UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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):
June 13, 2017
PETRO
RIVER OIL CORP.
(Exact
name of Registrant as specified in its Charter)
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Delaware
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000-49760
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9800611188
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(State
or other jurisdiction
of
incorporation)
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(Commission File
No.)
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(IRS
Employer
Identification
No.)
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205
East 42nd Street, Fourteenth Floor
New York, New York
10017
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(Address of
principal executive offices)
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(469)
828-3900
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(Registrant’s
Telephone Number)
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Not
Applicable
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(Former name or
address, if changed since last report)
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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 (see General Instruction A.2.
below):
☐
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))
Item
1.01
Entry
into a Material Definitive Agreement.
Item
2.03
Creation
of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On June
13, 2017, Petro River Oil Corp. (the “
Company
”) entered into a
Securities Purchase Agreement (“
Purchase Agreement
”) with Petro
Exploration Funding, LLC (“
Funding Corp
.”), pursuant to
which the Company issued to Funding Corp. a senior secured
promissory note to finance the Company’s working capital
requirements (the “
Note
Financing
”), in the principal amount of $2.0 million
(“
Secured
Note
”). As additional consideration for the Note
Financing, the Company issued to Funding Corp. (i) a warrant to
purchase 840,336 shares of the Company’s common stock,
$0.00001 par value (“
Common
Stock
”) (“
Warrant
”), and (ii) an overriding
royalty interest equal to 2% in all production from the
Company’s interest in the concessions located in Osage
County, Oklahoma, currently held by Spyglass Energy Group, LLC, an
indirect subsidiary of the Company (“
Spyglass
”), pursuant to an
Assignment of Overriding Royalty Interests (the “
Assignment
”).
The
Secured Note accrues interest at a rate of 10% per annum, and
matures on June 30, 2020. To secure the repayment of all amounts
due under the terms of the Secured Note, the Company entered into a
Security Agreement, pursuant to which the Company granted to
Funding Corp. a security interest in all assets of the Company. The
first interest payment will be due on June 1, 2018 and each six
month anniversary thereof until the outstanding principal balance
of the Secured Note is paid in full.
The
Warrant is exercisable immediately upon issuance, for an exercise
price per share equal to $2.38 per share, and shall terminate, if
not previously exercised, three years from the date of
issuance.
Scot
Cohen, a member of the Company’s Board of Directors and a
substantial stockholder of the Company, owns or controls 31.25% of
Funding Corp.
Item
3.02
Unregistered
Sale of Equity Securities.
See
Item 2.03 above.
Disclaimer
The foregoing descriptions of the Purchase Agreement, Warrant,
Security Agreement, Assignment and Promissory Note do not purport
to be complete, and are qualified in their entirety by reference to
the full text of the form of Purchase Agreement, form of Warrant,
form of Security Agreement and form of Promissory Note attached
hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 respectively,
each of which are incorporated by reference herein.
Item 9.01
Financial Statements and Exhibits.
See
Exhibit Index.
EXHIBIT
INDEX
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Exhibit Number
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Description
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10.1
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Form of Securities Purchase Agreement
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10.2
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Form of Warrant
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10.3
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Form of Security Agreement
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10.4
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Form of
Assignment of Overriding
Royalty Interests
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10.5
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Form of Promissory
Note
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SIGNATURES
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.
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PETRO
RIVER OIL CORP.
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Date:
June 16, 2017
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By:
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/s/ Scot
Cohen
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Scot
Cohen
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Executive
Chairman
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Exhibit 10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement is entered into and dated as of June
13, 2017 (this “
Agreement
”), by and among Petro
River Oil Corp., a Delaware corporation (the “
Company
”), Spyglass Energy Group,
LLC, a Delaware limited liability company (“
Spyglass
”) and Petro Exploration
Funding, LLC, a New York limited liability company
(“
Purchaser
”).
RECITAL
WHEREAS, the
Company is entering into this Agreement to fund various operations
including drilling programs in its 106,500 acre concession in Osage
County, Oklahoma (the “Osage Drilling Program”) held by
its indirect subsidiary Spyglass;
WHEREAS, as
consideration for allocating a portion of the funding herein to the
Osage Drilling Program, Spyglass agrees to enter into this
Agreement along with the Company; and
NOW
THEREFORE, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of
1933, as amended (the “
Securities Act
”), and Rule 506
promulgated thereunder, the Company desires to issue and sell to
Purchaser and Purchaser desires to purchase from the Company,
certain securities of the Company pursuant to the terms set forth
herein.
AGREEMENT
In
consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company, Spyglass
and Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions
. In addition to the
terms defined elsewhere in this Agreement, the following terms
shall have the meanings set forth in this
Section 1.1
:
“Affiliate”
means any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144
under the Securities Act.
“
Assignment of Overriding Royalty
Interests
” means the Assignment of Overriding Royalty
Interest between Spyglass and Purchaser in the form attached as
Exhibit C.
“Bankruptcy Event”
means any
of the following events: (a) the Company or any Subsidiary
commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Company or any Subsidiary thereof; (b)
there is commenced against the Company or any Subsidiary any such
case or proceeding that is not dismissed within 60 days after
commencement; (c) the Company or any Subsidiary is adjudicated
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (d) the Company
or any Subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 days; (e) the Company or any
Subsidiary makes a general assignment for the benefit of creditors;
(f) the Company or any Subsidiary fails to pay, or states that it
is unable to pay or is unable to pay, its debts generally as they
become due; (g) the Company or any Subsidiary calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) the Company or any Subsidiary,
by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the
foregoing.
“Business Day”
means any day
except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New
York are authorized or required by law or other governmental action
to close.
“Change of Control”
means
the occurrence of any of the following in one or a series of
related transactions: (i) an acquisition after the date hereof by
an individual or legal entity or “group” (as described
in Rule 13d-5(b)(1) under the Exchange Act) of more than one-third
of the voting rights or equity interests in the Company; (ii) a
replacement of more than one-third of the members of the
Company’s board of directors that is not approved by those
individuals who are members of the board of directors on the date
hereof (or other directors previously approved by such
individuals); (iii) a merger or consolidation of the Company or any
Subsidiary or a sale of more than one-third of the assets of the
Company in one or a series of related transactions, unless
following such transaction or series of transactions, the holders
of the Company’s securities prior to the first such
transaction continue to hold at least two-thirds of the voting
rights and equity interests in the surviving entity or acquirer of
such assets; (iv) a recapitalization, reorganization or other
transaction involving the Company or any Subsidiary that
constitutes or results in a transfer of more than one-third of the
voting rights or equity interests in the Company; (v) consummation
of a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act with respect to the Company, or (vi) the
execution by the Company or its controlling shareholders of an
agreement providing for or reasonably likely to result in any of
the foregoing events.
“Closing”
means the closing
of the purchase and sale of the Securities pursuant to
Section 2.1
.
“Closing Date”
means the
date of the Closing.
“Closing Price”
means,
for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or
quoted on an Eligible Market or any other national securities
exchange, the closing bid price per share of the Common Stock for
such date (or the nearest preceding date) on the primary Eligible
Market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the
OTC Bulletin Board, the closing bid price per share of the Common
Stock for such date (or the nearest preceding date) so quoted; (c)
if prices for the Common Stock are then reported in the “Pink
Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent closing bid price
per share of the Common Stock so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
Purchaser.
“Commission”
means the
Securities and Exchange Commission.
“Common Stock”
means the
common stock of the Company, par value $0.00001 per share, and any
securities into which such common stock may hereafter be
reclassified.
“Convertible Securities”
means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.
“
Effective
Date
” means the date that the Registration Statement
is first declared effective by the Commission.
“Eligible Market”
means any
of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market and the OTC Bulletin Board.
“Exchange Act”
means the
Securities Exchange Act of 1934, as amended.
“Losses”
means any and all
losses, claims, damages, liabilities, settlement costs and
expenses, including without limitation costs of preparation of
legal action and reasonable attorneys’ fees.
“Notes”
means the Secured
Promissory Notes due June 2020 with an aggregate principal face
amount of $2,000,000 issued by the Company to Purchaser in the form
of
Exhibit A
hereto.
“Options”
means any rights,
warrants or options to subscribe, directly or indirectly for or
purchase Common Stock or Convertible Securities (including all
Additional Warrants that can be issued under the Transaction
Documents).
“ORRI”
means the overriding
royalty interest equal to 2% in aggregate of 8/8ths in the oil, gas
and other hydrocarbon substances which may be produced, saved, sold
and marketed from the oil and gas leases as described in the
Assignment of Overriding Royalty Interests.
“Person”
means an individual
or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
“Purchaser Counsel”
means MSN Legal, counsel to Purchaser.
“Rule 144”
means Rule
144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
“Securities”
means the
Notes, the Warrants, the ORRI and the Underlying Shares issued or
issuable (as applicable) to Purchaser pursuant to the Transaction
Documents.
“Security Agreement”
means
the Security Agreement dated as of the Closing Date, among the
Company, and the Purchaser set forth on the signature pages thereto
substantially in the form of
Exhibit D
.
“Subsidiaries”
shall
mean Spyglass and
Bandolier Energy
LLC, each indirect subsidiaries of the
Company.
“Trading Day”
means (a) any
day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if the Common Stock is not then
listed or quoted and traded on any Trading Market, then any
Business Day.
“Trading Market”
means OTC
Bulletin Board or any other Eligible Market or any national
securities exchange, market or trading or quotation facility on
which the Common Stock is then listed or quoted.
“Transaction Documents”
means this Agreement, the Notes, the Warrants, the Assignment of
Overriding Royalty Interest, the Security Agreement, the Transfer
Agent Instructions and any other documents or agreements executed
or delivered in connection with the transactions contemplated
hereby.
“Underlying Shares”
means the shares of Common Stock issuable (i) upon exercise of the
Warrants, and (ii) in satisfaction of any other obligation of the
Company to issue shares of Common Stock pursuant to the Transaction
Documents, and in each case, any securities issued or issuable in
exchange for or in respect of such securities.
“Warrants”
means,
collectively, the Common Stock warrants issued and sold under this
Agreement, in the form of
Exhibit B
.
ARTICLE
II.
PURCHASE
AND SALE
2.1
Closing
. The Closing Date shall
be 10:00 a.m., New York City time, on the date hereof (or such
later date as is mutually agreed to by the Company and Purchaser)
after notification of satisfaction (or waiver) of the conditions to
the Closing set forth in
Article V
. Subject to the terms
and conditions set forth in this Agreement, at the Closing, the
Company or Spyglass, as the case may be, shall issue and sell to
Purchaser and Purchaser shall purchase from the Company, the Notes
and Warrants, and the ORRI, for the purchase price set forth on
Schedule A
hereto
under the heading “Purchase Price”. The Closing shall
take place at the offices of Purchaser Counsel or at such other
location as the parties may agree.
2.2
Closing
Deliveries
.
(a)
At the Closing, the
Company or Spyglass, as the case may be, shall deliver or cause to
be delivered to Purchaser the following:
(i)
a Note, registered
in the name of Purchaser, in the principal amount indicated on
Schedule A
hereto
under the heading “Note Principal Amount”;
(ii)
a
Warrant, registered in the name of Purchaser, pursuant to which
Purchaser shall have the right to acquire such number of Underlying
Shares indicated on
Schedule A
hereto under the
heading “Warrant Shares”; and
(iii)
an
Assignment of Overriding Royalty Interest, registered in the name
of Purchaser, with the ORRI amount indicated on
Schedule A
hereto under the
heading “ORRI”;
(b)
At the Closing,
Purchaser shall deliver or cause to be delivered to the Company (i)
the purchase price set forth on Schedule A hereto under the heading
“Purchase Price”, in United States dollars and in
immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose, and (ii) the
Security Agreement and the Assignment of Overriding Interest, each
executed by Purchaser.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and Warranties of the
Company
. The Company and Spyglass hereby makes the following
representations and warranties to the Purchaser:
(a)
Organization and
Qualification
. Each of the Company and the Subsidiaries is
an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the
aggregate, (i) materially adversely affect the legality, validity
or enforceability of any Transaction Document, (ii) have or result
in a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) materially
adversely impair the Company’s ability to perform fully on a
timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “
Material Adverse
Effect
”).
