares, by way of share split, share dividend or otherwise, or consolidate its outstanding Common Shares into a smaller number of shares (any such event being herein called a “Common Share Reorganization”), then (a) the definition of Exercise Price shall be adjusted, effective immediately after the effective date of such Common Share Reorganization, so that each amount contained in the definition of the Exercise Price is equal to such amount multiplied by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding after giving effect to such Common Shares Reorganization, and (b) the number of Common Shares subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of Common Shares subject to purchase immediately before such Common Share Reorganization by a fraction, the numerator of which shall be the number of shares outstanding after giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding immediately before giving effect to such Common Share Reorganization. The parties agree that the number and Exercise Price for the Warrant Shares was negotiated and valued at the post-Reverse Stock Split number of Common Shares and Exercise Price. Accordingly, the Reverse Stock Split shall not constitute a Common Share Reorganization under this Section 4.1. Conversely, if the Reverse Stock Split has not occurred at the time this Warrant is exercised then the parties agree that the Exercise Price and the number of Common Shares subject to purchase shall be adjusted as a Common Share Reorganization, as though the Common Shares of the Company were subject to a stock split in which each share of Common Stock shall be replaced with four shares of Common Stock (i.e. a 4 for 1 stock split).

4.2. Capital Reorganization. If there shall be any consolidation or merger to which the Company is a party, other than a consolidation or a merger of which the Company is the continuing corporation and that does not result in any reclassification of, or change (other than a Common Share Reorganization) in, outstanding Common Shares, or any sale or conveyance of the property of the Company as an entirety or substantially as an entirety, or any recapitalization of the Company (any such event being called a “Capital Reorganization”), then, effective upon the effective date of such Capital Reorganization, the Warrant Holder shall no longer have the right to purchase Common Shares, but shall have instead the right to purchase, upon exercise of this Warrant, the kind and amount of Common Shares and other securities and property (including cash) which the Warrant Holder would have owned or have been entitled to receive pursuant to such Capital Reorganization, if the Warrant had been exercised immediately prior to the effective date of such Capital Reorganization.

4.3. Adjustment Rules.

(a) Any adjustments pursuant to this Section 4 shall be made successively whenever any event referred to herein shall occur, except that, notwithstanding any other provision of this Section 4, no adjustment shall be made to the number of Warrant Shares to be delivered to the Warrant Holder (or to the Exercise Price) if such adjustment represents less than one-percent (1%) of the number of Warrant Shares previously required to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to one-percent (1%) or more of the number of Warrant Shares to be so delivered.

(b) If the Company shall take a record of the holders of its Common Shares for any purpose referred to in this Section 4, then (i) such record date shall be deemed to be the date of the issuance, sale, distribution or grant in question and (ii) if the Company shall legally abandon such action prior to effecting such action, no adjustment shall be made pursuant to this Section 4 in respect of such action.

(c) As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 4, the Company shall take any action which may be necessary, including obtaining regulatory approvals or exemptions, in order that the Company may thereafter validly and legally issue as fully paid and nonassessable all Common Shares which the Warrant Holder is entitled to receive upon exercise of this Warrant.

5. Transfer of Warrant.

5.1. No Transfer Without the Consent of the Company. This Warrant is personal to the Warrant Holder and this Warrant Certificate and the rights of the Warrant Holder hereunder may not be sold, assigned, transferred or conveyed, in whole or in part, except (a) to an Affiliate, nominee or assignee of the Warrant Holder that is an Accredited Investor or (b) with the prior written consent of the Company, which shall not be unreasonably withheld.

5.2. Permitted Transfers. Upon transfer of the Warrant permitted under Section 5.1 above, the Warrant Holder must deliver to the Company a duly executed Warrant Assignment in the form of Annex B attached hereto with funds sufficient to pay any transfer tax imposed in connection with such assignment. Upon surrender of this Warrant to the Company, the Company shall execute and deliver a new Warrant in the form of this Warrant, with appropriate changes to reflect such assignment, in the name or names of the assignee or assignees specified in the fully executed Warrant Assignment or other instrument of assignment and, if the Warrant Holder’s entire interest is not being transferred or assigned, in the name of the Warrant Holder, and this Warrant shall promptly be canceled. In connection with any transfer or exchange of this Warrant permitted hereunder, the transferring Warrant Holder shall pay all costs and expenses relating thereto, including, without limitation, all transfer taxes, if any, and all reasonable expenses incurred by the Company (including legal fees and expenses). Any new Warrant issued shall be dated the date hereof. The terms “Warrant” and “Warrant Holder” as used herein include all Warrants into which this Warrant (or any successor Warrant) may be exchanged or issued in connection with the permitted transfer or assignment of this Warrant, any successor Warrant and the holders of those Warrants, respectively.