(b)
Authorization;
Enforcement
. The Company and its Subsidiaries have the
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereunder and thereunder have been duly
authorized by all necessary action on the part of the Company and
no further consent or action is required by the Company, its Board
of Directors or its stockholders. Each Transaction Document has
been (or upon delivery will be) duly executed by the Company is or,
when delivered in accordance with the terms hereof, will
constitute, assuming due authorization, execution and delivery by
each of the other parties thereto, the valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms, except where enforceability may be limited by a
Bankruptcy Event and except where enforceability is subject to the
application of equitable principles or remedies.
(c)
No
Conflicts
. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt) or other
binding understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations of
any self-regulatory organization to which the Company or its
securities are subject), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in each case
as, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(d)
Filings, Consents
and Approvals
. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filing
with the Commission of a Form 8-K Current Report, (ii) the
application(s) to each Trading Market for the listing of the
Underlying Shares for trading thereon, and (iii) the notification
to the Trading Market of the change in the number of shares
outstanding(collectively, the “
Required Approvals
”).
(e)
Issuance of the
Securities
.
The Securities are
duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens (other than
restrictions under applicable securities laws or the Transaction
Documents), and shall not be subject to preemptive rights or
similar rights of shareholders. Assuming the accuracy of the
representations of the Purchaser set forth in
Section
3.2
, the Securities are
issued in compliance with applicable securities laws, rules and
regulations.
The Company has reserved
from its duly authorized capital stock the maximum number of shares
of Common Stock issuable under the Transaction
Documents
.
(f)
Private
Placement
. Neither the Company nor any Person acting on the
Company’s behalf has sold or offered to sell or solicited any
offer to buy the Securities by means of any form of general
solicitation or advertising. Neither the Company nor any of its
Affiliates nor any Person acting on the Company's behalf has,
directly or indirectly, at any time within the past six months,
made any offer or sale of any security or solicitation of any offer
to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer
and sale of the Securities as contemplated hereby or (ii) cause the
offering of the Securities pursuant to the Transaction Documents to
be integrated with prior offerings by the Company for purposes of
any stockholder approval provisions under the rules and regulations
of any Trading Market. Assuming the accuracy of the
Purchaser’s representations and warranties set forth in
Section 3.2
, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to Purchaser as contemplated
hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market and no
shareholder approval is required for the Company to fulfill its
obligations under the Transaction Documents (other than those
obligations set forth in
Section 4.5
). The Company is
not a United States real property holding corporation within the
meaning of the Foreign Investment in Real Property Tax Act of
1980.
(g)
Acknowledgment
Regarding Purchaser’s Purchase of Securities
. The
Company acknowledges and agrees that Purchaser is acting solely in
the capacity of an arm’s length purchaser with respect to
this Agreement and the transactions contemplated hereby. The
Company further acknowledges that Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by Purchaser or its
respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely
incidental to Purchaser’s purchase of the Securities. The
Company further represents to Purchaser that the Company’s
decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives. The
Company further acknowledges that Purchaser has not made any
promises or commitments other than as set forth in this Agreement,
including any promises or commitments for any additional investment
by Purchaser in the Company.
(h)
Ranking
.
Except as set forth on
Schedule 3.1(cc)
, as of the
date of this Agreement, no indebtedness of the Company is senior
to, or pari passu with, the Notes in right of payment, whether with
respect to interest or upon liquidation or dissolution, or
otherwise.
3.2
Representations and
Warranties of the Purchaser
. Purchaser hereby represents and
warrants to the Company as follows:
(a)
Organization;
Authority
. Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization with the requisite corporate, limited liability
company or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by Purchaser of
the Transaction Documents to which it is a party have been duly
authorized by all necessary corporate or limited liability company
action on the part of Purchaser. The Transaction Documents to which
it is a party have been duly executed by Purchaser and, when
delivered by Purchaser in accordance with terms hereof and thereof,
will constitute the valid and legally binding obligation of
Purchaser, enforceable against it in accordance with its
terms.
(b)
Investment
Intent
.
Purchaser is
acquiring the Securities for investment purposes and has no present
intention of distributing any of the Securities in violation of
applicable securities laws. Purchaser has been advised and
understands that the Securities have not been registered under the
Securities Act or under the “blue sky” or similar laws
of any jurisdiction and the Securities may be resold only if
registered pursuant to the provisions of the Securities Act and
such other laws, if applicable, or, subject to the terms and
conditions of this Agreement, if an exemption from registration is
available. Nothing contained herein shall be deemed a
representation or warranty by Purchaser to hold the Securities for
any period of time. Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Purchaser has been advised
and understands that the Company, in issuing the Securities, is
relying upon, among other things, the representations and
warranties of Purchaser herein.
(c)
Purchaser
Status
. As indicated on Purchaser’s signature page
hereto and incorporated herein by reference, Purchaser is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and/or a “qualified institutional
buyer” as defined in Rule 144A under the Securities
Act. Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act.
(d)
Experience of
Purchaser
. Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such
investment. Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(e)
General
Solicitation
. Purchaser is not purchasing the Securities as
a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.
(f)
Disclosure
.
Purchaser acknowledges and agrees that the Company neither makes
nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in
Section
3.1
.
(g)
Bad Actor
Representation
. Purchaser is subject to any of the
"Bad Actor" disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a "
Disqualification Event
"), except for a
Disqualification Event covered by Rule 506(d)(2) or
(d)(3).
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions
.
(a)
The Securities may
only be disposed of pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection
with any transfer of Securities other than pursuant to an effective
registration statement or to the Company or pursuant to Rule 144,
except as otherwise set forth herein, the Company may require the
transferor to provide to the Company an opinion of counsel selected
by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and
agrees to register on the books of the Company and with its
transfer agent, without any such legal opinion, any transfer of
Securities by Purchaser to an Affiliate of Purchaser, provided that
the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act.
(b)
Purchaser agrees to
the imprinting, except as otherwise permitted by
Section 4.1(c)
, of the
following legend on any certificate evidencing
Securities:
[NEITHER] THESE
SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE
SECURITIES ISSUABLE UPON [EXERCISE] OF THESE SECURITIES] MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
(c)
Certificates
evidencing Securities shall not be required to contain the legend
set forth in
Section
4.1(b)
or any other legend (i) while a Registration
Statement covering the resale of such Securities is effective under
the Securities Act, or (ii) following any sale of such Securities
pursuant to Rule 144, or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the
Commission). The Company shall issue or cause its counsel to issue
the legal opinion included in the Transfer Agent Instructions to
the Company’s transfer agent on the Effective Date or at such
earlier time as a legend is no longer required for certain
Securities, the Company will no later than three Trading Days
following the delivery by Purchaser to the Company or the
Company’s transfer agent of a legended certificate
representing such Securities, deliver or cause to be delivered to
Purchaser a certificate representing such Securities that is free
from all restrictive legends. The Company may not make any notation
on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in
Section
4.1(b)
.
(d)
The Company
acknowledges and agrees that Purchaser may from time to time pledge
or grant a security interest in some or all of the Securities in
connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Securities and, if required
under the terms of such agreement, loan or arrangement, Purchaser
may transfer pledged or secured Securities to the pledgees or
secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of selling stockholders
thereunder.
4.2
Acknowledgment of Dilution
. The
Company acknowledges that the issuance of the Securities (including
the Underlying Shares) will result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that
its obligations under the Transaction Documents, including without
limitation its obligation to issue the Securities (including the
Underlying Shares) pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim that the Company may have against
Purchaser. Anything in this Agreement or elsewhere herein to the
contrary notwithstanding, it is understood and agreed by the
Company (i) that Purchaser has not been asked to agree, nor has
Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the
Securities for any specified term; (ii) that future open market or
other transactions by Purchaser, including short sales, and
specifically including, without limitation, short sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) that Purchaser, and counter parties in
“derivative” transactions to which Purchaser is a
party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) that
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction.
4.3
Furnishing of Information
. As
long as Purchaser owns Securities, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. Upon
the request of Purchaser, the Company shall deliver to Purchaser a
written certification of a duly authorized officer as to whether it
has complied with the preceding sentence. As long as Purchaser owns
Securities, if the Company is not required to file reports pursuant
to such laws, it will prepare and furnish to Purchaser and make
publicly available in accordance with paragraph (c) of Rule 144
such information as is required for Purchaser to sell the
Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of Rule 144 applicable
to the issuer of securities relating to transactions for the sale
of securities pursuant to Rule 144.
4.4
Exercise Procedures
. The form
of Exercise Notice included in the Warrants set forth the totality
of the procedures required by Purchaser, or member of Purchaser, in
order to exercise the Warrants. No additional legal opinion or
other information or instructions shall be necessary to enable
Purchaser, or member of Purchaser, to exercise their Warrants. The
Company shall honor exercises of the and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.
4.5
Repayment of Notes
. Each of the
parties hereto agrees that all repayments of the Notes (including
any accrued interest thereon) by the Company (other than by
conversion of the Notes) will be paid pro rata to the holders
thereof based upon the principal amount then outstanding to each of
such holders.
4.6
No Impairment
. At all times
after the date hereof, the Company will not take or permit any
action, or cause or permit any Subsidiaries to take or permit any
action that materially impairs or adversely affects the rights of
Purchaser under the Agreement or the Notes.
4.7
Indemnification
. In
consideration of Purchaser's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless Purchaser and each other holder of the Securities
and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of
the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"
Related Persons
") from and
against any and all actions, causes of action, suits, claims and
Losses in connection therewith (irrespective of whether any such
Related Person is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "
Indemnified
Liabilities
"), incurred by any Related Person as a result
of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made in the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or
made against such Related Person by a third party (including for
these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents
or any other certificate, instrument or document contemplated
hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Securities, or (iii) the status of Purchaser or
holder of the Securities as an investor in the Company. To the
extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable
law.
ARTICLE
V.
CONDITIONS
5.1
Conditions Precedent to the
Obligations of Purchasers
. The obligation of Purchaser to
acquire Securities at the Closing is subject to the satisfaction or
waiver by h Purchaser, at or before the Closing, of each of the
following conditions:
(a)
Representations and Warranties
.
The representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made on and as of such
date;
(b)
Performance
. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by it at or prior to the Closing;
(c)
No Injunction
. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents;
(d)
Adverse Changes
. Since the date
of execution of this Agreement, no event or series of events shall
have occurred that reasonably would be expected to have a Material
Adverse Effect;
(e)
No Suspensions of Trading in Common
Stock; Listing
. Trading in the Common Stock shall not have
been suspended by the Commission or any Trading Market (except for
any suspensions of trading of not more than one Trading Day solely
to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement,
and the Common Stock shall have been at all times since such date
listed for trading on an Eligible Market;
5.2
Conditions Precedent to the
Obligations of the Company
. The obligation of the Company to
sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the
following conditions:
(a)
Representations and Warranties
.
The representations and warranties of Purchaser contained herein
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made on and as of
such date;
(b)
Performance
. Purchaser shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by Purchaser at or prior to the Closing; and
(c)
No Injunction
. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.
ARTICLE
VI.
MISCELLANEOUS
6.1
Termination
. This Agreement may
be terminated by the Company or Purchaser, by written notice to the
other parties, if the Closing has not been consummated by the third
Trading Day following the date of this Agreement; provided that no
such termination will affect the right of any party to sue for any
breach by the other party (or parties).
6.2
Fees and Expenses
. Within 10
days following the Closing, the Company shall pay Purchaser its
reasonable legal fees and expenses incurred in connection with the
preparation and negotiation of this Agreement. The Company shall
pay all transfer agent fees, stamp taxes and other taxes and duties
levied in connection with the issuance of any
Securities.
6.3
Entire Agreement
. The
Transaction Documents, together with the Exhibits, Annexes, and
Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing,
and without further consideration, each party will execute and
deliver to the other parties such further documents as may be
reasonably requested in order to give practical effect to the
intention of the parties under the Transaction
Documents.
6.4
Notices
. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) the Trading Day after the
date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Agreement
later than 6:30 p.m. (New York City time) on any date and earlier
than 11:59 p.m. (New York City time) on such date, (iii) the
Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given. The
address for such notices and communications shall be as
follows:
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If to
the Company:
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Petro
River Oil Corp
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55
5
th
Avenue
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New
York, NY 10003
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Attn:
Scot Cohen
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|
|
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If to
the Purchaser:
|
Petro
Exploration Funding LLC
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55
5
th
Avenue
|
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New
York, NY 10003
|
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Attn:
Scot Cohen
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or such
other address as may be designated in writing hereafter, in the
same manner, by such Person.
6.5
Amendments; Waivers
. No
provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the
Company and holders collectively holding 60% of the aggregate
principal amount outstanding under the Notes or, in the case of a
waiver, by the party against whom enforcement of any such waiver is
sought. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Notes then
outstanding without the consent of holders collectively holding 90%
of the aggregate principal amount outstanding under the Notes. No
waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such
right.
6.6
Construction
. The headings
herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
6.7
Successors and Assigns
. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Purchaser. Purchaser may
assign its rights under this Agreement to any Person to whom
Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the
Purchaser. Notwithstanding anything to the contrary herein,
Securities may be assigned to any Person in connection with a bona
fide margin account or other loan or financing arrangement secured
by such Securities.
6.8
No Third-Party Beneficiaries
.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, except that each Related Person is an intended
third party beneficiary of
Section 4.7
.
6.9
Governing Law; Venue; Waiver of Jury
Trial
. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by any of the Transaction
Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts
sitting in the City of New York, Borough of Manhattan. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the
enforcement of any of this Agreement), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper.
Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or any of the
Transaction Documents or the transactions contemplated hereby or
thereby. If either party shall commence an action or proceeding to
enforce any provisions of this Agreement or any Transaction
Document, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable
attorneys’ fees and other reasonable costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.
6.10
Survival
. The representations,
warranties, agreements and covenants contained herein shall survive
the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable.
6.11
Execution
. This Agreement may
be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile signature page were an
original thereof.
6.12
Severability
. If any provision
of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision
in this Agreement.
6.13
Rescission and Withdrawal
Right
. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction
Documents, whenever Purchaser exercises a right, election, demand
or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein
provided, then Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company,
any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
6.14
Replacement of Securities
. If
any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.
The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement
Securities.
6.15
Remedies
. In addition to being
entitled to exercise all rights provided herein or granted by law,
including recovery of damages, Purchaser and the Company will be
entitled to specific performance under the Transaction Documents.
The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees
to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be
adequate.
6.16
Usury
. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any claim, action or proceeding that may be
brought by Purchaser in order to enforce any right or remedy under
any Transaction Document. Notwithstanding any provision to the
contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under
the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under
applicable law (the
“Maximum
Rate”
), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest
that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the
new maximum contract rate of interest allowed by law will be the
Maximum Rate of interest applicable to the Transaction Documents
from the effective date forward, unless such application is
precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to
Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by Purchaser to the unpaid
principal balance of any such indebtedness or be refunded to the
Company, the manner of handling such excess to be at
Purchaser’s election.
6.17
Adjustments in Share Numbers and
Prices
. In the event of any stock split, subdivision,
dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event
occurring after the date hereof, each reference in this Agreement
to a number of shares or a price per share shall be amended to
appropriately account for such event.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.
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PETRO RIVER OIL CORP.
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By:
__________________________
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Stephen
Brunner
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President
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SPYGLASS ENERGY GROUP, LLC.By: Stephen BrunnerManager
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[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE OF PURCHASER FOLLOWS.]
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PETRO EXPLORATION FUNDINGLLC
By:
_________________________
Scot
Cohen
Managing
Member
Note Principal Amount: $2,000,000
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Status (check boxes as applicable):
☐
Purchaser is an “accredited investor” as defined in
Rule 501(a) under the Securities Act.
☐
Purchaser is a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act.
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Address for Notice:
20 E 20
th
Street, 6
th
Fl
New York, NY 10003
Attn: Scot Cohen
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[Signature Page to Securities Purchase Agreement]
Exhibits
:
C.
Form of Assignment
of Overriding Royalty Interest
D.
Form of Security
Agreement
Schedule A
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Purchaser
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Note Principal Amount
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Warrant Shares
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ORRI
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Purchase Price
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Petro
Exploration Funding LLC
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2,000,000
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840,336
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2%
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2,000,000
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NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
PETRO RIVER OIL CORP.
WARRANT
Warrant
__ No. [ ] Dated: June __, 2017
PETRO
RIVER OIL CORP., a Delaware corporation (the “
Company
”), hereby certifies that,
for value received, PETRO EXPLORATION FUNDING, LLC or its
registered assigns (the “
Holder
”), is entitled to purchase
from the Company up to a total of 840,336shares of common stock,
$0.00001 par value per share (the “
Common Stock
”), of the Company
(each such share, a “
Warrant
Share
” and all such shares, the “
Warrant Shares
”) at an exercise
price equal to $2.38 per share (as adjusted from time to time as
provided in
Section
9
, the “
Exercise
Price
”), at any time and from time to time from and
after the date hereof and through and including the date that is
three years from the date of issuance hereof (the
“
Expiration
Date
”), and subject to the following terms and
conditions. This Warrant (this “
Warrant
”) is one of a series of
similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated as of June 13, 2017, by and among the
Company and the Purchasers identified therein (the
“
Purchase
Agreement
”). All such warrants are referred to herein,
collectively, as the “
Warrants
.”
1.
Definitions
. In addition to the
terms defined elsewhere in this Warrant, capitalized terms that are
not otherwise defined herein have the meanings given to such terms
in the Purchase Agreement.
2.
Registration of Warrant
. The
Company shall register this Warrant, upon records to be maintained
by the Company for that purpose (the “
Warrant Register
”), in the name of
the record Holder hereof from time to time. The Company may deem
and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
3.
Registration of Transfers
. The
Company shall register the assignment and transfer of any portion
of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto on
Annex B
duly
completed and signed, to the Company’s transfer agent or to
the Company at its address specified herein. Upon any such
registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a
“
New Warrant
”),
evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.
4.
Exercise and Duration of
Warrants
.
(a)
This Warrant shall
be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and
become void and of no value.
(b)
A Holder may
exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto on
Annex A
(the
“
Exercise
Notice
”), appropriately completed and duly signed, and
(ii) payment of the Exercise Price for the number of Warrant
Shares as to which this Warrant is being exercised, and the date
such items are delivered to the Company (as determined in
accordance with the notice provisions hereof) is an
“
Exercise Date
.”
The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of
the Exercise Notice shall have the same effect as cancellation of
the original Warrant and issuance of a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares, if
any.
5.
Delivery of Warrant
Shares
.
(a)
Upon the exercise
of this Warrant, the Company shall promptly (but in no event later
than three Trading Days after the Exercise Date) issue or cause to
be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends unless a registration statement
covering the resale of the Warrant Shares and naming the Holder as
a selling stockholder thereunder is not then effective and the
Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144 under the Securities Act. The
Holder, or any Person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of
such Warrant Shares as of the Exercise Date. The Company shall,
upon request of the Holder, use its best efforts to deliver Warrant
Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions.
(b)
This Warrant is
exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this
Warrant following one or more partial exercises, the Company shall
issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant
Shares.
(c)
The Company’s
obligations to issue and deliver Warrant Shares upon an exercise in
accordance with
Section
4(b)
above are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms
hereof.
6.
Charges, Taxes and Expenses
.
Issuance and delivery of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses
shall be paid by the Company; provided, however, that the Company
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than
that of the Holder. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring
this Warrant or receiving Warrant Shares upon exercise
hereof.
7.
Replacement of Warrant
. If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this
Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if
requested.
8.
Reservation of Warrant Shares
.
The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued
Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided,
the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of
persons other than the Holder (taking into account the adjustments
and restrictions of
Section 9
). The Company
covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. The Company
will take all such action as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation
system upon which the Common Stock may be listed.
9.
Certain Adjustments
. The
Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set
forth in this
Section
9
.
(a)
Stock Dividends and Splits
. If
the Company, at any time while this Warrant is outstanding, (i)
pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines
outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such
subdivision or combination.
(b)
Pro Rata Distributions
. If the
Company, at any time while this Warrant is outstanding, distributes
to holders of Common Stock (i) evidences of its indebtedness, (ii)
any security (other than a distribution of Common Stock covered by
the preceding paragraph), (iii) rights or warrants to
subscribe for or purchase any security, or (iv) any other asset (in
each case, “
Distributed
Property
”), then in each such case the Exercise Price
in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the
product of such Exercise Price times a fraction of which the
denominator shall be the average of the Closing Prices for the five
Trading Days immediately prior to (but not including) such record
date and of which the numerator shall be such average less the then
fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, as determined by
the Company's independent certified public accountants that
regularly examine the financial statements of the Company (an
“
Appraiser
”). In
such event, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser
(which shall be a nationally recognized accounting firm), in which
case such fair market value shall be deemed to equal the average of
the values determined by each of the Appraiser and such appraiser.
As an alternative to the foregoing adjustment to the Exercise
Price, at the request of the Holder delivered before the
90
th
day
after such record date, the Company will deliver to such Holder,
within five Trading Days after such request (or, if later, on the
effective date of such distribution), the Distributed Property that
such Holder would have been entitled to receive in respect of the
Warrant Shares for which this Warrant could have been exercised
immediately prior to such record date. If such Distributed Property
is not delivered to a Holder pursuant to the preceding sentence,
then upon any exercise of the Warrant that occurs after such record
date, such Holder shall remain entitled to receive, in addition to
the Warrant Shares otherwise issuable upon such exercise (if
applicable), such Distributed Property.
(c)
Fundamental Transactions
. If,
at any time while this Warrant is outstanding, (i) the Company
effects any merger or consolidation of the Company with or into
another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (iv) the Company
effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares
of Common Stock covered by
Section 9(a)
above) (in any
such case, a “
Fundamental
Transaction
”), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same
amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the
“
Alternate
Consideration
”). The aggregate Exercise Price for this
Warrant will not be affected by any such Fundamental Transaction,
but the Company shall apportion such aggregate Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. In the event of a
Fundamental Transaction, the Company or the successor or purchasing
Person, as the case may be, shall execute with the Holder a written
agreement providing that:
(x)
this Warrant shall
thereafter entitle the Holder to purchase the Alternate
Consideration in accordance with this
Section 9(c)
,
(y)
in the case of any
such successor or purchasing Person, upon such consolidation,
merger, statutory exchange, combination, sale or conveyance, such
successor or purchasing Person shall be jointly and severally
liable with the Company for the performance of all of the Company's
obligations under this Warrant and the Purchase Agreement,
and
(z)
if registration or
qualification is required under the Securities Act or applicable
state law for the public resale by the Holder of shares of stock
and other securities so issuable upon exercise of this Warrant,
such registration or qualification shall be completed prior to such
reclassification, change, consolidation, merger, statutory
exchange, combination, sale or conveyance.
If, in
the case of any Fundamental Transaction, the Alternate
Consideration includes shares of stock, other securities, other
property or assets of a Person other than the Company or any such
successor or purchasing Person, as the case may be, in such
Fundamental Transaction, then such written agreement shall also be
executed by such other Person and shall contain such additional
provisions to protect the interests of the Holder as the Board of
Directors of the Company shall reasonably consider necessary by
reason of the foregoing. At the Holder’s request, any
successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder’s right to
purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the
provisions of this paragraph (c) and insuring that the Warrant (or
any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. If
any Fundamental Transaction constitutes or results in a Change of
Control, then at the request of the Holder delivered before the
90
th
day
after such Fundamental Transaction, the Company (or any such
successor or surviving entity) will purchase this Warrant from the
Holder for a purchase price, payable in cash within five Trading
Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the Black-Scholes value of the
remaining unexercised portion of this Warrant on the date of such
request.