6. Lost Mutilated or Missing Warrant Certificates.

Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Certificate and, in the case of loss, theft or destruction, upon receipt of indemnification satisfactory to the Company, or, in the case of mutilation, upon surrender and cancellation of the mutilated Warrant Certificate, the Company shall execute and deliver a new Warrant Certificate of like tenor and representing the right to purchase the same aggregate number of Warrant Shares. The recipient of any such Warrant Certificate shall reimburse the Company for all reasonable expenses incidental to the replacement of such lost, mutilated or missing Warrant Certificate.

7. Miscellaneous.

7.1. Successors and Assigns. All the provisions of this Warrant Certificate by or for the benefit of the Company or the Warrant Holder shall bind and inure to the benefit of their respective successors and permitted assigns.

7.2. Waivers; Amendments. Any provision of this Warrant Certificate may be amended or modified with (but only with) the written consent of the Company and the Warrant Holder. Any amendment, modification or waiver effected in compliance with this Section 7.3 shall be binding upon the Company and the Warrant Holder. No failure or delay of the Company or the Warrant Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereon or the exercise of any other right or power. The rights and remedies of the Company and the Warrant Holder hereunder are cumulative and not exclusive of any rights or remedies which each would otherwise have.

7.3. No Rights as a Shareholder. The Warrant shall not entitle the Warrant Holder, prior to the exercise of the Warrant, to any rights as a holder of shares of the Company.

7.4. Separability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

7.5. Governing Law. This Warrant shall be construed and enforced in accordance with the laws of the State of Delaware without regard to principles of conflicts of law, except as otherwise required by mandatory provisions of law.

7.6. Section Headings. The section headings used herein are for convenience of reference only and shall not be construed in any way to affect the interpretation of any provisions of the Warrant.

[Signature on Next Page]

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and attested by an officer of the Company, all as of the day and year first above written.

	EMPIRE PETROLEUM CORPORATION



	By:	/s/ Michael R. Morrissett
	Name:      Title:	Michael R. Morrissett President




	By:	/s/ Thomas W. Pritchard
	Name: Title:	Thomas W. Pritchard CEO

ANNEX A

Form of Notice of Exercise

Date: __________

To: Empire Petroleum Corporation

Reference is made to the Common Share Purchase Warrant No. Energy Evolution Master Fund-1 dated September 30, 2021 May 6, 2021, issued to the undersigned by Empire Petroleum Corporation. Terms defined therein are used herein as therein defined.

The undersigned, pursuant to the provisions set forth in the Warrant Certificate, hereby irrevocably elects and agrees to purchase the number of Common Shares at the Exercise Price(s) set forth below, and makes payment herewith by check payable to the order of Empire New Mexico LLC in an amount equal to $ __________.

	Number of Warrant Shares		Applicable Exercise Price

If said number of shares is less than all of the shares purchasable hereunder, the undersigned hereby requests that a new Warrant Certificate representing the remaining balance of the Warrant Shares be issued to me.

The undersigned hereby represents that it is exercising the Warrant for its own account for investment purposes and not with the view to any sale or distribution and that the Warrant Holder will not offer, sell or otherwise dispose of the Warrant or any underlying Warrant Shares in violation of applicable securities laws.

Energy Evolution Master Fund, LTD

By: ________________________

Name: ______________________

Title: _______________________

ANNEX B

Form of Warrant Assignment

Date:__________

Reference is made to the Common Share Purchase Warrant No. Energy Evolution Master Fund-1 dated September 30, 2021, issued to the undersigned by Empire Petroleum Corporation. Terms defined therein are used herein as therein defined.

FOR VALUE RECEIVED __________________ (the “Assignor”) hereby sells, assigns and transfers all of the rights of the Assignor as set forth in the Warrant Certificate with respect to the number of Warrant Shares covered thereby as set forth below, to the Assignee(s) as set forth below:

All notices to be given by the Company to the Assignor as Warrant Holder shall be sent to the Assignee(s) at the above listed address(es), and, if the number of Warrant Shares being hereby assigned is less than all of the Warrant Shares covered by the Warrant Certificate held by the Assignor, then also to the Assignor.

In accordance with Section 5 of the Warrant Certificate, the Assignor requests that the Company execute and deliver a new Warrant Certificate or Warrant Certificates in the name or names of the Assignee or Assignees, as is appropriate, or, if the number of Warrant Shares being hereby assigned is less than all of the Warrant Shares covered by the Warrant held by the Assignor, new Warrant Certificates in the name or names of the Assignee or the Assignees, as is appropriate, and in the name of the Assignor.

The undersigned represents that the Assignee has represented to the Assignor that the Assignee or each Assignee, as is appropriate, is acquiring the Warrant for its own account or the account of an Affiliate for investment purposes and not with the view to sell or distribute, and that the Assignee or each Assignee, as is appropriate, will not offer, sell or otherwise dispose of the Warrant or the Warrant Shares except under circumstances as will not result in a violation of applicable securities laws.

ENERGY EVOLUTION Master FUND, LTD

By: ________________________

Name: ______________________

Title: _______________________