(d)
Number of Warrant Shares
.
Simultaneously with any adjustment to the Exercise Price pursuant
to paragraphs (a), or (b) of this Section, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the
increased or decreased number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such
adjustment.
(e)
Calculations
. All calculations
under this
Section
9
shall be made to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock.
(f)
Notice of Adjustments
. Upon the
occurrence of each adjustment pursuant to this
Section 9
, the Company at its
expense will promptly compute such adjustment in accordance with
the terms of this Warrant and prepare a certificate setting forth
such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and
showing in reasonable detail the facts upon which such adjustment
is based. The Company will deliver a copy of each such certificate
to the Holder within 10 Trading Days of the occurrence of such
adjustment.
(g)
Notice of Corporate Events
. If
the Company (i) declares a dividend or any other distribution of
cash, securities or other property in respect of its Common Stock,
including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the
Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 20
calendar days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure
that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with
respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such
notice.
10.
Payment of Exercise Price
. The
Holder shall pay the Exercise Price in immediately available
funds.
11.
Limitation on Exercise
.
Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder
upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following
such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its
Affiliates and any other Persons whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% (the “
Threshold
Percentage
”) or 9.999% (the “
Maximum Percentage”)
of the total
number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such
exercise (or other issuance)). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated
thereunder. Each delivery of an Exercise Notice hereunder will
constitute a representation by the Holder to the Company that the
Holder has evaluated the limitations set forth in this paragraph
and determined that issuance of the full number of Warrant Shares
requested in such Exercise Notice is permitted under this
paragraph. The Company’s obligation to issue shares of Common
Stock in excess of the limitation referred to in this Section shall
be suspended (and shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares
of Common Stock may be issued in compliance with such limitation.
By written notice to the Company, the Holder shall have the right
(x) at any time and from time to time to reduce its Maximum
Percentage immediately upon notice to the Company in the event and
only to the extent that Section 16 of the Exchange Act or the rules
promulgated thereunder (or any successor statute or rules) is
changed to reduce the beneficial ownership percentage threshold
thereunder to a percentage less than 9.999% and (y) at any time and
from time to time to waive the provisions of this Section insofar
as they relate to the Threshold Percentage or to increase or
decrease its Threshold Percentage (but not in excess of the Maximum
Percentage) unless the Holder shall have, by written instrument
delivered to the Company, irrevocably waived its rights to so
increase or decrease its Threshold Percentage, but (i) any such
waiver, increase or decrease will not be effective until the
61
st
day
after such notice is delivered to the Company, and (ii) any such
waiver, increase or decrease will apply only to the Holder and not
to any other holder of Warrants.
12.
Fractional Shares
. The Company
shall not be required to issue or cause to be issued fractional
Warrant Shares on the exercise of this Warrant. If any fraction of
a Warrant Share would, except for the provisions of this Section,
be issuable upon exercise of this Warrant, the number of Warrant
Shares to be issued will be rounded up to the nearest whole share
or right to purchase the nearest whole share, as the case may
be.
13.
Notices
. Any and all notices or
other communications or deliveries hereunder (including without
limitation any Exercise Notice) shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior
to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii)
the Trading Day following the date of mailing, if sent by a
nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be
given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.
14.
Warrant Agent
. The Company
shall serve as warrant agent under this Warrant. Upon 30 days'
notice to the Holder, the Company may appoint a new warrant agent.
Any corporation into which the Company or any new warrant agent may
be merged or any corporation resulting from any consolidation to
which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholders services
business shall be a successor warrant agent under this Warrant
without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the
Holder's last address as shown on the Warrant
Register.
15.
Miscellaneous
.
(a)
Subject to the
restrictions on transfer set forth on the first page hereof, this
Warrant may be assigned by the Holder. This Warrant may not be
assigned by the Company except to a successor in the event of a
Fundamental Transaction. This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing
in this Warrant shall be construed to give to any Person other than
the Company and the Holder any legal or equitable right, remedy or
cause of action under this Warrant. This Warrant may be amended
only in writing signed by the Company and the Holder and their
successors and assigns.
(b)
The Company will
not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any Warrant Shares above the amount
payable therefor on such exercise, (ii) will take all such action
as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (iii) will not
close its stockholder books or records in any manner which
interferes with the timely exercise of this Warrant.
(c)
Governing Law; Venue; Waiver Of Jury
Trial
. all questions concerning the construction, validity,
enforcement and interpretation of this warrant shall be governed by
and construed and enforced in accordance with the laws of the state
of new york. each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the city of
new york, borough of manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the transaction documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper. each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. the
company hereby waives all rights to a trial by
jury.
(d)
The headings herein
are for convenience only, do not constitute a part of this Warrant
and shall not be deemed to limit or affect any of the provisions
hereof.
(e)
In case any one or
more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any
way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this
Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated
above.
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PETRO RIVER OIL CORP.
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By:
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Name:
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Title:
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Annex A
FORM OF
EXERCISE NOTICE
(To be
executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To:
PETRO RIVER OIL CORP.
The
undersigned is the Holder of Warrant A No. _______ (the
“
Warrant
”)
issued by Petro River Oil Corp., a Delaware corporation (the
“
Company
”).
Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant.
1.
The Warrant is
currently exercisable to purchase a total of ______________ Warrant
Shares.
2.
The undersigned
Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant.
3.
The Holder intends
that payment of the Exercise Price shall be made in immediately
available funds.
4.
The holder shall
pay the sum of $____________ to the Company in accordance with the
terms of the Warrant.
5.
Pursuant to this
exercise, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the
Warrant.
6.
Following this
exercise, the Warrant shall be exercisable to purchase a total of
______________ Warrant Shares.
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Dated: ,
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Name of
Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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Annex B
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of
Petro River Oil Corp.. to which the within Warrant relates and
appoints ________________ attorney to transfer said right on the
books of Petro River Oil Corp.. with full power of substitution in
the premises.
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Dated: ,
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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Address
of Transferee
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In the
presence of:
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SECURITY AGREEMENT
This
SECURITY AGREEMENT, dated as of June __, 2017 (the
“
Agreement
”) is by and
among Petro River Oil Corp, Inc., a company duly organized and
validly existing under the laws of Delaware (the
“
Company
”)
and Petro Exploration Funding, LLC, a company duly organized and
validly existing under the laws of New York (the
“Purchaser”).
The
Company and the Purchaser are parties to a Securities Purchase
Agreement dated as of June 13, 2017 (as modified and supplemented
and in effect from time to time, the “
Purchase Agreement
”),
that provides, subject to the terms and conditions thereof, for the
issuance and sale by the Company to the Purchaser, Notes and
Warrants as more fully described in the Purchase
Agreement.
To
induce the Purchaser to enter into the Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company has agreed to pledge
and grant a security interest in the Collateral (as hereinafter
defined) as security for the Secured Obligations (as hereinafter
defined). Accordingly, the parties hereto agree as
follows:
Section
1.
Definitions
. Each capitalized
term used herein and not otherwise defined shall have the meaning
assigned to such term in the Purchase Agreement. In addition, as
used herein:
“
Accounts
” shall have the
meaning ascribed thereto in Section 3(d) hereof.
“
Business
” shall mean the
businesses from time to time, now or hereafter, conducted by the
Company and its Subsidiaries.
“
Collateral
” shall have
the meaning ascribed thereto in Section 3 hereof.
“
Copyright Collateral
”
shall mean all Copyrights, whether now owned or hereafter acquired
by the Company, that are associated with the Business.
“
Copyrights
” shall mean
all copyrights, copyright registrations and applications for
copyright registrations, including those shown on
Annex 3
hereto, and, without
limitation, all renewals and extensions thereof, the right to
recover for all past, present and future infringements thereof, and
all other rights of any kind whatsoever accruing thereunder or
pertaining thereto.
“
Documents
” shall have the
meaning ascribed thereto in Section 3(j) hereof.
“
Equipment
” shall have the
meaning ascribed thereto in Section 3(h) hereof.
“
Event of Default
” shall
have the meaning ascribed thereto in Section 8 of the
Note.
“Excluded
Assets”: the collective reference to (i) any asset subject to
a purchase money security interest (“PMSI Assets”) in
each case to the extent the grant by the Company of a security
interest pursuant to this Agreement in the Company’s right,
title and interest in such PMSI Asset (A) is prohibited by legally
enforceable provisions of any contract, agreement, instrument or
indenture governing such Intangible Asset or PMSI Asset, (B) would
give any other party to such contract, agreement, instrument or
indenture a legally enforceable right to terminate its obligations
thereunder or accelerate the indebtedness evidenced thereby or (C)
is permitted only with the consent of another party, if the
requirement to obtain such consent is legally enforceable and such
consent has not been obtained; (ii) Motor Vehicles the perfection
of a security interest in which is excluded from the Uniform
Commercial Code in the relevant jurisdiction; and (iii) the Capital
Stock in any Foreign Subsidiary, to the extent (but only to the
extent) required to prevent the Collateral from including more than
65% of all capital stock of any Foreign Subsidiary of the
Company.
“
Excluded Collateral
”
shall mean the assets of the Company which secure the Permitted
Indebtedness and the assets listed on
Annex 2
hereto.
“Foreign
Subsidiary”: any subsidiary of the Company that is organized
under the laws of a jurisdiction outside the United
States.
“
Instruments
” shall have
the meaning ascribed thereto in Section 3(e) hereof.
“
Intellectual Property
”
shall mean, collectively, all Copyright Collateral, all Patent
Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information,
know-how and trade secrets used or useful in the Business; (b) all
licenses or user or other agreements granted to the Company with
respect to any of the foregoing, in each case whether now or
hereafter owned or used including, without limitation, the licenses
or other agreements with respect to the Copyright Collateral, the
Patent Collateral or the Trademark Collateral; (c) all customer
lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys,
manuals, materials standards, processing standards, catalogs,
computer and automatic machinery software and programs, and the
like pertaining to the operation by the Company of the Business;
(d) all sales data and other information relating to sales now or
hereafter collected and/or maintained by the Company that pertain
to the Business; (e) all accounting information which pertains to
the Business and all media in which or on which any of the
information or knowledge or data or records which pertain to the
Business may be recorded or stored and all computer programs used
for the compilation or printout of such information, knowledge,
records or data; (f) all licenses, consents, permits, variances,
certifications and approvals of governmental agencies now or
hereafter held by the Company pertaining to the operation by the
Company and its Subsidiaries of the Business; and (g) all causes of
action, claims and warranties now or hereafter owned or acquired by
the Company in respect of any of the items listed
above.
“
Inventory
” shall have the
meaning ascribed thereto in Section 3(f) hereof.
“
Issuers
” shall mean,
collectively, the respective entities identified on
Annex 1
hereto, and all other
entities formed by the Company or entities in which the Company
owns or acquires any capital stock or similar
interest.
“
Motor Vehicles
” shall
mean motor vehicles, tractors, trailers and other like property,
whether or not the title thereto is governed by a certificate of
title or ownership.
“
Patent Collateral
” shall
mean all Patents, whether now owned or hereafter acquired by the
Company that are associated with the Business.
“
Patents
” shall mean all
patents and patent applications, including those shown on
Annex 3
hereto,
and, without limitation, the inventions and improvements described
and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations-in-part
thereof, all income, royalties, damages and payments now or
hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or
future infringements thereof, the right to sue for past, present
and future infringements thereof, and all rights corresponding
thereto throughout the world.
“
Permitted Indebtedness
”
shall mean the Company’s existing indebtedness, liabilities
and obligations as disclosed on
Annex 5
hereto and any future
capitalized leases, purchase money indebtedness and the
Notes.
“
Permitted Liens
” shall
mean (i) the Company’s existing Liens as disclosed in
Annex 6
hereto,
(ii) the security interests created by this Agreement, (iii) Liens
of local or state authorities for franchise, real estate or other
like taxes, (iv) statutory Liens of landlords and liens of
carriers, warehousemen, bailees, mechanics, materialmen and other
like Liens imposed by law, created in the ordinary course of
business and for amounts not yet due, (v) tax Liens not yet due and
payable and (vi) existing Liens which do not materially affect the
value of the Company’s property and do not materially
interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries.
“
Pledged Stock
” shall have
the meaning ascribed thereto in Section 3(a) hereof.
“
Real Estate
” shall have
the meaning ascribed thereto in Section 3(l) hereof.
“
Secured Obligations
”
shall mean, collectively, (a) the principal of and interest on the
Notes issued or issuable (as applicable) by the Company and held by
the applicable Purchaser and all other amounts from time to time
owing to such Purchasers by the Company under the Purchase
Agreement and the Notes and (b) all obligations of the Company to
such Purchasers thereunder.
“
Stock Collateral
” shall
mean, collectively, the Collateral described in clauses (a) through
(c) of Section 3 hereof and the proceeds of and to any such
property and, to the extent related to any such property or such
proceeds, all books, correspondence, credit files, records,
invoices and other papers.
“
Trademark Collateral
”
shall mean all Trademarks, whether now owned or hereafter acquired
by the Company, that are associated with the Business.
Notwithstanding the foregoing, the Trademark Collateral does not
and shall not include any Trademark which would be rendered
invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral
.
“
Trademarks
” shall mean
all trade names, trademarks and service marks, logos, trademark and
service mark registrations, and applications for trademark and
service mark registrations, including those shown on
Annex 3
hereto, and, without
limitation, all renewals of trademark and service mark
registrations, all rights corresponding thereto throughout the
world, the right to recover for all past, present and future
infringements thereof, all other rights of any kind whatsoever
accruing thereunder or pertaining thereto, together, in each case,
with the product lines and goodwill of the business connected with
the use of, and symbolized by, each such trade name, trademark and
service mark.
“
Uniform Commercial Code
”
shall mean the Uniform Commercial Code as in effect in the State of
Nevada from time to time.
Section
2.
Representations and Warranties
.
The Company represents and warrants to each of the Purchasers
that:
a.
the Company is the
sole beneficial owner of the Collateral and no Lien exists or will
exist upon any Collateral at any time (and, with respect to the
Stock Collateral, no right or option to acquire the same exists in
favor of any other Person), except for Permitted Liens and the
pledge and security interest in favor of each of the Purchasers
created or provided for herein which pledge and security interest
will constitute a first priority perfected pledge and security
interest in and to all of the Collateral (other than (i)
Intellectual Property registered or otherwise located outside of
the United States of America, (ii) Real Estate, and (iii) as
otherwise set forth in this Agreement) upon the filing of the
applicable financing statements or delivery of stock certificates
required hereunder or other action required by this Agreement
necessary to establish “control” as that term is
defined in the Uniform Commercial Code over the Collateral for the
benefit of the Purchaser.
b.
the Pledged Stock
directly or indirectly owned by the Company in the entities
identified in
Annex
1
hereto is, and all other Pledged Stock, whether issued now
or in the future, will be, duly authorized, validly issued, fully
paid and nonassessable, free and clear of all Liens other than
Permitted Liens and none of such Pledged Stock is or will be
subject to any contractual restriction, preemptive and similar
rights, or any restriction under the charter or by-laws of the
respective Issuers of such Pledged Stock, upon the transfer of such
Pledged Stock (except for any such restriction contained
herein);
c.
the Pledged Stock
directly or indirectly owned by the Company in the entities
identified in
Annex
1
hereto constitutes all of the issued and outstanding
shares of capital stock of any class of such Issuers beneficially
owned by the Company on the date hereof (whether or not registered
in the name of the Company) and said
Annex 1
correctly identifies,
as at the date hereof, the respective Issuers of such Pledged
Stock;
d.
the Company owns
and possesses the right to use, and has done nothing to authorize
or enable any other Person to use, all of its Copyrights, Patents
and Trademarks, and all registrations of its material Copyrights,
Patents and Trademarks are valid and in full force and effect.
Except as may be set forth in said
Annex 3
, the Company owns and
possesses the right to use all material Copyrights, Patents and
Trademarks, necessary for the operation of the
Business;
e.
to the
Company’s knowledge, (i) except as set forth in
Annex 3
hereto, there is no
violation by others of any right of the Company with respect to any
material Copyrights, Patents or Trademarks, respectively, and (ii)
the Company is not, in connection with the Business, infringing in
any material respect upon any Copyrights, Patents or Trademarks of
any other Person; and no proceedings have been instituted or are
pending against the Company or, to the Company’s knowledge,
threatened, and no claim against the Company has been received by
the Company, alleging any such violation, except as may be set
forth in said
Annex
3
;
f.
the Company does
not own any material Trademarks registered in the United States of
America to which the last sentence of the definition of Trademark
Collateral applies; and
Section
3.
Collateral
. As collateral
security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations,
the Company hereby pledges, grants, collaterally assigns,
hypothecates and transfers to the Purchaser on behalf of the
Purchasers as hereinafter provided, a security interest in and Lien
upon all of the Company’s right, title and interest in, to
and under all personal property and other assets of the Company,
whether now owned or hereafter acquired by or arising in favor of
the Company, whether now existing or hereafter coming into
existence, whether owned or consigned by or to, or leased from or
to the Company and regardless of where located, except for the
Excluded Collateral and the Excluded Assets, (all being
collectively referred to herein as “
Collateral
”)
including:
a.
the Company’s
direct or indirect ownership interest in the respective shares of
capital stock of the Issuers and all other shares of capital stock
of whatever class of the Issuers, now or hereafter owned by the
Company, together with in each case the certificates evidencing the
same (collectively, the “
Pledged
Stock
”);
b.
all shares,
securities, moneys or property representing a dividend on any of
the Pledged Stock, or representing a distribution or return of
capital upon or in respect of the Pledged Stock, or resulting from
a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of,
or otherwise in respect of, the Pledged Stock;
c.
without affecting
the obligations of the Company under any provision prohibiting such
action hereunder or under the Purchase Agreement or the Notes, in
the event of any consolidation or merger in which any Issuer is not
the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor
corporation is the Company itself) formed by or resulting from such
consolidation or merger (the Pledged Stock, together with all other
certificates, shares, securities, properties or moneys as may from
time to time be pledged hereunder pursuant to clause (a) or (b)
above and this clause (c) being herein collectively called the
“
Stock
Collateral
”);
d.
all accounts and
general intangibles (each as defined in the Uniform Commercial
Code) of the Company constituting any right to the payment of
money, including (but not limited to) all moneys due and to become
due to the Company in respect of any loans or advances for the
purchase price of Inventory or Equipment or other goods sold or
leased or for services rendered, all moneys due and to become due
to the Company under any guarantee (including a letter of credit)
of the purchase price of Inventory or Equipment sold by the Company
and all tax refunds (such accounts, general intangibles and moneys
due and to become due being herein called collectively
“
Accounts
”);
e.
all instruments,
chattel paper or letters of credit (each as defined in the Uniform
Commercial Code) of the Company evidencing, representing, arising
from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade
acceptances (herein collectively called “
Instruments
”);
f.
all inventory (as
defined in the Uniform Commercial Code) of the Company and all
goods obtained by the Company in exchange for such inventory
(herein collectively called “
Inventory
”);
g.
all Intellectual
Property and all other accounts or general intangibles of the
Company not constituting Intellectual Property or
Accounts;
h.
all equipment (as
defined in the Uniform Commercial Code) of the Company (herein
collectively called “
Equipment
”);
i.
each contract and
other agreement of the Company relating to the sale or other
disposition of Inventory or Equipment;
j.
all deposit
accounts (as defined in the Uniform Commercial Code) of the Company
(herein collectively called “
Deposit
Accounts
”);
k.
all documents of
title (as defined in the Uniform Commercial Code) or other receipts
of the Company covering, evidencing or representing Inventory or
Equipment (herein collectively called “
Documents
”);
l.
all rights, claims
and benefits of the Company against any Person arising out of,
relating to or in connection with Inventory or Equipment purchased
by the Company, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting such
Inventory or Equipment;
m.
all estates in land
together with all improvements and other structures now or
hereafter situated thereon, together with all rights, privileges,
tenements, hereditaments, appurtenances, easements, including, but
not limited to, rights and easements for access and egress and
utility connections, and other rights now or hereafter appurtenant
thereto ("
Real
Estate
");
n.
all other tangible
or intangible property of the Company, including, without
limitation, all proceeds, products and accessions of and to any of
the property of the Company described in clauses (a) through (m)
above in this Section 3 (including, without limitation, any
proceeds of insurance thereon), and, to the extent related to any
property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files, records,
invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the
possession or under the control of the Company or any computer
bureau or service company from time to time acting for the
Company.
Section
4.
Further Assurances; Remedies
.
In furtherance of the grant of the pledge and security interest
pursuant to Section 3 hereof, the Company hereby agrees with the
Purchaser and each of the Purchasers as follows:
4.01
Delivery
and Other Perfection
. The Company shall:
a.
if any of the
above-described shares, securities, monies or property required to
be pledged by the Company under clauses (a), (b) and (c) of Section
3 hereof are received by the Company, forthwith either (x) transfer
and deliver to the Purchaser such shares or securities so received
by the Company (together with the certificates for any such shares
and securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank) all of which thereafter shall
be held by the Purchaser, pursuant to the terms of this Agreement,
as part of the Collateral or (y) take such other action as the
Purchaser shall reasonably deem necessary or appropriate to duly
record the Lien created hereunder in such shares, securities,
monies or property referred to in said clauses (a), (b) and (c) of
Section 3;
b.
deliver and pledge
to the Purchaser, at the Purchaser's request, any and all
Instruments, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the Purchaser
may request; provided, that so long as no Event of Default shall
have occurred and be continuing, the Company may retain for
collection in the ordinary course any Instruments received by it in
the ordinary course of business and the Purchaser shall, promptly
upon request of the Company, make appropriate arrangements for
making any other Instrument pledged by the Company available to it
for purposes of presentation, collection or renewal (any such
arrangement to be effected, to the extent deemed appropriate by the
Purchaser, against trust receipt or like document);
c.
give, execute,
deliver, file and/or record any financing statement, notice,
instrument, document, agreement or other papers that may be
necessary (in the reasonable judgment of the Purchaser) to create,
preserve, perfect or validate any security interest granted
pursuant hereto or to enable the Purchaser to exercise and enforce
their rights hereunder with respect to such security interest,
including, without limitation, causing any or all of the Stock
Collateral to be transferred of record into the name of the
Purchaser or its nominee (and the Purchaser agrees that if any
Stock Collateral is transferred into its name or the name of its
nominee, the Purchaser will thereafter promptly give to the Company
copies of any notices and communications received by it with
respect to the Stock Collateral), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject
to the provisions of Section 4.09 below;
d.
upon the
acquisition after the date hereof by the Company of any Equipment
covered by a certificate of title or ownership cause the Purchaser
to be listed as the lienholder on such certificate of title and
within 120 days of the acquisition thereof (or such other time as
the Purchaser may approve in its sole discretion) deliver evidence
of the same to the Purchaser;
e.
keep accurate books
and records relating to the Collateral, and, during the
continuation of an Event of Default, stamp or otherwise mark such
books and records in such manner as the Purchaser may reasonably
require in order to reflect the security interests granted by this
Agreement;
f.
furnish to the
Purchaser from time to time (but, unless an Event of Default shall
have occurred and be continuing, no more frequently than quarterly)
statements and schedules further identifying and describing the
material Copyright Collateral, the Patent Collateral and the
Trademark Collateral, respectively, and such other reports in
connection with the Copyright Collateral, the Patent Collateral and
the Trademark Collateral, as the Purchaser may reasonably request,
all in reasonable detail;
g.
permit
representatives of the Purchaser, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts
from its books and records pertaining to the Collateral, and permit
representatives of the Purchaser to be present at the
Company’s place of business to receive copies of all
communications and remittances relating to the Collateral, and
forward copies of any notices or communications by the Company with
respect to the Collateral, all in such manner as the Purchaser may
reasonably require; provided, however, that so long as an Event of
Default is not continuing, such visits shall be made not more than
once per fiscal year at Company’s expense; and
h.
upon the occurrence
and during the continuance of any Event of Default, upon request of
the Purchaser, promptly notify each account debtor in respect of
any Accounts or Instruments that such Collateral has been assigned
to the Purchaser hereunder, and that any payments due or to become
due in respect of such Collateral are to be made directly to the
Purchaser.
4.02
Other
Financing Statements and Liens
. Except with respect to
Permitted Indebtedness or as otherwise permitted under Schedule
3.1(a) of the Purchase Agreement, without the prior written consent
of the Purchaser, the Company shall not file or authorize or permit
to be filed, in any jurisdiction, any financing statement or like
instrument with respect to the Collateral in which the Purchaser is
not named as the sole secured party for the benefit of each of the
Purchasers, except for Permitted Liens.
4.03
Preservation
of Rights
. The Purchaser shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
4.04
Special
Provisions Relating to Certain Collateral
.
(1)
The Company will
cause the Stock Collateral to constitute at all times 100% of the
total number of shares of each class of capital stock of each
Issuer then outstanding that is owned directly or indirectly by the
Company.
(2)
So long as no Event
of Default shall have occurred and be continuing, the Company shall
have the right to exercise all voting, consensual and other powers
of ownership pertaining to the Stock Collateral for all purposes
not inconsistent with the terms of this Agreement, the Purchase
Agreement, the Notes or any other instrument or agreement referred
to herein or therein, provided that the Company agrees that it will
not vote the Stock Collateral in any manner that is inconsistent
with the terms of this Agreement, the Purchase Agreement, the Notes
or any such other instrument or agreement; and the Purchaser shall
execute and deliver to the Company or cause to be executed and
delivered to the Company all such proxies, powers of attorney,
dividend and other orders, and all such instruments, without
recourse, as the Company may reasonably request for the purpose of
enabling the Company to exercise the rights and powers which it is
entitled to exercise pursuant to this Section
4.04(a)(2).
(3)
Unless and until an
Event of Default has occurred and is continuing, the Company shall
be entitled to receive and retain any dividends on the Stock
Collateral paid in cash out of earned surplus.
(4)
If any Event of
Default shall have occurred, then so long as such Event of Default
shall continue, and whether or not the Purchaser exercises any
available right to declare any Secured Obligations due and payable
or seeks or pursues any other relief or remedy available to it
under applicable law or under this Agreement, the Purchase
Agreement, the Notes or any other agreement relating to such
Secured Obligations, all dividends and other distributions on the
Stock Collateral shall be paid directly to the Purchaser and
retained by it as part of the Stock Collateral, subject to the
terms of this Agreement, and, if the Purchaser shall so request in
writing, the Company agrees to execute and deliver to the Purchaser
appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the
Purchaser shall, upon request of the Company (except to the extent
theretofore applied to the Secured Obligations) be returned by the
Purchaser to the Company.
b.
Intellectual
Property
.
(1)
For the purpose of
enabling the Purchaser to exercise rights and remedies under
Section 4.05 hereof at such time as the Purchaser shall be lawfully
entitled to exercise such rights and remedies, and for no other
purpose, the Company hereby grants to the Purchaser, to the extent
assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Company) to
use, assign, license or sublicense any of the Intellectual Property
(other than the Trademark Collateral or goodwill associated
therewith) now owned or hereafter acquired by the Company, wherever
the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the
compilation or printout thereof.
(2)
Notwithstanding
anything contained herein to the contrary, so long as no Event of
Default shall have occurred and be continuing and following notice
by the Purchaser of the termination of Company’s rights with
respect thereto, the Company will be permitted to exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in the
ordinary course of the business of the Company. In furtherance of
the foregoing, unless an Event of Default shall have occurred and
is continuing, the Purchaser shall from time to time, upon the
request of the Company, execute and deliver any instruments,
certificates or other documents, in the form so requested, which
the Company shall have certified are appropriate (in its judgment)
to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (1)
immediately above as to any specific Intellectual Property).
Further, upon the payment in full of all of the Secured Obligations
or earlier expiration of this Agreement or release of the
Collateral, the Purchaser shall grant back to the Company the
license granted pursuant to clause (1) immediately above. The
exercise of rights and remedies under Section 4.05 hereof by the
Purchaser shall not terminate the rights of the holders of any
licenses or sublicenses theretofore granted by the Company in
accordance with the first sentence of this clause (2).
4.05
Events
of Default, etc.
During the period during which an Event of
Default shall have occurred and be continuing:
a.
the Company shall,
at the request of the Purchaser, assemble the Collateral owned by
it at such place or places, reasonably convenient to both the
Purchaser and the Company, designated in its request;
b.
the Purchaser may
make any reasonable compromise or settlement deemed desirable with
respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
c.
the Purchaser shall
have all of the rights and remedies with respect to the Collateral
of a secured party under the Uniform Commercial Code (whether or
not said Code is in effect in the jurisdiction where the rights and
remedies are asserted) and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum
extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the
Purchaser were the sole and absolute owner thereof (and the Company
agrees to take all such action as may be appropriate to give effect
to such right);
d.
the Purchaser in
its discretion may, in its name or in the name of the Company or
otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no
obligation to do so; and
e.
the Purchaser may,
upon 10 Business Days, prior written notice to the Company of the
time and place, with respect to the Collateral or any part thereof
which shall then be or shall thereafter come into the possession,
custody or control of the Purchaser, or any of its respective
Purchasers, sell, lease, assign or otherwise dispose of all or any
of such Collateral, at such place or places as the Purchaser deems
best, and for cash or on credit or for future delivery (without
thereby assuming any credit risk), at public or private sale,
without demand of performance or notice of intention to effect any
such disposition or of time or place thereof (except such notice as
is required above or by applicable statute and cannot be waived)
and the Purchaser or anyone else may be the purchaser, lessee,
assignee or recipient of any or all of the Collateral so disposed
of at any public sale (or, to the extent permitted by law, at any
private sale), and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or
equity of redemption (statutory or otherwise), of the Company, any
such demand, notice or right and equity being hereby expressly
waived and released. In the event of any sale, assignment, or other
disposition of any of the Trademark Collateral, the goodwill of the
Business connected with and symbolized by the Trademark Collateral
subject to such disposition shall be included, and the Company
shall supply to the Purchaser or its designee, for inclusion in
such sale, assignment or other disposition, all Intellectual
Property relating to such Trademark Collateral. The Purchaser may,
without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so
adjourned.
The
proceeds of each collection, sale or other disposition under this
Section 4.05, including by virtue of the exercise of the license
granted to the Purchaser in Section 4.04(b)(1) hereof, shall be
applied in accordance with Section 4.09 hereof.
The
Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable
state securities laws, the Purchaser may be compelled, with respect
to any sale of all or any part of the Collateral, to limit
purchasers to those who will agree, among other things, to acquire
the Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. The Company
acknowledges that any such private sales to an unrelated third
party in an arm’s length transaction may be at prices and on
terms less favorable to the Purchaser than those obtainable through
a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the
Purchaser shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of
time necessary to permit the respective Issuer thereof to register
it for public sale.
4.06
Deficiency
.
If the proceeds of sale, collection or other realization of or upon
the Collateral pursuant to Section 4.05 hereof are insufficient to
cover the costs and expenses of such realization and the payment in
full of the Secured Obligations, the Company shall remain liable
for any deficiency.
4.07
Removals,
etc
. Without at least 30 days’ prior written notice to
the Purchaser or unless otherwise required by law, the Company
shall not (i) maintain any of its books or records with respect to
the Collateral at any office or maintain its chief executive office
or its principal place of business at any place, or permit any
Inventory or Equipment to be located anywhere other than at the
address indicated for the Company in Section 7.4 of the Purchase
Agreement or at one of the locations identified in
Annex 4
hereto or in transit
from one of such locations to another or (ii) change its corporate
name, or the name under which it does business, from the name shown
on the signature page hereto.
4.08
Private
Sale
. The Purchaser shall incur no liability as a result of
the sale of the Collateral, or any part thereof, at any private
sale to an unrelated third party in an arm’s length
transaction pursuant to Section 4.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any
claims against the Purchaser arising by reason of the fact that the
price at which the Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Secured
Obligations, even if the Purchaser accepts the first offer received
and does not offer the Collateral to more than one
offeree.
4.09
Application
of Proceeds
. Except as otherwise herein expressly provided,
the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at
the time held by the Purchaser under this Section 4, shall be
applied by the Purchaser:
First
, to the payment of the
costs and expenses of such collection, sale or other realization,
including reasonable out-of-pocket costs and expenses of the
Purchaser and the fees and expenses of its Purchasers and counsel,
and all expenses, and advances made or incurred by the Purchaser in
connection therewith;
Next
, to the payment in full of
the Secured Obligations in each case equally and ratably in
accordance with the respective amounts thereof then due and owing
to each of the Purchasers; and
Finally
, to the payment to the
Company, or its successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then
remaining.
As used
in this Section 4, “
proceeds
” of Collateral
shall mean cash, securities and other property realized in respect
of, and distributions in kind of, Collateral, including any thereof
received under any reorganization, liquidation or adjustment of
debt of the Company or any issuer of or obligor on any of the
Collateral.
4.10
Attorney-in-Fact
.
Without limiting any rights or powers granted by this Agreement to
the Purchaser while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any
Event of Default, the Purchaser is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the
provisions of this Section 4 and taking any action and executing
any instruments which the Purchaser may deem necessary or advisable
to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the
Purchasers shall be entitled under this Section 4 to make
collections in respect of the Collateral, the Purchaser shall have
the right and power to receive, endorse and collect all checks made
payable to the order of the Company representing any dividend,
payment, or other distribution in respect of the Collateral or any
part thereof and to give full discharge for the same.
4.11
Perfection
.
(i) Concurrently with the execution and delivery of this Agreement
or within 10 Business Days following the date hereof, the Company
shall file such financing statements and other documents in such
offices as the Purchaser may reasonably request to perfect the
security interests granted by Section 3 of this Agreement that may
be perfected by such filing; (ii) the Company shall within 10
Business Days following the date hereof, grant control over any
Deposit Accounts to the Purchaser];and (iii) at any time requested
by the Purchaser, the Company shall deliver to the Purchaser all
share certificates of capital stock directly or indirectly owned by
the Company in the entities identified in
Annex 1
hereto, accompanied by
undated stock powers duly executed in blank.
4.12
Termination
.
When all Secured Obligations shall have been paid in full under the
Purchase Agreement, this Agreement shall terminate, and the
Purchaser shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money
received in respect thereof, to or on the order of the Company and
to be released and cancelled all licenses and rights referred to in
Section 4.04(b)(1) hereof. The Purchaser shall also execute and
deliver to the Company upon such termination such Uniform
Commercial Code termination statements, certificates for
terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Company to
effect the termination and release of the Liens on the
Collateral.
4.13
Expenses
.
The Company agrees to pay to the Purchaser all reasonable
out-of-pocket expenses (including reasonable expenses for legal
services of every kind) of, or incident to, the enforcement of any
of the provisions of this Section 4, or performance by the
Purchaser of any obligations of the Company in respect of the
Collateral which the Company has failed or refused to perform upon
reasonable notice, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the
Purchaser in respect thereof, by litigation or otherwise, including
expenses of insurance, and all such expenses shall be Secured
Obligations to the Purchaser secured under Section 3
hereof.
4.14
Further
Assurances
. The Company agrees that, from time to time upon
the written reasonable request of the Purchaser, the Company will
execute and deliver such further documents and do such other acts
and things as the Purchaser may reasonably request in order fully
to effect the purposes of this Agreement.
4.15
Indemnity
.
Each of the Purchasers hereby jointly and severally covenants and
agrees to reimburse, indemnify and hold the Purchaser harmless from
and against any and all claims, actions, judgments, damages,
losses, liabilities, costs, transfer or other taxes, and expenses
(including, without limitation, reasonable attorneys’ fees
and expenses) incurred or suffered without any gross negligence,
bad faith or willful misconduct by the Purchaser, arising out of or
incident to any investigation, proceeding or litigation arising out
of this Agreement or the administration of the Purchaser’s
duties hereunder, or resulting from its actions or inactions as
Purchaser.
Section
5.
Miscellaneous
.
5.01
No
Waiver
. No failure on the part of the Purchaser or any of
its Purchasers to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by the Purchaser or any of its Purchasers of
any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of
any remedies provided by law.
5.02
Governing
Law
. This Agreement shall be governed by, and construed in
accordance with, the law of the State of Nevada.
5.03
Notices
.
All notices, requests, consents and demands hereunder shall be in
writing and facsimile (facsimile confirmation required) or
delivered to the intended recipient at its address or telex number
specified pursuant to Section 7.4 of the Purchase Agreement and
shall be deemed to have been given at the times specified in said
Section 7.4.
5.04
Waivers,
etc
. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the
Company and the Purchaser. Any such amendment or waiver shall be
binding upon each of the Purchasers and the Company.
5.05
Successors
and Assigns
. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the
Company and each of the Purchasers (provided, however, that the
Company shall not assign or transfer its rights hereunder without
the prior written consent of the Purchaser).
5.06
Counterparts
.
This Agreement may be executed in any number of counterparts, all
of which together shall constitute one and the same instrument and
any of the parties hereto may execute this Agreement by signing any
such counterpart.
5.07
Purchaser
.
Each Purchaser agrees to appoint Iroquois Master Fund Ltd. as its
Purchaser for purposes of this Agreement. The Purchaser may employ
Purchasers and attorneys-in-fact in connection herewith and shall
not be responsible for the negligence or misconduct of any such
Purchasers or attorneys-in-fact selected by it in good
faith.
Severability
. If any provision
hereof is invalid and unenforceable in any jurisdiction, then, to
the fullest extent permitted by law, (i) the other provisions
hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in favor of the Purchasers in
order to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
IN
WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed as of the day and year first above
written.
COMPANY:
PETRO RIVER OIL CORP.
By:
______________________________
Stephen
Brunner
President
PURCHASER:
PETRO EXPLORATION FUNDING, LLC
By:
______________________________
Scot
Cohen
Manager
ANNEX
1
ENTITIES
IN WHICH THE COMPANY IS PLEDGING ITS CAPITAL STOCK
Approximate
Entity
Percentage Interest
Megawest Kansas
Energy
Corp
56%
Bandolier Energy
Group,
LLC
53%
ANNEX
2
EXCLUDED
COLLATERAL
None
ANNEX
3
LIST OF
LOCATIONS
ANNEX
4
PATENTS,
COPYRIGHTS AND TRADEMARKS
All
patents, copyrights and trademarks as set forth in the Companies
public filings.
ANNEX
5
PERMITTED
INDEBTEDNESS
Up to
$250,000 in the ordinary course of business
ANNEX
6
PERMITTED
LIENS
Up to
$250,000 in the ordinary course of business
Exhibit 10.4
ASSIGNMENT OF OVERRIDING ROYALTY INTERESTS
SPYGLASS ENERGY
GROUP, LLC, an Oklahoma limited liability company
(“Assignor”), for Ten Dollars and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, hereby transfers, assigns, sets over, and
delivers unto Petro Exploration Funding, LLC, a New York limited
liability company (“Assignee”), an overriding royalty
interest equal to TWO PERCENT (2%) of 8/8ths in the oil, gas and
other hydrocarbon substances which may be produced, saved, sold and
marketed from the oil and gas leases described in Exhibit A-1 and
the Concession Agreement lands as defined and described in Exhibit
A-2 (collectively referred to herein as the “Leases”),
insofar as said Leases cover the lands specifically described
therein, said lands being situated in Osage County,
Oklahoma.
TO HAVE
AND TO HOLD the overriding royalty interests unto Assignee, its
respective successors and assigns forever, with warranty of title
by, through, and under the Assignor, but not otherwise. The
overriding royalty interests herein conveyed shall be subject to
the following provisions and conditions:
1.
The overriding
royalty interests herein assigned shall be free and clear of and
from any and all costs and expenses of developing, operating,
producing and marketing, but shall bear its proportionate part of
all gross production, severance and other taxes which may be
assessed or levied against said overriding royalty interests or the
production attributable thereto. Nothing contained herein shall
impose on Assignor any covenant, duty or obligation to develop or
operate the properties covered by the Leases other than as required
by the Leases or to maintain the Leases in effect by the payment of
delay rentals.
2. In the event Assignor owns less than the entire and undivided
leasehold estate in the lands covered by the Leases, or any of
them, the overriding royalty interests herein assigned shall be
reduced proportionately and shall be payable to Assignee in the
proportion which the leasehold interests owned by Assignor bear to
the entire and undivided oil, gas and mineral estates described
therein.
3. In
the event the Leases, or any of them, cover less than the entire
and undivided interest in the oil, gas and other minerals in the
lands covered by the Leases, the overriding royalty interests
hereby assigned shall be reduced proportionately and shall be
payable to Assignee in the proportion which the interests in the
oil, gas and other minerals in the lands covered by said Leases
bear to the entire and undivided interest in the oil, gas and other
minerals in and under said lands.
4.
Assignor shall have the right to pool the Leases and the lands
covered thereby, or any part thereof, with other lands and leases
into units, and if the Assignor shall so pool the Leases and the
lands covered thereby voluntarily, or if the Leases and the lands
covered thereby, or any part thereof, are pooled with other leases
and lands in order to form drilling and spacing units by any
governmental authority having jurisdiction, then the overriding
royalty interests herein assigned and conveyed shall be reduced in
the proportion which the acreage covered by the Leases bears to all
of the acreage included in any such pooled unit.
5. The
overriding royalty interests herein assigned shall attach and apply
to all of the Leases described in Exhibit A-1 and any renewals or
extensions thereof, and to any future Leases granted under the
Concession Agreement (as defined in Exhibit A-2) and any renewals
or extensions thereof.
IN
WITNESS WHEREOF, this Assignment has been executed and delivered by
Assignor on the date of acknowledgement of signature below, but
shall be effective for all purposes as of June ___,
2017
SPYGLASS ENERGY
GROUP, LLC
By:
__________________________
Stephen
Brunner
Manager
STATE
OF _________ )
COUNTY
OF ______)
Before
me, the undersigned, a Notary Public, in and for said County and
State, on June__, 2017, personally appeared Stephen Brunner, to me
known to be the identical person who subscribed the foregoing
instrument as Manager of Spyglass Energy Group, LLC.
___________________________
Notary
Public
EXHIBIT
A-1
Oil and
Gas Leases
See
attached
EXHIBIT
A-2
Concession
Agreement Lands
All oil
and gas leases issued and to be issued to Assignor, its successors
and assigns, under and pursuant to the Lease Acquisition and
Exploration Agreement, made and entered into as of September 21,
2005, by and between the Osage Tribe of Indians of Oklahoma and
Spyglass Energy Group, LLC, as approved by Tribal Resolution No.
31-1240, as amended from time to time, covering the following
described lands, all situated in Osage County,
Oklahoma:
Range 6
East:
Township
26 North, Range 6 East: Section 1; Section 2 E/2; Section 11 NE/4;
Sections 12 and 13; Sections 24 and 25; Section 36 NE/4;
and
Township
27 North, Range 6 East: Sections 1 through 5; Section 6 N/2 and
SW/4; Section 8 N/2 and SE/4; Sections 9 through 15; Section 16 N/2
and SE/4; Section 21 NE/4; Sections 22 through 26; Section 27 E/2;
Sections 35 and 36; and
Township
28 North, Range 6 East: Sections 25 through 36; and
Range
7 East:
Township
25 North, Range 7 East: Sections 1 through 6; Section 7 E/2;
Sections 8 through 12; Section 13 W/2 and NE/4; Section 14; Section
15 NE/4; and
Township
26 North, Range 7 East: Sections 1 through 36; and
Township
27 North, Range 7 East: Sections 1 through 36; and
Township
28 North, Range 7 East: Sections 25 through 36; and
Range 8
East:
Township
25 North, Range 8 East: Sections 4 through 8; Section 18 NW/4;
and
Township
26 North, Range 8 East: Sections 3 through 9; Sections 16 through
21; Sections 28 through 33; and
Township
27 North, Range 8 East: Sections 5 through 8; Section 10; Section
15; Sections 17 through 22; Sections 24 and 25; Sections 27 through
34; and
Township
28 North, Range 8 East: Sections 30 and 31.
EXHIBIT 10.5
SECURED PROMISSORY NOTE
For
value received, Petro River Oil Corp., a Delaware corporation (the
“
Company
”),
hereby promises to pay to the order of Petro Exploration Funding,
LLC or its registered assigns (the “
Holder
”), at
the address of c/o 20 E 20
th
Street, New York,
New York, NY 10003, the principal sum of $2,000,000 on the dates
specified herein, with interest as specified herein.
This
Note is subject to the following additional provisions, terms and
conditions:
ARTICLE
1.
DEFINITIONS
.
Section 1.1.
Definitions
.
Defined terms used herein but not defined shall have the meaning
ascribed in the Securities Purchase Agreement dated June 13, 2017
(the “Purchase Agreement”) between the Company and
Holder.
Section
1.2.
Certain
Definitions
“
Applicable
Rate
” means 10% per annum.
“
Bankruptcy
Law
” means Title 11, United State Code or any similar
federal or state law for the relief of debtors.
“
Business Day
”
means any day that is not a Saturday or Sunday or a day on which
banks are required or permitted to be closed in New York, New
York.
“
Collateral
”
shall have the meaning ascribed in the Security
Agreement.
“
Default Rate
”
means 18% per annum.
“
Distribution
Event
” means any insolvency, bankruptcy, receivership,
liquidation, reorganization or similar proceeding (whether
voluntary or involuntary) relating to the Company or its property,
or any proceeding for voluntary or involuntary liquidation,
dissolution or other winding up of the Company, whether or not
involving insolvency or bankruptcy.
“
Maturity
Date
” means June 30, 2020.
“
Maximum Rate
”
means the maximum nonusurious interest rate permitted under
applicable law.
“
Note
” means
this Promissory Note made by the Company payable to the Holder,
together with all amendments and supplements hereto, all
substitutions and replacements hereof, and all renewals,
extensions, increases, restatements, modifications, rearrangements
and waivers hereof from time to time.
“
Proceeds
”
has the meaning set forth in the Uniform Commercial Code in the
State of New York.
“Security
Agreement”
means the Security Agreement dated as of
the date hereof between the Company and Holder.
“
Transfer
” has
the meaning set forth in
Section 4.2(b)
.
ARTICLE
2.
BASIC TERMS
.
Section
2.1.
Principal
.
(a)
Scheduled Repayment
. To the
extent not previously paid, the entire unpaid principal balance of
this Note shall be due and payable on the Maturity
Date.
(b)
Prepayment
. Upon
five days’ prior written notice, the Company may make
voluntary prepayments in whole or in part of the unpaid principal
hereunder from time to time at without penalty or
premium.
Section
2.2.
Interest.
(a)
The Company agrees
to pay interest in respect of the unpaid principal amount of this
Note at a rate per annum equal to the lesser of the Applicable Rate
or the Maximum Rate. Upon the occurrence and during the continuance
of an Event of Default, which has not been cured, the Company
agrees to pay during the period of the continuance of such Event of
Default interest on the unpaid principal amount of this Note at a
rate per annum equal to the lesser of the Default Rate and the
Maximum Rate.
(b)
Interest payments
shall be paid on June 1, 2018, and each 6 month anniversary
thereafter until earlier of (i) outstanding principal balance of
this Note shall be paid in full or the Maturity Date.
(c)
Interest shall be
calculated on the basis of a 365-day year.
Section
2.3.
Payments
in General
. All payments of principal and interest on this
Note shall be in such coin or currency of the United States of
America as at the time of payment shall be legal tender for payment
of public and private debts. If any payment (whether of principal,
interest or otherwise) on this Note is due on a day which is not a
Business Day, such payment shall be due and payable on the next
succeeding Business Day. All payments under this Note shall be made
by wire transfer or check in accordance with Holder’s
instructions.
Section
2.4.
Surrender
of Note on Transfer
. This Note shall, as a condition to
transfer, be surrendered to the Company in exchange for a new Note
in a principal amount equal to the principal amount remaining
unpaid on the surrendered Note, and with the same terms and
conditions as this Note. In case the entire principal amount of
this Note is prepaid, this Note shall be surrendered to the Company
for cancellation and shall not be reissued.
Section
2.5.
Security
.
To secure the indebtedness evidenced by this Note, all interest
hereon, and all other fees and expenses related to the loan
evidenced by this Note, including all costs and expenses incurred
by Holder in the collection of the foregoing, the Company hereby
grants to Holder a security interest as set forth in the Security
Agreement.
Section
2.6.
Covenants.
(a)
The Company agrees
to pay all obligations when due and perform fully all of the
Company’s duties under and in connection with this
Note.
(b)
The Company agrees
to (i) take all actions reasonably requested by Holder to perfect
for Holder a first priority security interest in the Inventory, and
(ii) refrain from encumbering, or, other than in the ordinary
course of business consistent with past practice, selling any of
the Collateral, or permitting the Collateral or any interest in the
Collateral to be encumbered, or seized, or, other than in the
ordinary course of business consistent with past practice,
transferred or otherwise disposed of.
ARTICLE
3.
DEFAULT AND REMEDIES
.
Section
3.1.
Events
of Default
. An “
Event of
Default
” occurs if:
(a)
the Company
defaults in the payment of principal or interest on the Note when
the same becomes due and payable;
(b)
the Company
defaults in the punctual performance of any other obligation,
covenant, term or provision contained in this Note; or
(c)
the Company (i)
commences a voluntary case concerning itself under any Bankruptcy
Law now or hereafter in effect, or any successor thereof; (ii) is
the object of an involuntary case under any Bankruptcy Law; or
(iii) commences any Distribution Event or is the object of an
involuntary Distribution Event.
Section 3.2.
Remedies
.
(a)
If an Event of
Default (other than an Event of Default under
Section 3.1(c)
) shall
occur, the Holder may declare by notice in writing given to the
Company, the entire unpaid principal amount of the Note, together
with accrued but unpaid interest thereon, to be immediately due and
payable, in which case the Note shall become immediately due and
payable, both as to principal and interest, without presentment,
demand, default, notice of intent to accelerate and notice of such
acceleration, protest or notice of any kind, all of which are
hereby expressly waived, anything herein or elsewhere to the
contrary notwithstanding.
(b)
If an Event of
Default under
Section
3.1(c)
shall occur, the entire unpaid principal amount of
the Note, together with accrued but unpaid interest thereon, shall
automatically become immediately due and payable, both as to
principal and interest, without presentment, demand, default,
notice of intent to accelerate and notice of such acceleration,
protest or notice of any kind, all of which are hereby expressly
waived, anything herein or elsewhere to the contrary
notwithstanding.
(c)
If any Event of
Default shall have occurred, the Holder may proceed to protect and
enforce its rights either by suit in equity or by action at law, or
both, and take any of the following actions (but it is expressly
agreed and acknowledged that the Holder is under no duty to take
any such actions):
(i) require
the Company to give possession or control of the Collateral to the
Holder;
(ii) take
control of Proceeds (as defined in the Security Agreement) and use
any such cash Proceeds to reduce any part of the indebtedness
evidenced by this Note, all interest hereon or related fees and
expenses;
(iii) sell,
or instruct any agent or broker to sell, all or any part of the
Collateral in a public or private sale and apply all proceeds to
the payment or other satisfaction of the indebtedness evidenced by
this Note, all interest hereon or related fees and expenses in such
order and manner as the Holder shall, in its discretion,
choose;
(iv) take
any action the Company is required to take or any other necessary
or desirable action to obtain, preserve, and enforce this Note, and
to maintain and preserve the Collateral, without notice to the
Company;
(v) transfer
any of the Collateral, or evidence thereof, into the Holder’s
own name or that of its nominee and receive the Proceeds therefrom
and hold the same as security for the indebtedness evidenced by
this Note, interest hereon and related fees and expenses, or apply
the same thereon;
(vi) take
control of funds generated by the Collateral , and use such funds
to reduce any part of the indebtedness evidenced by this Note,
interest hereon or related fees and expenses; and
(vii) exercise
all other rights that a secured creditor may exercise with respect
to any of the Collateral.
ARTICLE
4.
MISCELLANEOUS
.
Section 4.1.
Amendment.
This Note may be
amended, modified, superseded or cancelled, and any of the terms,
covenants, representations, warranties or conditions hereof and
thereof may be waived, only by a written instrument executed by the
Holder and the Company.
Section 4.2. Successors
and Assigns
.
(a) The
rights and obligations of the Company and the Holder under this
Note shall be binding upon, and inure to the benefit of, and be
enforceable by, the Company and the Holder, and their respective
permitted successors and assigns.
(b) The Company may not sell, assign (by
operation of law or otherwise), transfer, pledge, grant a security
interest in or delegate (collectively “
Transfer
”)
any of its rights or obligations under this Note unless the Holder
has granted its prior written consent and any such purported
Transfer by the Company without obtaining such prior written
consent shall be null and void
ab initio
.
Section 4.3.
Defenses
. Except as expressly set forth herein, the
obligations of the Company under this Note shall not be subject to
reduction, limitation, impairment, termination, defense, set-off,
counterclaim or recoupment for any reason.
Section 4.4.
Replacement of
Note
. Upon receipt by the
Company of evidence, satisfactory to it, of the loss, theft,
destruction, or mutilation of this Note and (in the cases of loss,
theft or destruction) of any indemnity reasonably satisfactory to
it, and upon surrender and cancellation of this Note, if mutilated,
the Company will deliver a new Note of like tenor in lieu of this
Note. Any Note delivered in accordance with the provisions of
this
Section 4.4
shall be dated as of the date of this
Note.
Section 4.5.
Attorneys’ and Collection
Fees
. Each party will bear its
own fees and expenses incurred in connection with the preparation,
execution and performance of this Note and the transactions
contemplated hereby, including all fees and expenses of agents,
representatives, financial advisors, legal counsel and accountants.
Notwithstanding the foregoing, in the event this Note shall not be
paid when due and payable (whether upon demand, by acceleration or
otherwise), the Company shall be liable for and shall pay to Holder
all collection costs and expenses incurred by Holder, including
reasonable attorney’s fees.
Section 4.6.
Governing
Law
. This Note and the validity
and enforceability hereof shall be governed by and construed and
interpreted in accordance with the laws of the State of New
York.
Section 4.7.
Waivers
. Except as may be otherwise provided herein, the
makers, signers, sureties, guarantors and endorsers of this Note
severally waive demand, presentment, notice of dishonor, notice of
intent to demand or accelerate payment hereof, notice of
acceleration, diligence in collecting, grace, notice, and protest,
and agree to one or more extensions for any period or periods of
time and partial payments, before or after maturity, without
prejudice to the Holder.
Section 4.8. No Waiver by
Holder
. No failure or delay on
the part of the Holder in exercising any right, power or privilege
hereunder and no course of dealing between the Company and the
Holder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
Section 4.9.
No
Impairment
. The Company will
not, by amendment of its certificate of incorporation or through
any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed
hereunder by the Company, but will at times in good faith assist in
the carrying out of all the provisions of this
Note.
Section
4.10
.
Limitation on Interest
. Notwithstanding
any other provision of this Note, interest on the indebtedness
evidenced by this Note is expressly limited so that in no
contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the interest contracted
for, charged or received by the Holder exceed the maximum amount
permissible under applicable law. If from any circumstances
whatsoever fulfillment of any provisions of this Note or of any
other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of
validity prescribed by law, then,
ipso facto
, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any such circumstances the Holder shall ever receive anything
of value as interest or deemed interest by applicable law under
this Note or any other document evidencing, securing or pertaining
to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the
principal amount owing under this Note or on account of any other
indebtedness of the Company to the Holder, and not to the payment
of interest, or if such excessive interest exceeds the unpaid
balance of principal of this Note and such other indebtedness, such
excess shall be refunded to the Company. In determining whether or
not the interest paid or payable with respect to any indebtedness
of the Company to the Holder, under any specific contingency,
exceeds the highest lawful rate, the Company and the Holder shall,
to the maximum extent permitted by applicable law, (a) characterize
any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effects
thereof, (c) amortize, prorate, allocate and spread the total
amount of interest throughout the term of such indebtedness so that
the actual rate of interest on account of such indebtedness does
not exceed the maximum amount permitted by applicable law, and/or
(d) allocate interest between portions of such indebtedness, to the
end that no such portion shall bear interest at a rate greater than
that permitted by applicable law. The terms and provisions of this
paragraph shall control and supersede every other conflicting
provision of this Note and all other agreements between the Company
and the Holder.
Section 4.11
.
Severability.
If one or more provisions
of this Note are held to be unenforceable under applicable law,
such provision(s) shall be excluded from this Note and the balance
of this Note shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its
terms.
Section 4.12
.
Construction
. This Note has been freely
and fairly negotiated among the parties. If an ambiguity or
question of intent or interpretation arises, this Note will be
construed as if drafted jointly by the parties and no presumption
or burden of proof will arise favoring or disfavoring any party
because of the authorship of any provision of this Note. Unless the
context requires otherwise, any agreements, documents, instruments
or laws defined or referred to in this Note will be deemed to mean
or refer to such agreements, documents, instruments or laws as from
time to time amended, modified or supplemented, including (a) in
the case of agreements, documents or instruments, by waiver or
consent and (b) in the case of laws, by succession of comparable
successor statutes. All references in this Note to any particular
law will be deemed to refer also to any rules and regulations
promulgated under that law. The words “include,
“includes” and “including will be deemed to be
followed by “without limitation.” The word
“or” is used in the inclusive sense of
“and/or” unless the context requires otherwise.
References to a Person are also to its permitted successors and
assigns. Pronouns in masculine, feminine and neuter genders will be
construed to include any other gender, and words in the singular
form will be construed to include the plural and vice versa, unless
the context requires otherwise. When a reference in this Note is
made to an Article, Section, Exhibit, Annex or Schedule, such
reference is to an Article or Section of, or Exhibit, Annex or
Schedule to, this Note unless otherwise indicated. The words
“this Note,” “herein,”
“hereof,” “hereby,” “hereunder”
and words of similar import refer to this Note as a whole and not
to any particular subdivision unless expressly so
limited.
Section 4.13
.
Right of Setoff
. Notwithstanding the
terms of this Note or any other agreement or document, the Holder
and each of its affiliates is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, and
without prior notice to the Company, any such notice being
expressly waived by the Company, to set off and appropriate and
apply any and all obligations and indebtedness (in whatever
currency) at any time owing by the Holder or such affiliate to or
for the credit or the account of the Company against any and all of
the obligations of the Company now or hereafter existing under this
Note to the Holder or its affiliates, whether direct or indirect,
absolute or contingent, matured or unmatured, and irrespective of
whether or not the Holder or its affiliates shall have made any
demand under this Note and although such obligations of the Company
are owed to a subsidiary, office or affiliate of the Holder
different from the subsidiary, office or affiliate obligated on
such obligations or indebtedness. The rights of the Holder and its
affiliates under this
Section 4.13
are in addition to
other rights and remedies (including other rights of set-off) that
the Holder or such affiliates may have. The Holder agrees to notify
the Company promptly after any such set off and appropriation and
application;
provided
,
however
, that the failure to
give such notice shall not affect the validity of such set off and
appropriation and application.
[Signature Page Follows]
EXECUTED as of the
date first written above.
PETRO
RIVER OIL CORP.
By:_________________________________
Stephen
Brunner
President
The
Holder hereby accepts this Note this ___ day of June,
2017
PETRO
EXPLORATION FUNDING, LLC
By:
________________________________
Scot
Cohen
Manager
SIGNATURE PAGE TO
SECURED PROMISSORY NOTE
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